EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
TYCO ACQUISITION CORP. XXIV (NV)
and
SENSORMATIC ELECTRONICS CORPORATION
including
GUARANTEE
of
TYCO INTERNATIONAL LTD.
Dated as of August 3, 2001
Table of Contents
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Page
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ARTICLE I EXCHANGE OFFER AND MERGER.....................................7
SECTION 1.01 The Offer.....................................................7
SECTION 1.02 Company Action...............................................10
SECTION 1.03 Directors....................................................11
SECTION 1.04 The Merger...................................................12
SECTION 1.05 Effective Time; Closing......................................12
SECTION 1.06 Effect of the Merger.........................................12
SECTION 1.07 Articles of Incorporation; Bylaws............................13
SECTION 1.08 Directors and Officers.......................................13
SECTION 1.09 Effect on Capital Stock......................................13
SECTION 1.10 Exchange of Certificates.....................................14
SECTION 1.11 No Further Ownership Rights in the
Company Common Stock.........................................16
SECTION 1.12 Tax Consequences.............................................17
SECTION 1.13 Taking of Necessary Action; Further Action...................17
SECTION 1.14 Appraisal Rights.............................................17
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY................18
SECTION 2.01 Organization and Qualification; Subsidiaries.................18
SECTION 2.02 Certificate of Incorporation and Bylaws......................19
SECTION 2.03 Capitalization...............................................19
SECTION 2.04 Authority Relative to this Agreement.........................20
SECTION 2.05 No Conflict; Required Filings and Consents...................21
SECTION 2.06 Compliance; Permits..........................................22
SECTION 2.07 SEC Filings; Financial Statements............................23
SECTION 2.08 Absence of Certain Changes or Events.........................23
SECTION 2.09 No Undisclosed Liabilities...................................24
SECTION 2.10 Absence of Litigation........................................24
SECTION 2.11 Employee Benefit Plans; Employment Agreements................24
SECTION 2.12 Employment and Labor Matters.................................28
SECTION 2.13 Registration Statement; Proxy Statement/Prospectus...........28
SECTION 2.14 Restrictions on Business Activities..........................29
SECTION 2.15 Title to Property............................................30
SECTION 2.16 Taxes........................................................30
SECTION 2.17 Environmental Matters........................................31
SECTION 2.18 Brokers......................................................33
SECTION 2.19 Intellectual Property........................................33
SECTION 2.20 Interested Party Transactions................................35
SECTION 2.21 Insurance....................................................35
SECTION 2.22 Product Liability and Recalls................................35
SECTION 2.23 Opinion of Company Financial Advisor.........................35
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIROR...................35
SECTION 3.01 Organization and Qualification; Subsidiaries.................36
SECTION 3.02 Capitalization...............................................36
SECTION 3.03 Authority Relative to this Agreement.........................37
SECTION 3.04 No Conflicts; Required Filings and Consents..................37
SECTION 3.05 Compliance...................................................38
SECTION 3.06 SEC Filings; Financial Statements............................39
SECTION 3.07 Absence of Certain Changes or Events.........................39
SECTION 3.08 No Undisclosed Liabilities...................................39
SECTION 3.09 Absence of Litigation........................................40
SECTION 3.10 Registration Statement; Proxy Statement/Prospectus...........40
SECTION 3.11 Brokers......................................................41
SECTION 3.12 Ownership of Acquiror; No Prior Activities...................41
SECTION 3.13 Ownership Interest in the Company............................41
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER.......................41
SECTION 4.01 Conduct of Business by the Company Pending the Merger........41
SECTION 4.02 No Solicitation..............................................44
SECTION 4.03 Conduct of Business by Guarantor Pending the Merger..........47
ARTICLE V ADDITIONAL AGREEMENTS........................................47
SECTION 5.01 Stockholder Approval; Preparation of
Post-Effective Amendment and Proxy Statement/Prospectus......47
SECTION 5.02 Company Stockholders Meeting.................................49
SECTION 5.03 Access to Information; Confidentiality.......................49
SECTION 5.04 Consents; Approvals..........................................49
SECTION 5.05 Agreements with Respect to Affiliates........................50
SECTION 5.06 Indemnification and Insurance................................50
SECTION 5.07 Notification of Certain Matters..............................52
SECTION 5.08 Further Action/Tax Treatment.................................52
SECTION 5.09 Public Announcements.........................................53
SECTION 5.10 Guarantor Common Shares......................................53
SECTION 5.11 Conveyance Taxes.............................................53
SECTION 5.12 Stock Incentive Plans; Restricted Shares;
Other Programs...............................................53
SECTION 5.13 Certain Employee Benefits....................................54
SECTION 5.14 Reports of Tenders...........................................56
SECTION 5.15 Accountant's Letters.........................................56
SECTION 5.16 Compliance with State Property Transfer Statutes.............56
SECTION 5.17 Redemption of Company Preferred Stock........................56
SECTION 5.18 Prepayment of Company Indebtedness...........................56
ARTICLE VI CONDITIONS TO THE MERGER.....................................57
SECTION 6.01 Conditions to Obligation of
Each Party to Effect the Merger..............................57
ARTICLE VII TERMINATION..................................................58
SECTION 7.01 Termination..................................................58
SECTION 7.02 Effect of Termination........................................60
SECTION 7.03 Fees and Expenses............................................60
ARTICLE VIII GENERAL PROVISIONS...........................................62
SECTION 8.01 Effectiveness of Representations,
Warranties and Agreements....................................62
SECTION 8.02 Notices......................................................63
SECTION 8.03 Certain Definitions..........................................64
SECTION 8.04 Amendment....................................................65
SECTION 8.05 Waiver.......................................................65
SECTION 8.06 Headings.....................................................66
SECTION 8.07 Severability.................................................66
SECTION 8.08 Entire Agreement.............................................66
SECTION 8.09 Assignment...................................................66
SECTION 8.10 Parties in Interest..........................................66
SECTION 8.11 Failure or Indulgence Not Waiver;
Remedies Cumulative..........................................66
SECTION 8.12 Governing Law; Jurisdiction..................................67
SECTION 8.13 Counterparts.................................................67
SECTION 8.14 WAIVER OF JURY TRIAL.........................................67
SECTION 8.15 Performance of Guarantee.....................................67
SECTION 8.16 Enforcement..................................................67
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 3, 2001 (this
"Agreement"), by and between TYCO ACQUISITION CORP. XXIV (NV) ("Acquiror"), a
Nevada corporation and a direct, wholly-owned subsidiary of TYCO INTERNATIONAL
LTD. ("Guarantor"), a Bermuda company, and SENSORMATIC ELECTRONICS CORPORATION,
a Delaware corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of Acquiror and
the Company and the Executive Committee of the Guarantor's Board of Directors
have approved this Agreement, and declared that it is advisable that Acquiror
acquire all of the outstanding shares of common stock, par value $0.01 per share
(the "Company Common Stock"), of the Company (the "Shares") through (i) an
exchange offer (the "Offer") to exchange common shares, par value $0.20 per
share, of Guarantor ("Guarantor Common Shares") for all of the then issued and
outstanding Shares and (ii) a merger of the Company with and into Acquiror (the
"Merger"), each pursuant to and upon the terms and subject to the conditions of
this Agreement and in accordance with the applicable provisions of the Nevada
General Corporation Law (the "NGCL") and the Delaware General Corporation Law
(the "DGCL");
WHEREAS, Acquiror and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations thereunder, and that the
Offer and the Merger (together, the "Transaction") and other transactions
contemplated by this Agreement be undertaken pursuant to such plan. For
accounting purposes, the Merger is intended to be accounted for as a "purchase"
under United States generally accepted accounting principles ("GAAP");
WHEREAS, concurrently with the execution of this Agreement,
and as a condition and inducement to the Company's willingness to enter into
this Agreement, Guarantor has agreed fully and unconditionally to guarantee all
the representations, warranties, covenants, agreements and other obligations of
Acquiror in this Agreement (the "Guarantee"); and
WHEREAS, the Company and Acquiror desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, and
intending to be legally bound hereby the parties hereto agree as follows:
Definitions:
"Acquiror" is defined in the preamble.
"Acquiror Common Stock" is defined in Section 1.09(d).
"Acquisition Proposal" is defined in Section 4.02(a).
"Adjusted Option" is defined in Section 5.12(a).
"Affiliate Agreement" is defined in Section 5.05.
"Affiliate Plan" is defined in Section 2.11(a).
"affiliates" is defined in Section 8.03(a).
"Agreement" is defined in the preamble.
"Alternative Transaction" is defined in Section 4.02(a).
"Appointment Time" is defined in Section 1.03(a).
"Articles of Merger" is defined in Section 1.05.
"Average Share Price" is defined in Section 1.01(a).
"Basic Conditions" is defined in Annex I.
"Benefits Continuation Period" is defined in Section 5.13(a).
"business day" is defined in Section 8.03(b).
"CERCLA" is defined in Section 2.17(f).
"Certificates" is defined in Section 1.10(c).
"Certificate of Merger" is defined in Section 1.05.
"CGSH" is defined in Section 1.01(e).
"Closing" is defined in Section 1.05.
"Closing Date" is defined in Section 1.05.
"COBRA" is defined in Section 2.11(b).
"Code" is defined in the recitals.
"Company" is defined in the preamble.
"Company Affiliate Letter" is defined in Section 5.05.
"Company Charter Documents" is defined in Section 2.02.
"Company Common Stock" is defined in the recitals.
"Company Disclosure Schedule" is defined in Section 2.01(a).
"Company Employee" is defined in Section 5.13(a).
"Company Employee Plans" is defined in Section 2.11(a).
"Company Financial Advisor" is defined in Section 1.02(a).
"Company Intellectual Property Assets" is defined in Section 2.19(a).
"Company Permits" is defined in Section 2.06(b).
"Company Preferred Stock" is defined in Section 2.03(a).
"Company Restricted Shares" is defined in Section 1.09(c).
"Company SEC Documents" is defined in Section 2.03(b).
"Company Significant Subsidiaries" is defined in Section 2.01(a).
"Company Stock Option Plans" is defined in Section 1.09(c).
"Company Stock Options" is defined in Section 1.09(c).
"Company Stock Purchase Plans" is defined in Section 1.09(c).
"Company Stockholders Meeting" is defined in Section 2.04(c).
"Company 2000 Form 10-K" is defined in Section 2.01(a).
"Confidentiality Agreement" is defined in Section 5.03.
"Continuing Director" is defined in Section 1.03(a).
"control" is defined in Section 8.03(c).
"Covered Persons" is defined in Section 5.06(c).
"D&O Insurance" is defined in Section 5.06(d).
"Daily Per Share Price" is defined in Section 1.01(a).
"Daily Report" is defined in Section 5.14.
"Designated Expiration Date" is defined in Section 1.01(a).
"DGCL" is defined in the recitals.
"DOL" is defined in Section 2.11(a).
"dollars" is defined in Section 8.03(d).
"Effective Time" is defined in Section 1.05.
"8.21% Notes" is defined in Section 5.18.
"Environmental Claim" is defined in Section 2.17(f).
"Environmental, Health and Safety Laws" is defined in Section 2.05(c).
"Environmental Laws" is defined in Section 2.17(f).
"ERISA" is defined in Section 2.11(a).
"Exchange Act" is defined in Section 1.01(a).
"Exchange Agent" is defined in Section 1.10(a).
"Exchange Fund" is defined in Section 1.10(b).
"Exchange Ratio" is defined in Section 1.01(a).
"Expenses" is defined in Section 7.03(b).
"Fee" is defined in Section 7.03(b).
"Fully Diluted Shares" is defined in Section 1.01(b).
"GAAP" is defined in the recitals.
"Governmental Authority" is defined in Section 2.05(c).
"Guarantee" is defined in the recitals.
"Guarantor" is defined in the preamble.
"Guarantor Charter Documents" is defined in Section 3.01(a).
"Guarantor Common Shares" is defined in the recitals.
"Guarantor Preference Shares" is defined in Section 3.02(a).
"Guarantor SEC Documents" is defined in Section 3.05(a).
"Guarantor 2000 Form 10-K" is defined in Section 3.01(b).
"HSR Act" is defined in Section 2.05(c).
"Indemnified Parties" is defined in Section 5.06(b).
"Intellectual Property Assets" is defined in Section 2.19(a).
"IRS" is defined in Section 2.11(b).
"ISO" is defined in Section 2.11(c).
"knowledge" is defined in Section 8.03(e).
"Material Adverse Effect" is defined in Section 2.01(b).
"Materials of Environmental Concern" is defined in Section 2.17(f).
"Merger" is defined in the recitals.
"Merger Consideration" is defined in Section 1.09(a).
"Minimum Condition" is defined in Section 1.01(b).
"NGCL" is defined in the recitals.
"Non-Competition Agreement" is defined in Section 2.11(h).
"Non-U.S. Monopoly Laws" is defined in Section 2.05(c).
"Non-U.S. Plan" is defined in Section 2.11(a).
"Notes" is defined in Section 5.18.
"NYSE" is defined in Section 1.01(a).
"Offer" is defined in the recitals.
"Offer Conditions" is defined in Section 1.01(a).
"Offer Documents" is defined in Section 1.01(d).
"OSHA" is defined in Section 2.17(f).
"PCBs" is defined in Section 2.17(d).
"person" is defined in Section 8.03(f).
"person/group" is defined in Annex I.
"Post-Effective Amendment" is defined in Section 5.01(a).
"Post-1998 Company SEC Documents" is defined in Section 2.07(a).
"Post-1998 Guarantor SEC Documents" is defined in Section 3.06(a).
"Preliminary Prospectus" is defined in Section 1.01(d).
"Proxy Statement/Prospectus" is defined in Section 2.13(a).
"RCRA" is defined in Section 2.17(f).
"Recommendations" is defined in Section 1.02(a).
"Registration Statement" is defined in Section 1.01(d).
"Responsible Employees" is defined in Section 8.03(e).
"Rule 145" is defined in Section 5.05.
"Schedule 14D-9" is defined in Section 1.02(b).
"SEC" is defined in Section 1.01(c).
"Securities Act" is defined in Section 1.01(d).
"7.74% Notes" is defined in Section 5.18.
"Shares" is defined in the recitals.
"subsidiary or subsidiaries" is defined in Section 8.03(g).
"Subsidiary Documents" is defined in Section 2.02.
"Superior Proposal" is defined in Section 4.02(a).
"Supplemental Company Disclosure Schedule" is defined in Section
2.05(a).
"Surviving Corporation" is defined in Section 1.04.
"Tax" is defined in Section 2.16(b).
"Tax Return" is defined in Section 2.16(b).
"Terminal Date" is defined in Section 1.01(c).
"Terminating Breach" is defined in Section 7.01(h).
"Terminating Change" is defined in Section 7.01(g).
"Terminating Misrepresentation" is defined in Section 7.01(f).
"Third Party" is defined in Section 4.02(a).
"Third Party Intellectual Property Assets" is defined in Section
2.19(c).
"Transaction" is defined in the recitals.
"Transfer Agent" is defined in Section 1.02(c).
"TSCA" is defined in Section 2.17(f).
"2001 Company Balance Sheet" is defined in Section 2.09.
"2001 Guarantor Balance Sheet" is defined in Section 3.08.
ARTICLE I
EXCHANGE OFFER AND MERGER
SECTION 1.01 The Offer. (a) Provided that (i) this Agreement shall not
have been terminated in accordance with Section 7.01 and (ii) none of the events
set forth in clauses (6) (a) through (k) in Annex I hereto shall have occurred
and be continuing, Acquiror shall, as soon as practicable after the date hereof,
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended, and the SEC's rules and regulations promulgated thereunder
(the "Exchange Act")) the Offer. Each Share accepted by Acquiror pursuant to the
Offer shall be exchanged for the right to receive from Acquiror that number of
fully paid and nonassessable Guarantor Common Shares equal to the Exchange
Ratio. The obligation of Acquiror to consummate the Offer and to accept for
payment and to pay for any Shares tendered pursuant thereto shall be subject to
only those conditions set forth in Annex I hereto (the "Offer Conditions"), any
of which (other than the Basic Conditions) may be waived by Acquiror in its sole
discretion.
For purposes of this Agreement:
"Average Share Price" means the average of the Daily Per Share Prices
for the five consecutive trading days ending on the fourth trading day prior to
and not including the initial Designated Expiration Date as set forth initially
in the Offer (without giving effect to any extensions).
"Daily Per Share Price" for any trading day means the volume-weighted
average of the per share selling prices on the NYSE of Guarantor Common Shares
for that day, as reported by Bloomberg Financial Markets (or if such service is
unavailable, a service providing similar information selected by Acquiror and
the Company).
"Designated Expiration Date" means the date designated for the
expiration of the Offer, after which Acquiror will first accept Shares for
exchange, as such expiration date may be extended from time to time as required
or permitted by this Agreement.
"Exchange Ratio" means $24.00 divided by the Average Share Price,
subject to adjustment as provided in Sections 1.09(e) and 7.01(j).
"NYSE" means the New York Stock Exchange.
(b) The initial Designated Expiration Date shall be the twentieth
(20th) business day from and including the date of commencement of the Offer
(determined in accordance with Rule 14d-2(a) under the Exchange Act). The Offer
shall be subject to the condition that there shall be validly tendered in
accordance with the terms of the Offer prior to the Designated Expiration Date
and not properly withdrawn a number of Shares which, together with the Shares
then owned by Guarantor and Acquiror (if any), represents at least a majority of
the total number of outstanding Shares, assuming the exercise of all options,
rights and convertible securities then currently exercisable or convertible or
exercisable within 180 days thereafter and the issuance of all Shares that the
Company is obligated to issue thereunder (such total number of Shares being
hereinafter referred to as the "Fully Diluted Shares") (the "Minimum Condition")
and to the Offer Conditions and to no other conditions. Acquiror expressly
reserves the right to waive the conditions to the Offer and to make any change
in the terms or conditions of the Offer; provided that, without the prior
written consent of the Company, Acquiror shall not (i) decrease the number of
Shares sought pursuant to the Offer, (ii) change the form or decrease the amount
of consideration to be paid in the Offer, (iii) impose conditions to the Offer
in addition to the Offer Conditions, (iv) change or waive the Basic Conditions,
(v) change the Offer Conditions, (vi) extend the Offer (except as set forth in
the following paragraph), or (vii) make any other change to any of the terms of
and conditions to the Offer which is adverse to the holders of Shares.
(c) Subject to the terms of this Agreement and the satisfaction (or
waiver to the extent permitted by this Agreement) of the Offer Conditions,
Acquiror shall accept for exchange all Shares validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after the scheduled Designated
Expiration Date and shall exchange for Guarantor Common Shares all such Shares
in accordance with the terms of this Agreement promptly after acceptance;
provided that Acquiror shall (x) extend the Offer for successive extension
periods not in excess of ten (10) business days per extension but in no event
ending later than seven (7) months from the date hereof (the "Terminal Date"),
if, at the scheduled Designated Expiration Date, any of the Offer Conditions
shall not have been satisfied or waived, until such time as such conditions are
satisfied or waived, and (y) extend the Offer, but in no event later than the
Terminal Date, if and to the extent required by the applicable rules and
regulations of the Securities and Exchange Commission ("SEC"). In addition,
Acquiror may extend the Offer after the acceptance of Shares thereunder for a
further period of time by means of a subsequent offering period under Rule
14d-11 promulgated under the Exchange Act, of not more than twenty (20) business
days to meet the objective (which is not a condition to the Offer) that there be
validly tendered, in accordance with the terms of the Offer, prior to the
expiration date of the Offer (as so extended) and not withdrawn a number of
Shares which, together with Shares then owned by Guarantor and Acquiror,
represents at least 90% of the Fully Diluted Shares or otherwise in a manner
consistent with this Agreement. In addition, the consideration to be paid
pursuant to the Offer may be increased and the Offer may be extended to the
extent required by law in connection with such increase in each case without the
consent of the Company.
(d) As soon as practicable after the date of this Agreement, Acquiror
shall cause Guarantor to prepare and file with the SEC under the Securities Act
of 1933, as amended, and the SEC's rules and regulations promulgated thereunder
(the "Securities Act") a registration statement on Form S-4 to register the
offer and sale of Guarantor Common Shares pursuant to the Offer and the Merger
(the "Registration Statement"). The Registration Statement will include a
preliminary prospectus containing the information required under Rule 14d-4(b)
promulgated under the Exchange Act (the "Preliminary Prospectus"). As soon as
practicable but not later than the date of commencement of the Offer, Acquiror
shall (i) file, and cause Guarantor to file, with the SEC a Tender Offer
Statement on Schedule TO with respect to the Offer which will comply in all
material respects with the provisions of, and satisfy in all material respect
the requirements of, such Schedule TO and all applicable federal securities
laws, and will contain or incorporate by reference all or part of the
Preliminary Prospectus and the form of the related letter of transmittal
(together with any supplements or amendments thereto, collectively the "Offer
Documents") and (ii) cause the Offer Documents to be disseminated to holders of
Shares. Acquiror and the Company each agree promptly to correct any information
provided by it for use in the Registration Statement or the Offer Documents if
and to the extent that it shall have become false or misleading in any material
respect. Acquiror agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Acquiror shall cause Guarantor to use all reasonable
efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after its filing and to maintain such
effectiveness for so long as shall be required for the issuance of Guarantor
Common Shares pursuant to the Offer. Following the time the Registration
Statement is declared effective, Acquiror shall cause Guarantor to file the
final prospectus included therein under Rule 424(b) promulgated pursuant to the
Securities Act. Acquiror agrees to provide the Company with, and to consult with
the Company regarding, any comments that may be received from the SEC or its
staff with respect to the Offer Documents promptly after receipt thereof.
(e) Acquiror shall cause Guarantor to include as an exhibit to the
Registration Statement tax opinions of PricewaterhouseCoopers LLP and Cleary,
Gottlieb, Xxxxx & Xxxxxxxx ("CGSH"), in form and substance reasonably
satisfactory to Acquiror and to the Company, on the basis of customary facts,
representations, warranties and covenants of Guarantor, Acquiror and the Company
and assumptions set forth in such opinions (including, without limitation
assumptions that (i) the Minimum Condition will be satisfied and (ii) the Merger
shall be completed promptly following the Offer), to the effect that the
Transaction will be treated for United States federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code that is not
subject to Section 367(a)(1) of the Code pursuant to Treasury Regulation Section
1.367(a)-3(c) (other than with respect to Company stockholders who are or will
be "five-percent transferee shareholders" within the meaning of Treasury
Regulation Section 1.367(a)-3(c)(5)(ii) and do not enter into five-year gain
recognition agreements in the form provided in Treasury Regulation Section
1.367(a)-8), and that each of Guarantor, Acquiror and the Company will be a
party to the reorganization within the meaning of Section 368(b) of the Code.
No filing of, or amendment or supplement to, or correspondence to the
SEC or its staff with respect to, the Registration Statement, the Schedule TO or
the Offer Documents will be made by the Company, Acquiror or the Guarantor,
without providing the other party and its counsel a reasonable opportunity to
review and comment thereon.
Acquiror will advise the Company promptly after Guarantor receives
notice that the Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the suspension
of the qualification of the Guarantor Common Shares issuable in connection with
the Offer for offering or sale in any jurisdiction, or of any request by the SEC
for amendment of the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information. If at any time prior
to the time of consummation of the Offer any information relating to the Company
or Acquiror, or any of their respective affiliates, officers or directors,
should be discovered by the Company or Acquiror which should be set forth in an
amendment or supplement to the Registration Statement so that any of such
documents would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company.
Acquiror shall cause Guarantor to issue and make available in
accordance with this Agreement a number of Guarantor Common Shares as necessary
from time to time to satisfy Acquiror's obligations under Sections 1.01(a) and
1.09(a).
SECTION 1.02 Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held, has by unanimous vote of the directors participating therein (i)
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are advisable and are fair to and in the
best interest of the Company's stockholders, (ii) approved and adopted this
Agreement and the transactions and other matters contemplated hereby, including
the Offer and the Merger, in accordance with the requirements of the DGCL, and
(iii) resolved to recommend acceptance of the Offer and approval and adoption of
this Agreement and the Merger by the Company's stockholders subject to Section
4.02(c)(ii) (the recommendations referred to in this clause (iii) are
collectively referred to in this Agreement as the "Recommendations"). The
Company further represents that Xxxxxx Xxxxxxx & Co. Incorporated (the "Company
Financial Advisor") has rendered to the Company's Board of Directors its opinion
that, as of the date of such opinion, the consideration to be received by the
Company's stockholders in the Transaction is fair to such stockholders from a
financial point of view. The Company has been advised that all of its directors
and executive officers currently intend to tender their Shares pursuant to the
Offer.
(b) As soon as practicable on the day that the Offer is commenced, the
Company will file with the SEC and disseminate to holders of Shares a
Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which shall reflect the Recommendations; provided that they have not been
withdrawn or modified as permitted hereby. The Company shall comply in all
material respects with the provisions of, and satisfy in all material respects
the requirements of, such Schedule 14D-9 and all applicable federal securities
laws. The Company and Acquiror each agree promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect. The Company agrees to
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 Shares, in each case as and to
the extent required by applicable federal securities laws. Acquiror and its
counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 and any material amendments thereto prior to it being filed with
the SEC. The Company agrees to provide Acquiror with, and to consult with
Acquiror regarding, any comments that may be received from the SEC or its staff
with respect to the Schedule 14D-9 promptly after receipt thereof. Acquiror
shall provide the Company all information reasonably requested by the Company
for inclusion in the Schedule 14D-9 and any exhibits or annexes thereto.
(c) The Company will promptly direct its transfer agent (the "Transfer
Agent") to furnish Acquiror subject to the terms of the Confidentiality
Agreement (as defined in Section 5.03), with mailing labels and any available
listing or computer file containing the names and addresses of all record
holders of Shares and lists of securities positions of Shares held in stock
depositories, in each case as of the most recent practicable date, and shall
direct the Transfer Agent to provide to Acquiror such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Acquiror may
reasonably request in connection with the Offer. Acquiror shall use such
information only in connection with the transactions contemplated by this
Agreement.
(d) As promptly as practicable after the initial acceptance of Shares
by Acquiror, but no later than one (1) business day after such initial
acceptance of Shares, the Company shall publicly announce and mail a notice of
redemption of all outstanding shares of the Company Preferred Stock in
accordance with the applicable provisions of the Company's Certificate of
Designations in respect thereof, which announcement and notice shall provide for
such redemption on the thirtieth (30th) day following the date of such
announcement and notice.
SECTION 1.03 Directors. (a) Effective upon the acceptance for exchange
by Acquiror of Shares pursuant to the Offer (the "Appointment Time"), Acquiror
shall be entitled to designate the number of directors, rounded up to the next
whole number, on the Company's Board of Directors that equals the product of (i)
the total number of directors on the Company's Board of Directors (giving effect
to the election of any additional directors pursuant to this Section 1.03) and
(ii) the percentage that the number of Shares owned by Guarantor and Acquiror
(including Shares accepted for exchange) bears to the total number of Shares
outstanding, and the Company shall take all action reasonably necessary to cause
Acquiror's designees to be elected or appointed to the Company's Board of
Directors, including, without limitation, increasing the number of directors, or
seeking and accepting resignations of incumbent directors, or both; provided
that, prior to the Effective Time, the Company's Board of Directors shall always
have at least two members who were directors of the Company prior to
consummation of the Offer (each, a "Continuing Director"). If the number of
Continuing Directors is reduced to less than two for any reason prior to the
Effective Time, the remaining and departing Continuing Directors shall be
entitled to designate a person to fill the vacancy and, thereafter, such person
shall be a Continuing Director. Notwithstanding anything in this Agreement to
the contrary, if Acquiror's designees are elected to the Company's Board of
Directors prior to the Effective Time, the affirmative vote of the Continuing
Directors shall be required for the Company to (a) amend or terminate this
Agreement or agree or consent to any amendment or termination of this Agreement,
(b) waive any of the Company's or its stockholders' rights, benefits or remedies
hereunder, (c) extend the time for performance of Acquiror's obligations
hereunder, or (d) approve any other action by the Company which is reasonably
likely to adversely affect the interests of the stockholders of the Company
(other than Acquiror and its affiliates) with respect to the transactions
contemplated by this Agreement. The Continuing Directors shall have the sole
authority to assert and seek to enforce any and all rights and remedies of the
Company and to take any action to seek to enforce any obligations of Acquiror
under this Agreement and Acquiror's designees shall abstain and not act upon any
such action.
If at any time the Continuing Directors reasonably deem it necessary to
consult independent counsel (which may be CGSH) in connection with their duties
as Continuing Directors or actions to be taken by the Company, the Continuing
Directors may retain counsel for such purpose and for the purpose of enforcing
the Company's rights and remedies under this Agreement, and the Company shall
pay the reasonable fees and expenses of one such counsel incurred in connection
therewith.
(b) The Company's obligations to appoint designees to its Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-l
promulgated thereunder. The Company shall promptly take all actions required
pursuant to this Section 1.03 and Rule 14f-l in order to fulfill its obligations
under this Section 1.03 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-l to fulfill its obligations under this Section 1.03.
Acquiror will supply to the Company in writing and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
SECTION 1.04 The Merger. Upon the terms and subject to the conditions
of this Agreement and the applicable provisions of the DGCL and the NGCL, at the
Effective Time, the Company shall be merged with and into Acquiror, the separate
corporate existence of the Company shall cease, and Acquiror shall continue as
the surviving corporation of the Merger (the "Surviving Corporation").
SECTION 1.05 Effective Time; Closing. Subject to the provisions of
this Agreement, the parties hereto shall cause the Merger to be consummated by
(a) filing articles of merger as contemplated by the NGCL (the "Articles of
Merger") and (b) filing a properly executed agreement or certificate of merger
as contemplated by the DGCL (the "Certificate of Merger"), each, together with
any required related certificates, with the Secretaries of State of the States
of Nevada and Delaware, as appropriate, in such forms as required by, and
executed in accordance with the relevant provisions of, the NGCL and the DGCL,
respectively. The Merger shall become effective at the time of the later to
occur of such filings or at such later time, as may be agreed upon in writing by
the Company and Acquiror, specified in the Articles of Merger and the
Certificate of Merger (the "Effective Time") as soon as practicable on or after
the Closing Date. The closing of the Merger (the "Closing") shall take place at
the offices of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, 919 Third Avenue, New York,
New York, at a time and date to be specified by the parties, which shall be no
later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "Closing Date").
SECTION 1.06 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and the applicable provisions
of the NGCL and the DGCL. Without limiting the generality of the foregoing, at
the Effective Time, the Surviving Corporation shall possess all the property,
rights, privileges, powers and franchises of Acquiror and the Company, and shall
be subject to all debts, liabilities and duties of Acquiror and the Company.
SECTION 1.07 Articles of Incorporation; Bylaws. (a) At the
Effective Time, the Articles of Incorporation of Acquiror, which shall comply
with Section 5.06, as in effect immediately prior to the Effective Time, shall
be the Articles of Incorporation of the Surviving Corporation until thereafter
amended, as provided by the NGCL and such Articles of Incorporation, except that
the name of the Surviving Corporation shall be changed to "Sensormatic
Electronics Corporation".
(b) At the Effective Time, the Bylaws of Acquiror, which shall comply
with Section 5.06, as in effect immediately prior to the Effective Time, shall
be the Bylaws of the Surviving Corporation until thereafter amended, as provided
by the NGCL and such Bylaws.
SECTION 1.08 Directors and Officers. The directors of Acquiror
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.09 Effect on Capital Stock. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Acquiror, the Company or the holders of any of the
following securities:
(a) Conversion of the Company Common Stock. Each share of the Company
Common Stock issued and outstanding immediately prior to the Effective Time,
other than any shares of the Company Common Stock to be canceled pursuant to
Section 1.09(b) and other than shares as to which appraisal rights are exercised
pursuant to Section 1.14, will be canceled and extinguished and automatically
converted (subject to Section 1.09(e)) into the right to receive the number of
Guarantor Common Shares equal to the Exchange Ratio upon surrender of the
certificate representing such share of the Company Common Stock in the manner
provided in Section 1.10 (together with the cash in lieu of fractional Guarantor
Common Shares as specified below, the "Merger Consideration"). No fraction of a
Guarantor Common Share will be issued by virtue of the Merger, but in lieu
thereof, a cash payment shall be made pursuant to Section 1.10(e).
(b) Cancellation of the Company-Owned and Acquiror-Owned Stock. Each
share of the Company Common Stock held by the Company or any subsidiary of the
Company or owned by Guarantor or Acquiror immediately prior to the Effective
Time shall be canceled and extinguished without any conversion thereof.
(c) Stock Incentive Plans; Stock Purchase Plans. At the Effective Time,
(i) all options or rights ("Company Stock Options") to purchase Company Common
Stock then outstanding, whether under (A) the Company's Amended 1989 Stock
Incentive Plan, (B) the Company's 1995 Stock Incentive Plan, (C) the Company's
Directors Stock Option Plan, as amended, (D) the Company's 1999 Stock Incentive
Plan, (E) the Company's 1997 Consultants Stock Incentive Plan or (F) any other
stock option or stock plan or agreement of the Company (collectively, the
"Company Stock Option Plans"), (ii) all restricted shares of Company Common
Stock granted or awarded under any of the Company Stock Option Plans (the
"Company Restricted Shares") that are outstanding and (iii) all rights
outstanding under any of the Company's U.S. or non-U.S. stock purchase plans
(collectively, the "Company Stock Purchase Plans"), shall be treated in
accordance with Section 5.12 of this Agreement.
(d) Capital Stock of Acquiror. Each share of common stock, par value
$0.01 per share, of Acquiror (the "Acquiror Common Stock") issued and
outstanding immediately prior to the Effective Time shall constitute one validly
issued, fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation. Following the Effective Time, each
certificate evidencing ownership of shares of Acquiror Common Stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. If, during the period between the
date of this Agreement and the Effective Time, any change in the outstanding
shares of capital stock of Guarantor or the Company shall occur, including by
reason of any reclassification, recapitalization, redenomination of share
capital, stock split, reverse stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period, the Daily Per Share Price, the Average Share Price, the Exchange
Ratio, the Merger Consideration and any other amounts payable or to be delivered
pursuant to the Offer, the Merger or otherwise pursuant to this Agreement
(including without limitation, for purposes of Section 7.01(j)) shall be
appropriately adjusted.
SECTION 1.10 Exchange of Certificates. (a) Exchange Agent. Acquiror
shall select a bank or trust company reasonably acceptable to the Company to act
as the exchange agent (the "Exchange Agent") in the Merger.
(b) Exchange Fund. As necessary from to time following the Effective
Time, Acquiror shall make available to the Exchange Agent, as needed for
exchange in accordance with this Article I, (i) the Guarantor Common Shares
required for exchange of Shares in the Merger and (ii) an amount of cash
sufficient to permit the Exchange Agent to make the necessary payments of cash
in lieu of fractional Guarantor Common Shares in accordance with Section 1.10(e)
(such cash in lieu of fractional shares and Guarantor Common Shares, together
with any dividends or distributions with respect thereto, are hereinafter
referred to as the "Exchange Fund") payable pursuant to Section 1.09 in exchange
for outstanding shares of the Company Common Stock.
(c) Exchange Procedures. Promptly after the Effective Time, Acquiror
shall instruct the Exchange Agent to mail to each holder of record, as of the
Effective Time, of a certificate or certificates ("Certificates") which
immediately prior to the Effective Time represented outstanding shares of the
Company Common Stock whose shares were converted into the right to receive
Guarantor Common Shares pursuant to Section 1.09, (i) a letter of transmittal in
customary form (that shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall contain such other customary
provisions as Acquiror may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for Guarantor Common
Shares and cash in lieu of fractional shares. Upon surrender of Certificates for
cancellation to the Exchange Agent together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the holders of such Certificates shall be entitled to receive in exchange
therefor solely that number of whole Guarantor Common Shares into which their
shares of the Company Common Stock were converted at the Effective Time pursuant
to Section 1.09 (which may be delivered in uncertificated form pursuant to
Guarantor's direct registration system), cash in lieu of fractional shares that
such holders have the right to receive pursuant to Section 1.10(e) and any
dividends or distributions payable pursuant to Section 1.10(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, to evidence only the right to receive the whole number
of Guarantor Common Shares into which such shares of the Company Common Stock
shall have been so converted and the right to receive an amount in cash in lieu
of any fractional shares in accordance with Section 1.10(e) and any dividends or
distributions payable pursuant to Section 1.10(d). No interest will be paid or
accrued on any cash in lieu of fractional Guarantor Common Shares or on any
unpaid dividends or distributions payable to holders of Certificates. In the
event of a transfer of ownership of shares of the Company Common Stock that is
not registered in the transfer records of the Company, the proper whole number
of Guarantor Common Shares (which may be delivered in uncertificated form
pursuant to Guarantor's direct registration system) may be issued to a
transferee if the Certificate representing such shares of the Company Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid.
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made with respect to Guarantor Common Shares
with a record date after the Effective Time will be paid to the holders of any
unsurrendered Certificates with respect to the Guarantor Common Shares
represented thereby until the holders of record of such Certificates shall
surrender such Certificates in accordance with Section 1.10(c). Subject to
applicable law, following surrender of any such Certificates, the Exchange Agent
shall deliver that whole number of Guarantor Common Shares issued in exchange
therefor (which may be delivered in uncertificated form pursuant to Guarantor's
direct registration system), without interest, at the time of such surrender,
cash in lieu of fractional Guarantor Common Shares pursuant to Section 1.10(e),
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole Guarantor Common
Shares and, at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date occurring after surrender with respect to such whole
Guarantor Common Shares.
(e) Fractional Shares. No certificate or scrip representing fractional
Guarantor Common Shares will be issued in the Offer or the Merger upon the
surrender for exchange of Certificates, and such fractional Guarantor Common
Shares will not entitle the owner thereof to vote or to any rights of a holder
of Guarantor Common Shares. In lieu of any such fractional Guarantor Common
Shares, each holder of Certificates who would otherwise have been entitled to a
fraction of a Guarantor Common Share in exchange for such Certificate (after
taking into account all Certificates delivered by such holder) pursuant to this
Section shall receive from the Exchange Agent, as applicable, a cash payment in
lieu of such fractional Guarantor Common Share, determined by multiplying (A)
the fractional share interest to which such holder would otherwise be entitled
by (B) the Average Share Price.
(f) Required Withholding. The Exchange Agent shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable
pursuant to this Agreement, and from any dividends or distributions payable
pursuant to Section 1.10(d), to any holder or former holder of the Company
Common Stock such amounts as may be required to be deducted or withheld
therefrom under the Code or under any provision of state, local or foreign tax
law or under any other applicable law. To the extent such amounts are so
deducted or withheld, such amounts shall be treated for all purposes under this
Agreement as having been paid to the person to whom such amounts would otherwise
have been paid.
(g) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, solely that whole
number of Guarantor Common Shares into which the shares of the Company Common
Stock represented by such Certificates were converted pursuant to Section 1.09
(which may be issued in uncertificated form pursuant to Guarantor's direct
registration system), cash in lieu of fractional Guarantor Common Shares, if
any, as may be required pursuant to Section 1.10(e) and any dividends or
distributions payable pursuant to Section 1.10(d); provided, however, that
Acquiror may, in its discretion and as a condition precedent to the delivery of
any Guarantor Common Shares, cash and other distributions, require the owner of
such lost, stolen or destroyed Certificates to deliver a bond in such sum as it
may reasonably direct as indemnity against any claim that may be made against
Guarantor, Acquiror, the Surviving Corporation or the Exchange Agent with
respect to the Certificates alleged to have been lost, stolen or destroyed.
(h) No Liability. Notwithstanding anything to the contrary in this
Section 1.10, neither the Exchange Agent, Guarantor, Acquiror, the Surviving
Corporation nor their respective affiliates shall be liable to a holder of
Guarantor Common Shares or Company Common Stock for any amount properly paid to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(i) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Company Common Stock for six
months after the Effective Time shall be delivered to Acquiror, upon demand, and
any holders of Company Common Stock who have not theretofore complied with the
provisions of this Section 1.10 shall thereafter look only to Acquiror for the
Guarantor Common Shares, any cash in lieu of fractional Guarantor Common Shares
to which they are entitled pursuant to Section 1.10(e) and any dividends or
other distributions with respect to Guarantor Common Shares to which they are
entitled pursuant to Section 1.10(d), in each case, without any interest
thereon.
SECTION 1.11 No Further Ownership Rights in the Company Common
Stock. All Guarantor Common Shares issued in accordance with the terms hereof
(including any cash paid in respect thereof pursuant to Section 1.10(d) and (e))
shall be deemed to have been issued in full satisfaction of all rights
pertaining to shares of Company Common Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of shares
of Company Common Stock that were outstanding immediately prior to the Effective
Time. If after the Effective Time Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article I.
SECTION 1.12 Tax Consequences. It is intended by the parties hereto
that the Transaction shall constitute a "reorganization" within the meaning of
Section 368(a) of the Code. The parties hereto adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations.
SECTION 1.13 Taking of Necessary Action; Further Action. If, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of the Company and Acquiror, the officers and
directors of the Company, Acquiror and the Surviving Corporation will take all
such lawful and necessary action in the name of the Company or Acquiror.
SECTION 1.14 Appraisal Rights. Notwithstanding Section 1.09, if
holders of Shares are entitled under the DGCL to appraisal rights with respect
to the Merger, Shares outstanding immediately prior to the Effective Time and
held by a holder who has demanded appraisal for such Shares in accordance with
the DGCL shall not be converted into a right to receive from Acquiror the Merger
Consideration unless such holder fails to perfect or withdraws or otherwise
loses his or her right to appraisal. If after the Effective Time such holder
fails to perfect or withdraws or loses his or her right to appraisal, such
Shares shall be treated as if they had been converted as of the Effective Time
into a right to receive from Acquiror the Merger Consideration. The Company
shall give Acquiror prompt notice of any demands received by the Company for
appraisal of Shares, and Acquiror shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Acquiror, make any payment with
respect to, or settle or offer to settle, any such demands.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror as
follows:
SECTION 2.01 Organization and Qualification; Subsidiaries. (a) Each of
the Company and its subsidiaries is an entity duly organized, validly existing
and (to the extent the concept of good standing exists in the applicable
jurisdiction) in good standing under the laws of the jurisdiction of its
organization and has the requisite corporate or other power and authority
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power or authority would not reasonably be expected to have a Material Adverse
Effect. Each of the Company and its subsidiaries is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not reasonably be expected to have a Material Adverse
Effect. A true and complete list of all of the Company's "significant"
subsidiaries, as defined in Rule 1-02 under Regulation S-X (the "Company
Significant Subsidiaries"), is included as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 2000 (the "Company 2000
Form 10-K"). A list of all subsidiaries of the Company together with the
jurisdiction of organization of each such subsidiary and the percentage of each
such subsidiary's outstanding capital stock owned by the Company or another
subsidiary of the Company is contained in Section 2.01 of the written disclosure
schedule previously delivered by the Company to Acquiror (the "Company
Disclosure Schedule"). Except as set forth in Section 2.01 of the Company
Disclosure Schedule or the Company SEC Documents, neither the Company nor any of
its subsidiaries directly or indirectly owns any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or entity (other than its wholly-owned subsidiaries), (i)
with respect to which interest the Company or a subsidiary has invested (and
currently owns) or is required to invest $5 million or more, or (ii) which is a
publicly-traded entity unless such interest is held for investment by the
Company or its subsidiary and comprises less than five percent of the
outstanding stock of such entity.
(b) "Material Adverse Effect," when used in connection with the Company
or any of its subsidiaries or Guarantor or any of its Subsidiaries, as the case
may be, means any change, effect, development or circumstance that is materially
adverse to the business, assets (including intangible assets), financial
condition or results of operations of the Company and its subsidiaries or
Guarantor and its subsidiaries, as the case may be, in each case taken as a
whole; provided, however, that the following shall be excluded from the
definition of Material Adverse Effect and from any determination as to whether a
Material Adverse Effect has occurred or may occur: changes , effects,
developments or circumstances (i) affecting (A) the security or safety
industries generally, (B) the United States securities markets generally or (C)
economic, regulatory, or political conditions generally or (ii) arising from or
relating to this Agreement, the transactions contemplated hereby or the
announcement hereof or thereof, including, without limitation, any effects on
personnel, customers and suppliers.
SECTION 2.02 Certificate of Incorporation and Bylaws. The Company has
heretofore made available to Acquiror a complete and correct copy of its
Restated Certificate of Incorporation and Bylaws as amended to date (the
"Company Charter Documents"), and will make available to Acquiror, as promptly
as practicable, the certificates of incorporation and bylaws (or equivalent
organizational documents) of each of its subsidiaries (the "Subsidiary
Documents") reasonably requested by Acquiror. All such Company Charter Documents
and Subsidiary Documents are in full force and effect, except in the case of
Subsidiary Documents where the failure to be in force and effect would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries is in violation
of any of the provisions of its Restated Certificate of Incorporation or Bylaws
or equivalent organizational documents, except for violations of the documents
which do not and are not reasonably likely to materially interfere with the
operations of such entity.
SECTION 2.03 Capitalization. (a) The authorized capital stock of the
Company consists of 125,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, of which 690,000 shares have been designated as 6
1/2% Convertible Preferred Stock, par value $0.01 per share, with a liquidation
preference of $250.00 per share (the "Company Preferred Stock"). As of July 31,
2001, (i) 79,406,898 shares of Company Common Stock were issued and outstanding,
all of which are validly issued, fully paid and nonassessable (excluding
treasury shares which are issued but not outstanding, all of which are not
entitled to vote), and none of which has been issued in violation of preemptive
or similar rights, (ii) 1,741,140 shares of Company Common Stock were held by
subsidiaries of the Company, (iii) 8,332,826 shares of Company Common Stock were
reserved for existing grants and 4,448,832 shares of Company Common Stock were
reserved for future grants pursuant to the Company Stock Option Plans and (iv)
128,462 shares of Company Common Stock were reserved and available for future
issuance pursuant to the Company Stock Purchase Plans. As of July 31, 2001,
there were 690,000 outstanding shares of Company Preferred Stock. Except as set
forth in Section 2.03 of the Company Disclosure Schedule, no change in such
capitalization has occurred since July 31, 2001, except for changes resulting
from the exercise or termination of Stock Options which were outstanding and
exercisable as of July 31, 2001 (or were outstanding as of July 31, 2001 and
became exercisable in accordance with their terms thereafter), forfeiture of
restricted stock or transactions permitted by Section 4.01. Except as set forth
in Section 2.01, this Section 2.03 or Section 2.11 or in Section 2.03 or Section
2.11 of the Company Disclosure Schedule or the Company SEC Documents and except
for this Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character binding on the Company relating to
the issued or unissued capital stock of the Company or obligating the Company to
issue or sell any shares of capital stock of, or other equity interests in, the
Company. All shares of Company Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable and will not be issued in violation of preemptive or similar
rights.
(b) Except as set forth in Section 2.03 of the Company Disclosure
Schedule or the reports, schedules, forms, statements, registration statements,
proxy statements and other documents filed by the Company with the SEC since
June 30, 2000 and prior to the date of this Agreement, including those
incorporated by reference and not superseded by other Company SEC Documents (the
"Company SEC Documents"), there are no obligations, contingent or otherwise, of
the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any shares of the Company Common Stock or the capital stock of any
subsidiary. Except as set forth in Section 2.03 of the Company Disclosure
Schedule or the Company SEC Documents, there are no obligations, contingent or
otherwise, of the Company or any of its subsidiaries to provide funds to or make
any investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of obligations of
subsidiaries and intercompany book entry transactions, in either case entered
into in the ordinary course of business. Except as set forth in Sections 2.01 or
2.03 of the Company Disclosure Schedule, (i) all of the outstanding shares of
capital stock (other than directors' qualifying shares) of each of the Company's
subsidiaries are duly authorized, validly issued, fully paid and nonassessable,
and (ii) all such shares (other than directors' qualifying shares and a de
minimis number of shares owned by employees of such subsidiaries) are owned by
the Company or another subsidiary free and clear of all security interests,
liens, claims, pledges, agreements, limitations on the Company's voting rights,
charges or other encumbrances of any nature whatsoever. Except as set forth in
Section 2.01, this Section 2.03 or Section 2.11 or in Section 2.03 or Section
2.11 of the Company Disclosure Schedule or the Company SEC Documents and except
for this Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character binding on the Company's
subsidiaries relating to the issued or unissued capital stock of the Company's
subsidiaries or obligating the Company's subsidiaries to issue or sell any
shares of capital stock of, or other equity interests in, the Company's
subsidiaries.
SECTION 2.04 Authority Relative to this Agreement. (a) The Company
has all necessary corporate power and authority to execute and deliver this
Agreement and, subject to obtaining any necessary stockholder approval of the
agreement of merger contained herein, to perform its obligations hereunder and
to consummate 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 have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the requisite approval by the Company's
stockholders of the agreement of merger contained herein in accordance with DGCL
and the Company Charter Documents and the filings and recording of appropriate
merger documents as required by the DGCL and the NGCL).
(b) Assuming the accuracy of the representations and warranties in
Section 3.13, the provisions of Section 203 of the DGCL and Article Eleventh of
the Company's Restated Certificate of Incorporation will not apply to the Offer
and the Merger.
(c) As of the date hereof, the Board of Directors of the Company has by
a unanimous vote of those directors present (i) determined that it is advisable
and in the best interest of the Company's stockholders for the Company to enter
into this Agreement and to consummate the Merger upon the terms and subject to
the conditions of this Agreement, (ii) approved this Agreement and the
transactions contemplated hereby in accordance with the applicable provisions of
the DGCL and the Company Charter Documents, and (iii) recommended the approval
of this Agreement by holders of the Company Common Stock and directed that this
Agreement be submitted for consideration by the Company's stockholders at a
meeting of the stockholders of the Company to consider the Merger Agreement (the
"Company Stockholders Meeting"). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Guarantor and Acquiror of this Agreement and/or the
Guarantee hereof, as applicable, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the rights and remedies of
creditors generally and to general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
SECTION 2.05 No Conflict; Required Filings and Consents. (a)
Subject to the following sentence, Section 2.05(a) of the Company Disclosure
Schedule includes, as of the date hereof, a list of (i) other than intercompany,
all loan agreements, indentures, mortgages, pledges, conditional sale or title
retention agreements, security agreements, guaranties, standby letters of credit
(to which the Company or any subsidiary is the responsible party), equipment
leases or lease purchase agreements, each in an amount equal to or exceeding $6
million (other than leases outside the United States providing for payments of
not more than $2 million per year) to which the Company or any of its
subsidiaries is a party or by which any of them is bound; (ii) all contracts,
agreements, commitments or other understandings or arrangements to which the
Company or any of its subsidiaries is a party or by which any of them or any of
their respective properties or assets are bound or affected, but excluding
contracts, agreements, commitments or other understandings or arrangements
entered into in the ordinary course of business and involving, in the case of
any such contract, agreement, commitment, or other understanding or arrangement,
individual payments or receipts by the Company or any of its subsidiaries of
less than $4 million over the term of such contract, commitment, agreement, or
other understanding or arrangement; and (iii) all agreements which are required
to be filed as "material contracts" with the SEC pursuant to the requirements of
the Exchange Act but which have not been so filed with the SEC. With regard to
agreements for the purchase or sale of raw materials or inventory or for the
provision of services in the ordinary course of business and licensing or
royalty arrangements, the thresholds referred to in clauses (i) and (ii) of the
preceding sentence shall be measured on an annual basis. Notwithstanding the
foregoing, any agreement, commitment, understanding, arrangement or other
document that would otherwise be disclosed in Section 2.05(a) of the Company
Disclosure Schedule may be disclosed in Section 2.05 of a supplement to the
Company Disclosure Schedule to be delivered to Acquiror not later than thirty
(30) days following the date of this Agreement (the "Supplemental Company
Disclosure Schedule") if the agreement or other document is in an amount, as
determined in accordance with the other provisions of this Section 2.05(a), of
less than $10 million.
(b) Except as set forth in Section 2.05(b) and Sections 2.11(f) and (h)
of the Company Disclosure Schedule, the execution and delivery of this Agreement
by the Company does not, and the performance of this Agreement by the Company
will not, (i) conflict with or violate the Company Charter Documents, (ii)
assuming compliance with the matters referred to in Section 2.05(c), conflict
with or violate the Subsidiary Documents or any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or impair the Company's or
any of its subsidiaries' rights or alter the rights or obligations of any third
party under, or give to others any rights of, or cause any, termination,
amendment, redemption, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on (including a right to purchase) any of the
properties or assets of the Company or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, credit facility, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties is bound or
affected, except, in the case of clause (ii) or (iii), for any such conflicts,
violations, breaches, defaults or other occurrences that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require the
Company or any of its subsidiaries to make or seek any consent, approval,
authorization or permit of, or filing with or notification to, any governmental,
administrative, judicial or regulatory authority, domestic or foreign (each, a
"Governmental Authority"), except (i) for applicable requirements, if any, of
the Securities Act, the Exchange Act, state securities laws, the pre-merger
notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"), and
the NYSE; filings and consents under any applicable non-U.S. laws intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade ("Non-U.S. Monopoly Laws"); filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Offer or the Merger or the transactions contemplated by this
Agreement ("Environmental, Health and Safety Laws"); and the filing and
recordation of appropriate merger or other documents as required by the NGCL and
the DGCL; (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or materially delay consummation of the Offer or the Merger, or
otherwise prevent or materially delay the Company from performing its material
obligations under this Agreement, or would not otherwise reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; or (iii) as
to which any necessary consents, approvals, authorizations, permits, filings or
notifications have heretofore been obtained or filed, as the case may be, by the
Company.
SECTION 2.06 Compliance; Permits. (a) Except as set forth in
Section 2.06(a) of the Company Disclosure Schedule or the Company SEC Documents,
neither the Company nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties is bound or affected, except for any such conflicts,
defaults or violations which would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
(b) No investigation by any Governmental Authority with respect to the
Company or its subsidiaries is pending or, to the knowledge of the Company,
threatened, except as disclosed in the Company SEC Documents and except for such
investigations which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; provided that the Company makes no
representation in this Section 2.06(b) with respect to matters covered by
Sections 2.11, 2.12, 2.16 and 2.17.
(c) Except as set forth in Section 2.06(c)(x) of the Company Disclosure
Schedule or the Company SEC Documents, the Company and its subsidiaries hold all
permits, licenses, easements, variances, exemptions, consents, certificates,
orders and approvals from Governmental Authorities which are material to the
operation of the business of the Company and its subsidiaries, taken as a whole,
as it is now being conducted (collectively, the "Company Permits"), except where
the failure to hold such Company Permits would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. The Company
and its subsidiaries are in compliance with the terms of the Company Permits,
except as described in Section 2.06(c)(y) of the Company Disclosure Schedule and
in the Company SEC Documents or where the failure to so comply would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 2.07 SEC Filings; Financial Statements. (a) The Company has
filed all reports, schedules, forms, statements and other documents (including
all exhibits thereto) required to be filed with the SEC since June 30, 1998 (the
"Post-1998 Company SEC Documents"). Except as set forth in Section 2.07 of the
Company Disclosure Schedule or the Company SEC Documents and taking into account
any amendments and supplements filed prior to the date of this Agreement, such
Post-1998 Company SEC Documents (i) were prepared in all material respects in
accordance with the applicable requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light and at the time of the
circumstances under which they were made, not misleading. None of the Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Post-1998 Company SEC
Documents was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or in the Company SEC Documents), and each fairly presents in all material
respects the consolidated financial position of the Company and its subsidiaries
at the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements (i) should be read in conjunction with the consolidated
financial statements contained in the Company 2000 Form 10-K, and (ii) were or
are subject to normal and recurring year-end adjustments which were not or are
not expected to be material in amount.
SECTION 2.08 Absence of Certain Changes or Events. Except as set
forth in Section 2.08 or 4.01 of the Company Disclosure Schedule or the Company
SEC Documents, and except as result from acts or omissions after the date hereof
permitted under Section 4.01, since June 30, 2000, the Company has conducted its
business in the ordinary course and there has not occurred: (i) any changes,
effects or circumstances constituting, or which would reasonably be expected to
constitute, individually or in the aggregate, a Material Adverse Effect; (ii)
any amendments or changes in the Company Charter Documents; (iii) any material
changes to any Company Employee Plans or other employee benefit arrangements or
agreements, including the establishment of any new such plans, arrangements or
agreements or the extension of coverage under any such plans, arrangements or
agreements to new groups of employees or other individuals, except with respect
to Non-U.S. Plans (as defined in Section 2.11(a)), (iv) any damage to,
destruction or loss of any asset of the Company (whether or not covered by
insurance) that would reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect; (v) any material change by the Company in its
accounting methods, principles or practices (other than as required by GAAP
subsequent to the date hereof); or (vi) other than in the ordinary course of
business, any sale of a material amount of assets of the Company.
SECTION 2.09 No Undisclosed Liabilities. Except as set forth in
Section 2.09 of the Company Disclosure Schedule or the Company SEC Documents,
neither the Company nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (a) in the aggregate
adequately provided for or disclosed in the Company's unaudited balance sheet
(including any related notes thereto) as of March 31, 2001 included in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
(the "2001 Company Balance Sheet"), (b) incurred in the ordinary course of
business and not required under GAAP to be reflected on the 2001 Balance Sheet,
(c) incurred since March 31, 2001 in the ordinary course of business, (d)
incurred in connection with this Agreement or the Offer or the Merger or the
other transactions contemplated hereby, or (e) which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.10 Absence of Litigation. Except as set forth in Section
2.10 and Section 2.19(c) of the Company Disclosure Schedule or the Company SEC
Documents or arising out of the transactions contemplated by this Agreement,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of the Company, threatened against the Company or any of its
subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court, arbitrator or Governmental Authority, that would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 2.11 Employee Benefit Plans; Employment Agreements. (a)
"Company Employee Plans" shall mean all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), all "employee welfare benefit plans" (as defined in
Section 3(1) of ERISA), all similar plans maintained outside the United States
and not required by applicable law (any non-U.S., non-statutory Company Employee
Plan, a "Non-U.S. Plan") and all other bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar fringe or employee benefit plans, programs or arrangements (including
those which contain change of control provisions or pending change of control
provisions), and any employment, executive compensation or severance agreements
(including those which contain change of control provisions or pending change of
control provisions), whether maintained in the U.S. or a Non-U.S. Plan, as
amended, modified or supplemented, maintained or contributed to by the Company
or a subsidiary of the Company for the benefit of any former or current
employee, officer or director (or any of their beneficiaries) of the Company or
a subsidiary of the Company. The term "Affiliate Plan" shall mean any other such
plan, program or arrangement with respect to which the Company or any subsidiary
of the Company has or would reasonably be expected to have any material
liability, either as a member of a controlled group of corporations or trades or
businesses, as defined under Section 414 of the Code and comparable provisions
of ERISA, or by contractual arrangement. Section 2.11(a) of the Company
Disclosure Schedule lists each material Company Employee Plan and each material
Affiliate Plan; provided, however, that any Non-U.S. Plan that otherwise would
be disclosed on Section 2.11(a) of the Company Disclosure Schedule may be
disclosed in Section 2.11(a) of the Supplemental Company Disclosure Schedule.
With respect to each plan included on the Company Disclosure Schedule or, with
respect to Non-U.S. Plans, on the Supplemental Company Disclosure Schedule, the
Company shall indicate whether such plan includes a change in control provision.
With respect to each Company Employee Plan or Affiliate Plan listed in Section
2.11(a) of the Company Disclosure Schedule, the Company has made available to
Acquiror, and with respect to each Non-U.S. Plan listed in the Supplemental
Company Disclosure Schedule, the Company will make available to Acquiror at such
time as the Supplemental Company Disclosure Schedule is delivered to Acquiror,
to the extent applicable: (i) each such written Company Employee Plan (and, with
respect to Non-U.S. Plans that provide equity-based benefits, a written
description in English of such Non-U.S. Plan that is written in a language other
than English) and any related trust agreement, insurance and other contract
(including a policy), if any, the most recently prepared summary plan
description, if any, summary of material modifications the substance of which is
not already incorporated in the corresponding summary plan description or
Company Employee Plan document, if any, and written communications distributed
to plan participants that would reasonably be expected to materially modify the
terms of any Company Employee Plan, whether through information actually
conveyed in the communication or a failure to convey information; (ii) the three
most recent annual reports on Form 5500 series (or equivalent filing with
respect to Non-U.S. Plans), with accompanying schedules and attachments, filed
with respect to each Company Employee Plan, whether maintained in the U.S. or a
Non-U.S. Plan, required to make such a filing, provided, however, that other
than the most recent Form 5500 with accompanying schedules and attachments, such
materials may be made available to Acquiror at such time as the Supplemental
Company Disclosure Schedule is delivered to Acquiror; (iii) the most recent
actuarial valuation, if any, for each Company Employee Plan and Affiliate Plan
subject to Title IV of ERISA and for each Non-U.S. Plan, to the extent
applicable; (iv) the latest reports, if any, which have been filed with the
Department of Labor ("DOL") to satisfy the alternative method of compliance for
pension plans for certain selected employees pursuant to DOL regulation Section
2520.104-23; and (v) the most recent favorable determination letters issued for
each Company Employee Plan and related trust which is intended to be qualified
under Section 401(a) of the Code (and, if an application for such determination
is pending, a copy of the application for such determination).
(b) Except as set forth in Section 2.11(b) of the Company Disclosure
Schedule or, with respect to Non-U.S. Plans, the Supplemental Company Disclosure
Schedule, (i) none of the Company Employee Plans or Affiliate Plans promises or
provides material medical or other material welfare benefits to any director,
officer, employee or consultant (or any of their beneficiaries) after their
service with the Company or its subsidiary or affiliate terminates, other than
as required by Section 4980B of the Code or Part 6 of Subtitle B of Title I of
ERISA (hereinafter, "COBRA"), or any similar state or non-U.S. laws; (ii) none
of the Company Employee Plans or Affiliate Plans is a "multiemployer plan" as
such term is defined in Section 3(37) of ERISA and no Non-U.S. Plan is a
multiemployer plan, no Company Employee Plan or Affiliate Plan has incurred any
withdrawal liability that remains unsatisfied and the transactions contemplated
hereby are not reasonably likely to result in the assessment of any withdrawal
liability; (iii) neither the Company, any of its subsidiaries, nor, to the
knowledge of the Company, any other party in interest or disqualified person (as
defined in Section 3(14) of ERISA and Section 4975 of the Code), has engaged in
a transaction with respect to any Company Employee Plan or Affiliate Plan which
would reasonably be expected to subject the Company or any subsidiary, directly
or indirectly, to a tax, penalty or other liability for prohibited transactions
under ERISA or Section 4975 of the Code that would reasonably be expected to
have a Material Adverse Effect; (iv) with respect to the Company Employee Plans,
neither the Company or any of its subsidiaries, nor any executive of the Company
or one of its subsidiaries as fiduciary of the Company Employee Plans or, to the
knowledge of the Company, any other fiduciary of any Company Employee Plan has
breached any of the responsibilities or obligations imposed upon fiduciaries
under Title I of ERISA, except for such breach that would not reasonably be
expected to have a Material Adverse Effect; (v) all Company Employee Plans, and
all Affiliate Plans have been established and maintained in accordance with
their terms and have been operated in compliance with the requirements of
applicable law (including, but not limited to, to the extent applicable, the
notification and other requirements of COBRA, the Health Insurance Portability
and Accountability Act of 1996, the Newborns' and Mothers' Health Protection Act
of 1996, the Mental Health Parity Act of 1996, and the Women's Health and Cancer
Rights Act of 1998) except for such failure as would not reasonably be expected
to have a Material Adverse Effect; (vi) each Company Employee Plan which is
intended to be qualified under Section 401(a) of the Code is the subject of a
favorable determination letter from the Internal Revenue Service (the "IRS"),
and nothing has occurred which would reasonably be expected to result in the
disqualification of any such plan; (vii) all contributions required to be made
with respect to any Company Employee Plan (whether pursuant to the terms of such
plan, Section 412 of the Code, any collective bargaining agreement, or
otherwise) have been made or accrued on the Company's financial statements on or
before their due dates (including any extensions thereof), except to the extent
any failure to have made or accrued such a contribution on or before its due
date could not reasonably be expected to result in a current or future liability
that would reasonably be expected to have a Material Adverse Effect; (viii) no
Company action has occurred that resulted or, pursuant to applicable non-U.S.
law, is reasonably likely to result in any adverse liability for any Non-U.S.
Plan that reasonably would be expected to have a Material Adverse Effect; and
(ix) other than routine claims for benefits made in the ordinary course of the
operation of the Company Employee Plans or Affiliate Plans, there are no
pending, nor to the Company's knowledge, any threatened, claims, investigations
or causes of action with respect to any Company Employee Plan or Affiliate Plan,
whether maintained in the U.S. or a Non-U.S. Plan, whether made by a participant
or beneficiary of such a plan, a governmental agency or otherwise, against the
Company or any subsidiary of the Company, any Company director, officer or
employee, any Company Employee Plan, or Affiliate Plan or any fiduciary of a
Company Employee Plan or Affiliate Plan that would reasonably be expected to
have a Material Adverse Effect.
(c) The Company has provided to Acquiror a true and complete list of
each current or former employee, consultant, officer or director of the Company
or any of its subsidiaries who, as of the date hereof, holds (i) any option to
purchase the Company Common Stock or commitments for future options, together
with the number of shares of the Company Common Stock subject to such option,
the exercise price of such option (to the extent determined as of the date
hereof), whether such option is intended to qualify as an incentive stock option
within the meaning of Section 422(b) of the Code (an "ISO"), and the expiration
date of such option; and (ii) any shares of Company Common Stock that are
unvested or subject to a repurchase option, risk of forfeiture or other
condition providing that such shares may be forfeited or repurchased by the
Company upon any termination of the shareholder's employment, directorship or
other relationship with the Company or any of its subsidiaries or which shares
are subject to performance-based vesting.
(d) To the extent not already included and so labeled in Section
2.11(a) or such other section of the Company Disclosure Schedule as is
specifically referenced in Section 2.11(d) of the Company Disclosure Schedule,
Section 2.11(d) of the Company Disclosure Schedule sets forth a true and
complete (i) list of all material outstanding agreements with any consultants
who provide services to the Company or any of its subsidiaries; (ii) list of all
material agreements with respect to the services of independent contractors or
leased employees who provide services to the Company or any of its subsidiaries,
whether or not they participate in any of the Company Employee Plans; (iii)
description of any situation in which a material portion of the workforce of a
component of the Company or its subsidiaries, whether such component is a
subsidiary, unit, work location, line of business or otherwise, is composed of
non common law employees, whether consultants, independent contractors or
otherwise, which description shall include, if applicable, representative
samples of agreements with such non common law employees; and (iv) list of all
worker council agreements of the Company or any of its subsidiaries with or
relating to its employees, provided, however, that the Company may include the
information required pursuant to this Section 2.11(d) on the Supplemental
Company Disclosure Schedule.
(e) No Company Employee Plan or Affiliate Plan is subject to Title IV
of ERISA.
(f) Except as set forth in Section 2.11(f) of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement,
either alone or in combination with another event, will not (i) result in any
material payment (including, without limitation, severance, golden parachute or
bonus payments or otherwise) becoming due pursuant to any Company Employee Plan
to any current or former director, officer, employee or consultant of the
Company, (ii) result in any material increase in the amount of compensation or
benefits payable pursuant to any Company Employee Plan in respect of any
director, officer, employee or consultant of the Company, or (iii) accelerate
the vesting or timing of payment of any material benefits or compensation
payable pursuant to any Company Employee Plan in respect of any director,
officer, employee or consultant of the Company.
(g) There are no complaints, charges or claims against the Company or
any of its subsidiaries pending or, to the knowledge of the Company, threatened
to be brought by or filed with any Governmental Authority based on, arising out
of, in connection with or otherwise relating to the classification of any
individual by the Company as an independent contractor or "leased employee"
(within the meaning of Section 414(n) of the Code) rather than as an employee,
and no conditions exist under which the Company or any of its subsidiaries is
reasonably likely to incur any such liability that in each case would reasonably
be expected to have a Material Adverse Effect.
(h) The Company has provided or made available to Acquiror (i) with
respect to each participant in the Company's executive severance plans, whether
such employee has entered into an agreement or a provision of an agreement
prohibiting or restricting such employee from accepting employment or otherwise
engaging in activity that is in competition with the business of the Company or
its subsidiaries (other than with respect to the use of confidential information
or trade secrets) after the termination of such individual's employment with the
Company (a "Non-Competition Agreement"); and (ii) a description of those classes
of employees that are required to execute a Non-Competition Agreement, provided,
however, that the Company may include the information required under clauses (i)
and (ii) of this Section 2.11(h) in Section 2.11(h) of the Supplemental Company
Disclosure Schedule.
SECTION 2.12 Employment and Labor Matters. Except as set forth in
Section 2.11(b) or Section 2.12 of the Company Disclosure Schedule, or in the
Company SEC Documents or, in the case of non-U.S. agreements, contracts or
activities referred to in Subsection (b), Section 2.12 of the Supplemental
Company Disclosure Schedule:
(a) Each of the Company and its subsidiaries is in compliance, and has
not failed to be in compliance as a result of which it would reasonably be
expected now or in the future to have liability, with all applicable U.S. and
non-U.S. laws, agreements and contracts relating to employment practices, terms
and conditions of employment, and the employment of former, current, and
prospective employees, independent contractors and "leased employees" (within
the meaning of Section 414(n) of the Code) of the Company or any of its
subsidiaries including all such U.S. and non-U.S. laws, agreements and contracts
relating to wages, hours, collective bargaining, employment discrimination,
immigration, disability, civil rights, human rights, fair labor standards,
occupational safety and health, workers' compensation, pay equity, wrongful
discharge and violation of the potential rights of such former, current, and
prospective employees, independent contractors and leased employees, and has
timely prepared and filed all appropriate forms (including Immigration and
Naturalization Service Form I-9) required by any relevant Governmental
Authority, except where the failure to be or have been in compliance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) Neither the Company nor any of its subsidiaries is a party to any
U.S. or non-U.S. collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or its subsidiaries, nor, to the
knowledge of the Company, are there any activities or proceedings of any labor
union to organize any employees of the Company or any of its subsidiaries.
(c) Neither the Company nor any of its subsidiaries is in breach of any
U.S. or non-U.S. collective bargaining agreement or labor union contract, or has
any knowledge of any strikes, slowdowns, work stoppages, lockouts, or threats
thereof, by or with respect to any employees of the Company or any of its
subsidiaries which breach, strike, slowdown, work stoppage, lockout or threat
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
SECTION 2.13 Registration Statement; Proxy Statement/Prospectus. (a)
Subject to the accuracy of the representations of Acquiror in Section 3.10:
(i) the information supplied by the Company specifically for inclusion
in the Registration Statement pursuant to which the Guarantor Common Shares to
be issued in connection with the Offer and the Merger will be registered with
the SEC shall not, at the respective times the Registration Statement (including
any amendments or supplements thereto) is filed with the SEC or is declared
effective by the SEC, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements included
therein not misleading;
(ii) neither the Schedule 14D-9 nor any of the information supplied by
the Company specifically for inclusion in the Offer Documents will, at the
respective times any such documents or any amendments or supplements thereto are
filed with the SEC, are first published, sent or given to stockholders of the
Company, or at any time Acquiror initially accepts for exchange Shares pursuant
to the Offer, 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 included therein not misleading; and
(iii) the information supplied by the Company specifically for
inclusion in the proxy statement/prospectus in connection with the Company
Stockholders Meeting (such proxy statement/prospectus as amended or supplemented
is referred to herein as the "Proxy Statement/Prospectus") will not, at the time
the Proxy Statement/Prospectus, if any, is filed with the SEC or first sent to
stockholders or at the time of the Company Stockholders Meeting, 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 therein, in
light of the circumstances under which they were made, not misleading.
(b) If at any time prior to the Effective Time any event or
circumstance relating to the Company, any of its affiliates, officers or
directors is discovered by the Company which is required to be set forth in an
amendment to the Registration Statement or a supplement to the Offer Documents,
the Schedule 14D-9 or the Proxy Statement/Prospectus, the Company will promptly
inform Acquiror.
(c) The Schedule 14D-9 shall comply as to form in all material respects
with the requirements of all applicable laws, including the Securities Act and
the Exchange Act.
(d) Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by Guarantor or Acquiror or
any of their respective affiliates which is included or incorporated by
reference in, or furnished in connection with the preparation of, the Offer
Documents, the Schedule 14d-9, the Registration Statement or the Proxy
Statement/Prospectus.
SECTION 2.14 Restrictions on Business Activities. Except for this
Agreement or as set forth in Section 2.14 of the Company Disclosure Schedule or
the Company SEC Documents, to the Company's knowledge, there is no agreement,
judgment, injunction, order or decree binding upon the Company or any of its
subsidiaries which has or would reasonably be expected to have the effect of
prohibiting or impairing the conduct of business by the Company or any of its
subsidiaries as currently conducted by the Company or such subsidiary, or
restricting any transactions (including payment of dividends and distributions)
between the Company and its subsidiaries, except for any prohibition or
impairment as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 2.15 Title to Property. Except as set forth in Sections
2.15 and 2.19(b) of the Company Disclosure Schedule or the Company SEC
Documents, each of the Company and its subsidiaries has good title to all of its
owned real properties and other owned assets, free and clear of all liens,
charges and encumbrances, except liens for taxes not yet due and payable and
such liens or other imperfections of title, if any, as do not materially
interfere with the present use of the property affected thereby or which would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, and except for liens which secure indebtedness reflected in the
2001 Balance Sheet; and, to the knowledge of the Company, all leases pursuant to
which the Company or any of its subsidiaries lease from others material amounts
of real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
the Company, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would constitute
a material default or event of default), except where the lack of such good
standing, validity and effectiveness or the existence of such default or event
of default would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.
SECTION 2.16 Taxes. Except as set forth or referred to in Section 2.16
of the Company Disclosure Schedule or as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect:
(a) The Company and each of its subsidiaries has timely and accurately
filed, or caused to be timely and accurately filed, all Tax Returns required to
be filed by it, and has paid, collected or withheld, or caused to be paid,
collected or withheld, all amounts of Taxes required to be paid, collected or
withheld, other than such Taxes for which adequate reserves in the 2001 Company
Balance Sheet have been established or which are being contested in good faith.
There are no claims or assessments pending against the Company or any of its
subsidiaries for any alleged deficiency in any Tax, there are no pending or, to
the knowledge of the Company, threatened audits or investigations for or
relating to any liability in respect of any Taxes, and the Company has not been
notified in writing of any proposed Tax claims or assessments against the
Company or any of its subsidiaries (other than in each case, claims or
assessments for which adequate reserves in the 2001 Company Balance Sheet have
been established or which are being contested in good faith). Neither the
Company nor any of its subsidiaries has executed any waivers or extensions of
any applicable statute of limitations to assess any amount of Taxes. There are
no outstanding requests by the Company or any of its subsidiaries for any
extension of time within which to file any Tax Return or within which to pay any
amounts of Taxes shown to be due on any Tax Return. To the best knowledge of the
Company, there are no liens for amounts of Taxes on the assets of the Company or
any of its subsidiaries except for statutory liens for current Taxes not yet due
and payable. There are no outstanding powers of attorney enabling any party to
represent the Company or any of its subsidiaries with respect to Taxes. Other
than with respect to the Company and its subsidiaries, neither the Company nor
any of its subsidiaries is liable for Taxes of any other Person, or is currently
under any contractual obligation to indemnify any person with respect to any
amounts of Taxes (except for customary agreements to indemnify lenders or
security holders in respect of Taxes and except for provisions in agreements for
the divestiture of subsidiaries, assets or business lines of the Company or its
subsidiaries that require the Company or its subsidiaries (as applicable) to
indemnify a purchaser or purchaser group for amounts of Taxes of the Company or
its subsidiaries (as applicable) in the nature of sales or similar Taxes
incurred as a consequence of any such divestiture transactions), or is a party
to any tax sharing agreement or any other agreement providing for payments by
the Company or any of its subsidiaries with respect to any amounts of Taxes.
(b) For purposes of this Agreement, the term "Tax" shall mean any
United States federal, national, state, provincial, local or other
jurisdictional income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, estimated, alternative, or add-on minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge imposed by any Governmental Authority,
together with any interest or penalty imposed thereon. The term "Tax Return"
shall mean a report, return or other information (including any attached
schedules or any amendments to such report, return or other information)
required to be supplied to or filed with a Governmental Authority with respect
to any Tax, including an information return, claim for refund, amended return or
declaration or estimated Tax.
SECTION 2.17 Environmental Matters. (a) Except as set forth in
Section 2.17(a) to the Company Disclosure Schedule or in the Company SEC
Documents or as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, the operations and properties of
the Company and its subsidiaries are and at all times have been in compliance
with the Environmental Laws, which compliance includes the possession by the
Company and its subsidiaries of all permits and governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof.
(b) Except as set forth in Section 2.17(b) of the Company Disclosure
Schedule or the Company SEC Documents or as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, there are
no Environmental Claims, including claims based on "arranger liability," pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained or
assumed.
(c) Except as set forth on Section 2.17(c) of the Company Disclosure
Schedule or in the Company SEC Documents, there are no past or present actions,
circumstances, conditions, events or incidents, including the release, emission,
discharge, presence or disposal of any Materials of Environmental Concern, that
are reasonably likely to form the basis of any Environmental Claim against the
Company or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries
have retained or assumed, except for such Environmental Claims that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(d) Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or as set forth in Section 2.17(d)
of the Company Disclosure Schedule or the Company SEC Documents, (i) there are
no off-site locations where the Company or any of its subsidiaries has stored,
disposed or arranged for the disposal of Materials of Environmental Concern
which have been listed on the National Priority List, CERCLIS, or state
Superfund site list, and the Company and its subsidiaries have not been notified
that any of them is a potentially responsible party at any such location; (ii)
there are no underground storage tanks located on property owned or leased by
the Company or any of its subsidiaries; (iii) there is no friable asbestos
containing material contained in or forming part of any building, building
component, structure or office space owned, leased or operated by the Company or
any of its subsidiaries; and (iv) there are no polychlorinated biphenyls
("PCBs") or PCB-containing items contained in or forming part of any building,
building component, structure or office space owned, leased or operated by the
Company or any of its subsidiaries.
(e) Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, all Company Permits that the
Company is required to have obtained under Environmental Laws have been obtained
and are maintained by the Company, were duly issued by the appropriate
Governmental Authority, are in full force and effect and are not subject to
appeal. The Company has not received notice, or otherwise has no knowledge, that
any Company Permit has been or will be, rescinded, terminated, limited, or
amended, which rescission, termination, limitation or amendment would reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Effect on the Company. No additional capital expenditures will be required by
the Company for purposes of compliance with the terms or conditions of any
Company Permits or Company Permit renewals, except as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not require the assignment or
transfer of any Company Permit, except for (i) non-assignability or
non-transferability of Company Permits which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect and (ii)
those Company Permits that may be assigned or transferred on or prior to the
Effective Time without the consent of any Person and without causing any such
Company Permit to be rescinded, terminated or limited.
(f) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action, cause of action,
investigation or notice (in each case in writing or, if not in writing, to the
knowledge of the Company) by any person or entity alleging potential liability
(including potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from the
presence, or release or threat of release into the environment, of any Material
of Environmental Concern at any location, whether or not owned or operated by
the Company or any of its subsidiaries.
(ii) "Environmental Laws" means, as they exist on the date hereof, all
applicable United States federal, state, local and non-U.S. laws, regulations,
codes and ordinances, relating to pollution or protection of human health (as
relating to the environment or the workplace) and the environment (including
ambient air, surface water, ground water, land surface or sub-surface strata),
including laws and regulations relating to emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or otherwise relating
to the use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern, including, but not limited to Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.ss.9601 et seq.,
Resource Conservation and Recovery Act ("RCRA"), 42 X.X.X.xx. 6901 et seq.,
Toxic Substances Control Act ("TSCA"), 15 X.X.X.xx. 2601 et seq., Occupational
Safety and Health Act ("OSHA"), 29 X.X.X.xx. 651 et seq., the Clean
Air Act, 42 X.X.X.xx. 7401 et seq., the Clean Water Act, 33 X.X.X.xx. 1251 et
seq., each as may have been amended or supplemented, and any applicable
environmental transfer statutes or laws.
(iii) "Materials of Environmental Concern" means chemicals, pollutants,
contaminants, hazardous materials, hazardous substances and hazardous wastes,
medical waste, toxic substances, petroleum and petroleum products and
by-products, asbestos-containing materials, PCBs, and any other chemicals,
pollutants, substances or wastes, in each case regulated under any Environmental
Law.
SECTION 2.18 Brokers. No broker, finder or investment banker, other
than the Company Financial Advisor, the fees and expenses of which will be paid
by the Company, is entitled to any brokerage, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Acquiror a complete and correct copy of all agreements
between the Company and the Company Financial Advisor pursuant to which such
firm would be entitled to any payment relating to the transactions contemplated
hereunder.
SECTION 2.19 Intellectual Property. (a) As used herein, the term
"Intellectual Property Assets" shall mean all worldwide intellectual property
rights, including, without limitation, patents, trademarks, service marks,
copyrights, and registrations and applications therefor, licenses, trade names,
Internet domain names, know-how, trade secrets, computer software programs and
development tools and proprietary information, technologies and processes, and
all documentation and media describing or relating to the above, in any format,
whether hard copy or machine-readable only. As used herein, "Company
Intellectual Property Assets" shall mean the Intellectual Property Assets used
or owned by the Company or any of its subsidiaries.
(b) Except as set forth in Section 2.19(b) of the Company Disclosure
Schedule, the Company and/or each of its subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all the Company
Intellectual Property Assets that are used in and are material to the business
of the Company and its subsidiaries as currently conducted, without infringing
or violating the rights of others, except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(c) Except as set forth in Section 2.19(c) of the Company Disclosure
Schedule or as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, no claims (i) are currently
pending or, are threatened by any person with respect to the Company
Intellectual Property Assets, or (ii) are currently pending or threatened by any
person with respect to the Intellectual Property Assets of a third party (the
"Third Party Intellectual Property Assets") to the extent arising out of any
use, reproduction or distribution of, or of products or methods covered by, such
Third Party Intellectual Property Assets by or through the Company or any of its
subsidiaries.
(d) Except as set forth in Section 2.19(d) of the Company Disclosure
Schedule, there are no valid grounds for any bona fide claim to the effect that
the manufacture, offer for sale, sale, licensing or use of any product, system
or method either (i) now used, offered for sale, sold or licensed or, (ii) to
the Company's knowledge as of the date hereof, scheduled for commercialization
prior to the first anniversary of the date hereof, in each case by or for the
Company or any of its subsidiaries, infringes on any Third Party Intellectual
Property Assets, except as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(e) Section 2.19(e) of the Company Disclosure Schedule or, in the case
of non-U.S. Company Intellectual Property only, Section 2.19(e) of the
Supplemental Company Disclosure Schedule sets forth a list, to the Company's
knowledge, of (i) all material patents and patent applications owned by the
Company and/or each of its subsidiaries worldwide; (ii) all material trademark
and service xxxx registrations and all trademark and service xxxx applications;
(iii) all material common law trademarks, material trade dress and material
slogans; (iv) all material trade names owned by the Company and/or each of its
subsidiaries worldwide; (v) all material copyright registrations and copyright
applications owned by the Company and/or each of its subsidiaries worldwide;
(vi) all Internet domain name registrations owned by the Company and/or its
subsidiaries worldwide; and (vii) all licenses owned by the Company and/or each
of its subsidiaries in which the Company and/or each of its subsidiaries is (A)
a licensor with respect to any of the patents, trademarks, service marks, trade
names, Internet domain names, or copyrights listed in Section 2.19(e) of the
Company Disclosure Schedule or the Supplemental Company Disclosure Schedule
which are material to the Company or (B) a licensee of any other person's
patents, trade names, trademarks, service marks or copyrights material to the
Company, except for any licenses of software programs that are commercially
available "off the shelf." Section 2.19(e) of the Company Disclosure Schedule
and Section 2.19(e) of the Supplemental Disclosure Schedule, collectively, will
not fail to disclose any Company Intellectual Property Asset where the failure
to own or license such Company Intellectual Property Asset would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
Except as set forth in Section 2.19(e)(viii) of the Company Disclosure Schedule
or, with respect to non-U.S. matters only, Section 2.19(e)(viii) of the
Supplemental Company Disclosure Schedule, the Company and/or each of its
subsidiaries has made all necessary filings and recordations to protect and
maintain its interest in the patents, patent applications, trademark and service
xxxx registrations, trademark and service xxxx applications, Internet domain
names, copyright registrations and copyright applications and licenses set forth
in Section 2.19(e) of the Company Disclosure Schedule, except where the failure
to so protect or maintain would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(f) To the knowledge of the Company, except as set forth in Sections
2.19(e)(viii) or 2.19(f) of the Company Disclosure Schedule or in the Company
SEC Documents or, with respect to non-U.S. matters only, Section 2.19(f) of the
Supplemental Company Disclosure Schedule: (i) each U.S. and material non-U.S.
patent, trademark or service xxxx registration and copyright registration of the
Company and/or each of its subsidiaries is valid and subsisting and (ii) each
material license of the Company Intellectual Property Assets listed on Section
2.19(e) of the Company Disclosure Schedule is valid, subsisting and enforceable.
(g) Except as set forth in Section 2.19(g) of the Company Disclosure
Schedule, to the Company's knowledge, there is no unauthorized use, infringement
or misappropriation of any of the Company's material Intellectual Property
Assets by any third party, including any employee, former employee, independent
contractor or consultant of the Company or any of its subsidiaries.
SECTION 2.20 Interested Party Transactions. Except as set forth in
Section 2.20 of the Company Disclosure Schedule or the Company SEC Documents or
for events as to which the amounts involved do not, in the aggregate, exceed
$300,000, since the Company's proxy statement dated October 6, 2000, no event
has occurred that would be required to be reported as a Certain Relationship or
Related Transaction pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
SECTION 2.21 Insurance. Except as set forth in Section 2.21 of the
Company Disclosure Schedule or the Company SEC Documents, all material fire and
casualty, general liability, business interruption, product liability and
sprinkler and water damage insurance policies maintained by the Company are with
reputable insurance carriers, provide adequate coverage for all normal risks
incident to the business of the Company and its subsidiaries and their
respective properties and assets and are in character and amount appropriate for
the businesses conducted by the Company, except as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.22 Product Liability and Recalls. (a) Except as set forth in
Section 2.22(a) of the Company Disclosure Schedule or the Company SEC Documents,
to the Company's knowledge, there is no claim, pending or threatened, against
the Company or any of its subsidiaries for injury to person or property of
employees or any third parties suffered as a result of the sale of any product
or performance of any service by the Company or any of its subsidiaries,
including claims arising out of the defective or unsafe nature of its products
or services, which would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(b) Except as set forth in Section 2.22(b) of the Company Disclosure
Schedule or the Company SEC Documents, there is no pending or, to the knowledge
of the Company, threatened recall or investigation of any product sold by the
Company, which recall or investigation would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.23 Opinion of Company Financial Advisor. The Board of
Directors of the Company has been advised by the Company Financial Advisor to
the effect that in its opinion, as of the date of this Agreement, the
consideration to be received by the Company's stockholders in the Transaction is
fair from a financial point of view to such holders.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Company as follows:
SECTION 3.01 Organization and Qualification; Subsidiaries. (a) Each of
Guarantor and Acquiror is duly incorporated, validly existing and in good
standing (to the extent the concept of good standing exists in the applicable
jurisdiction) under the laws of its jurisdiction of incorporation and has the
requisite corporate power and authority necessary to own, lease and operate the
properties it purports to own, lease and operate and to carry on its business as
now conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not reasonably be expected to
have a Material Adverse Effect. Each of Guarantor and Acquiror is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities make such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Acquiror has
heretofore made available to the Company true and complete copies of Guarantor's
Memorandum of Association and Bye-Laws, as amended to date (the "Guarantor
Charter Documents").
(b) Each subsidiary of Guarantor is an entity duly organized, validly
existing and in good standing (to the extent the concept of good standing exists
in the applicable jurisdiction) under the laws of its jurisdiction of
organization, has the requisite corporate or other power and authority necessary
to own, lease and operate the properties it purports to own, lease and operate
and to carry on its business as now conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. Each subsidiary of Guarantor is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where
failure to be so qualified or in good standing would not reasonably be expected
to have a Material Adverse Effect. All of Guarantor's significant subsidiaries
and their respective jurisdictions of incorporation are included in the
subsidiary list contained in Guarantor's Annual Report on Form 10-K for the
fiscal year ended September 30, 2000 (the "Guarantor 2000 Form 10-K").
SECTION 3.02 Capitalization. (a) The authorized capital stock of
Guarantor consists of 2,500,000,000 Guarantor Common Shares and 125,000,000
Preference Shares, par value $1.00 per share ("Guarantor Preference Shares"). As
of June 30, 2001 (i) 1,935,521,933 Guarantor Common Shares were issued and
outstanding, all of which are duly authorized, validly issued, fully paid and
non-assessable, and none of which have been issued in violation of preemptive or
similar rights, (ii) one Guarantor Preference Share has been designated as a
Super Voting Preference Share and is validly issued, fully paid and
non-assessable and not issued in violation of preemptive or similar rights, and
(iii) no more than 9,000,000 Guarantor Common Shares and no Guarantor Preference
Shares were held by subsidiaries of Guarantor. As of June 30, 2001, no more than
243,000,000 Guarantor Common Shares were reserved for issuance upon exercise of
stock options issued under Guarantor's stock option plans.
(b) Except (i) as set forth in Section 3.02(a), (ii) for changes since
June 30, 2001 resulting from the exercise of stock options, (iii) for securities
of Guarantor or its subsidiaries convertible into or exchangeable for shares of
capital stock or voting securities of Guarantor set forth in the Guarantor SEC
Documents and the conversion or exchange thereof, (iv) for other rights to
acquire immaterial (individually and in the aggregate) amounts of Guarantor
Common Shares and changes resulting from the exercise thereof, (v) for changes
resulting from the grant of stock based compensation to directors or employees
or (vi) for changes resulting from the issuance of stock or other securities in
connection with a merger or other acquisition or business combination, an
underwritten public offering or an offering pursuant to Rule 144A under the
Securities Act approved by Guarantor's Board of Directors and undertaken in
compliance with Section 4.03(b), as applicable, there are no outstanding (x)
shares of capital stock or voting securities of Guarantor, (y) securities of
Guarantor convertible into or exchangeable for shares of capital stock or voting
securities of Guarantor or (z) options or other rights to acquire from Guarantor
or other obligations of Guarantor to issue, any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of Guarantor. Except as set forth in the Guarantor SEC Documents (as
defined in Section 3.05), there are no outstanding obligations of Guarantor or
any of its subsidiaries to repurchase, redeem or otherwise acquire any of its
equity securities.
(c) The Guarantor Common Shares to be delivered as Merger Consideration
have been duly authorized and, when issued and delivered in accordance with the
terms of this Agreement, will have been validly issued and will be fully paid
and nonassessable, and the issuance thereof is not subject to any preemptive or
other similar right.
SECTION 3.03 Authority Relative to this Agreement. (a) The execution,
delivery and performance by Guarantor and Acquiror of this Agreement, the
execution, delivery and performance by Guarantor of the Guarantee and the
consummation by Guarantor and Acquiror of the transactions contemplated hereby
and thereby, as applicable, are within the respective corporate powers of
Guarantor and Acquiror and have been duly and validly authorized by all
necessary corporate action. This Agreement has been duly and validly executed
and delivered and constitutes a valid and binding agreement of Acquiror
enforceable against Acquiror in accordance with its terms, and the Guarantee has
been duly and validly executed and delivered and constitutes a valid and binding
agreement of Guarantor enforceable against it in accordance with its terms.
(b) At a meeting duly called and held, or by written consent in lieu of
meeting, the Board of Directors of Acquiror has (i) determined that this
Agreement, the Offer, the Merger and the other transactions contemplated hereby
are fair to and in the best interests of Acquiror, and (ii) approved this
Agreement and the transactions contemplated hereby. At a meeting duly called and
held, the Executive Committee of the Guarantor's Board of Directors has approved
the Guarantee and the transactions contemplated thereby and the issuance of the
Guarantor Common Shares to be delivered to the Company stockholders in
connection with the Merger.
SECTION 3.04 No Conflicts; Required Filings and Consents. (a) The
execution, delivery and performance by Acquiror of this Agreement, the
execution, delivery and performance by Guarantor of the Guarantee and the
consummation by Acquiror and Guarantor of the Offer and the Merger and the other
transactions contemplated hereby and thereby, as applicable, require no action
by or in respect of, or filing with, any Governmental Authority, other than (i)
the filing of Articles of Merger with the Secretary of State of the State of
Nevada and a Certificate of Merger with respect to the Merger with the Secretary
of State of the State of Delaware, (ii) compliance with any applicable
requirements of the HSR Act and applicable Non-U.S. Monopoly Laws, (iii)
compliance with any applicable requirements of the Securities Act, the Exchange
Act, any applicable state securities laws, the NYSE, the London Stock Exchange
and the Bermuda Stock Exchange, (iv) compliance with Environmental, Health and
Safety Laws and (v) any actions or filings the absence of which would not be
reasonably expected, individually or in the aggregate, to have a Material
Adverse Effect or materially impair the ability of Acquiror to consummate the
Offer and the Merger and the other transactions contemplated by this Agreement
or the ability of Guarantor to fulfill its obligations under the Guarantee.
(b) The execution, delivery and performance by Acquiror of this
Agreement, the execution, delivery and performance by Guarantor of the Guarantee
and the consummation by Acquiror and Guarantor of the Offer and the Merger and
other transactions contemplated hereby and thereby, as applicable, do not and
will not (i) contravene, conflict with, or result in any violation or breach of
any provision of the Guarantor Charter Documents or the articles of
incorporation or bylaws of Acquiror (or equivalent organizational documents),
(ii) assuming compliance with the matters referred to in Section 3.04(a),
contravene, conflict with or result in a violation or breach of any provision of
any law, rule, regulation, judgment, injunction, order or decree applicable to
Guarantor or any of its subsidiaries, (iii) require any consent or other action
by any person under, constitute a default under, or cause or permit the
termination, cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which Guarantor or any of its
subsidiaries is entitled under any provision of any Material Agreement or
instrument binding upon Guarantor or any of its subsidiaries or any material
license, franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of Acquiror and its
subsidiaries; provided that, for purposes of this Subsection 3.04(b)(iii),
"Material Agreement" shall mean any agreement identified in the Guarantor 2000
Form 10-K or in any of Guarantor's quarterly reports on Form 10-Q filed with
respect to any quarter of its 2001 fiscal year or any agreement entered into
since the date of Guarantor's latest quarterly report on Form 10-Q that would be
required to be so identified in Guarantor's Annual Report on Form 10-K for the
year ended September 30, 2001 or (iv) result in the creation or imposition of
any encumbrance on any material asset of Guarantor or any of its subsidiaries.
SECTION 3.05 Compliance. (a) Except as set forth in the reports,
schedules, forms, statements, registration statements, proxy statements and
other documents (the "Guarantor SEC Documents") filed by the Guarantor with the
SEC since September 30, 2000 and prior to the date of this Agreement, including
those incorporated therein by reference and not superseded by other Guarantor
SEC Documents, neither Guarantor nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to Guarantor or any of its subsidiaries or by
which its or any of their respective properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Guarantor or any of its
subsidiaries is a party or by which Guarantor or any of its subsidiaries or its
or any of their respective properties is bound or affected, except for any such
conflicts, defaults or violations which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(b) No investigation by any Governmental Authority with respect to the
Guarantor or its subsidiaries is pending or, to the knowledge of Guarantor,
threatened, except as disclosed in the Guarantor SEC Documents and except for
such investigations which, if they resulted in adverse findings, would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
SECTION 3.06 SEC Filings; Financial Statements. (a) Guarantor has
filed with the SEC all reports, schedules, forms, statements and other documents
(including all exhibits thereto) required to be filed with the SEC since
September 30, 1998 (the "Post-1998 Guarantor SEC Documents"). Except as set
forth in the Guarantor SEC Documents and taking into account any amendments and
supplements filed prior to the date of this Agreement, such Post-1998 Guarantor
SEC Documents, (i) were prepared in all material respects in accordance with the
applicable requirements of the Securities Act or the Exchange Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of and at the time of the circumstances under
which they were made, not misleading. Except for Tycom Ltd. and The CIT Group,
Inc., none of the Guarantor's subsidiaries is required to file with the SEC
periodic reports pursuant to the Exchange Act.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Post-1998 Guarantor SEC
Documents were prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or in the Post-1998 Guarantor SEC Documents), and each fairly presents in all
material respects, the consolidated financial position of Guarantor and its
consolidated subsidiaries at the respective dates thereof and the consolidated
results of operations and cash flows for the periods indicated, except that for
purposes of the foregoing representation, the unaudited interim financial
statements (i) should be read in conjunction with the Guarantor's consolidated
financial statements contained in the Guarantor 2000 Form 10-K, and (ii) were or
are subject to normal and recurring year end adjustments which were not or are
not expected to be material in amount.
SECTION 3.07 Absence of Certain Changes or Events. Except as set forth
in the Guarantor SEC Documents, since September 30, 2000, the business of
Guarantor and its subsidiaries has been conducted in the ordinary course and
there has not occurred: (i) any change, effect or circumstance, including any
damage to, destruction or loss of any asset of Guarantor (whether or not covered
by insurance) constituting, or which would reasonably be expected to constitute,
individually or in the aggregate, a Material Adverse Effect; (ii) any amendments
or changes in the Guarantor Charter Documents, except as necessary to designate
Guarantor's Super Voting Preference Share; (iii) any material change by
Guarantor in its accounting methods, principles or practices (other than as
required by GAAP subsequent to the date of this Agreement); or (iv) any sale of
a material amount of assets of Guarantor, except in the ordinary course of
business.
SECTION 3.08 No Undisclosed Liabilities. Except as set forth in the
Guarantor SEC Documents, neither Guarantor nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise), except liabilities (a)
in the aggregate adequately provided for in Guarantor's unaudited balance sheet
(including any related notes thereto) as of March 31, 2001 included in
Guarantor's Quarterly Report on Form 10-Q for the fiscal period ended March 31,
2001 (the "2001 Guarantor Balance Sheet"), (b) incurred in the ordinary course
of business and not required under GAAP to be reflected on the 2001 Guarantor
Balance Sheet, (c) incurred since March 31, 2001 in the ordinary course of
business, (d) incurred in connection with this Agreement or the Offer or the
Merger or the other transactions contemplated hereby, or (e) which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 3.09 Absence of Litigation. Except as set forth in the
Guarantor SEC Documents or arising out of the transactions contemplated by this
Agreement, there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of Guarantor, threatened against Guarantor or any
of its subsidiaries, or any properties or rights of Guarantor or any of its
subsidiaries, before any court, arbitrator or Governmental Authority, that would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 3.10 Registration Statement; Proxy Statement/Prospectus. (a)
Subject to the accuracy of the representations of the Company in Section 2.13:
(i) the Registration Statement, as it may be amended, pursuant to which
the Guarantor Common Shares to be issued in connection with the Offer and the
Merger will be registered with the SEC shall not, at the respective times the
Registration Statement (including any amendments or supplements thereto) is
filed with the SEC or is declared effective by the SEC, 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 included therein not
misleading;
(ii) neither the Offer Documents nor any of the information supplied by
Guarantor or Acquiror specifically for inclusion in the Schedule 14D-9 will, at
the respective times any such documents or any amendments or supplements thereto
are filed with the SEC, are first published, sent or given to stockholders of
the Company or become effective under the Securities Act, or at any time
Acquiror accepts for exchange Shares pursuant to the Offer, 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 included therein not
misleading; and
(iii) the Proxy Statement/Prospectus will not, at the time the Proxy
Statement/Prospectus is filed with the SEC or first sent to stockholders or at
the time of the Company Stockholders Meeting, 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 therein, at such time and in light
of the circumstances under which they were made, not misleading.
(b) If at any time prior to the Effective Time any event or
circumstance relating to Acquiror or any of its affiliates, officers or
directors should be discovered by Acquiror which should be set forth in an
amendment to the Registration Statement or a supplement to the Offer Documents,
the 14D-9 or the Proxy Statement/Prospectus, Acquiror will promptly inform the
Company.
(c) The Offer Documents, the Registration Statement and Proxy
Statement/Prospectus shall comply as to form in all material respects with the
requirements of all applicable laws, including the Securities Act and the
Exchange Act.
(d) Notwithstanding the foregoing, Acquiror makes no representation or
warranty with respect to any information supplied by the Company which is
included or incorporated by reference in, or furnished in connection with the
preparation of, the Offer Documents, the Registration Statement or the Proxy
Statement/Prospectus.
SECTION 3.11 Brokers. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Acquiror or Guarantor who might be entitled to any fee or commission from
Acquiror, Guarantor or any of their respective affiliates in connection with the
transactions contemplated by this Agreement.
SECTION 3.12 Ownership of Acquiror; No Prior Activities. (a) Acquiror
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement.
(b) Except for obligations or liabilities incurred by Acquiror in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, Acquiror has not
incurred, directly or indirectly, through any subsidiary or affiliate, any
obligations or liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any person.
SECTION 3.13 Ownership Interest in the Company. Other than by reason of
this Agreement or the transactions contemplated hereby, neither Acquiror nor any
of its affiliates is, or has been at any time during the previous three years,
an "interested stockholder" of the Company, as that term is defined in Section
203 of the DGCL.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless Acquiror shall otherwise agree in writing, and
except as set forth in Section 4.01 of the Company Disclosure Schedule, the
Company shall conduct its business and shall cause the businesses of its
subsidiaries to be conducted only in, and the Company and its subsidiaries shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice; and the Company shall use reasonable commercial
efforts to preserve substantially intact the business organization of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries and to
preserve the present relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any of its
subsidiaries has significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, neither the Company nor
any of its subsidiaries shall, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Acquiror, which, in the case of
clauses (c), (d)(iv), (e)(iv), (f), (h), (i) or (j) will not be unreasonably
withheld or delayed:
(a) amend or otherwise change the Company Charter Documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company, any of its subsidiaries or affiliates (except for the issuance of
shares of Company Common Stock issuable pursuant to Company Stock Options
outstanding on the date hereof and except for the conversion or redemption of
the Company Preferred Stock);
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary course
of business and in a manner consistent with past practice, (ii) dispositions of
obsolete or worthless assets, and (iii) sales of immaterial assets not in excess
of $2 million in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly-owned subsidiary of
the Company (other than Sensormatic Electronics Corporation (Puerto Rico)) may
declare and pay a dividend to its parent that is not a cross-border dividend and
except that dividends may be declared and paid to holders of Company Preferred
Stock, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (iii) except (A) as
required by the terms of any security or agreement as in effect on the date
hereof and set forth in Sections 2.11(f) or 4.01 of the Company Disclosure
Schedule and (B) to the extent necessary to effect withholding to meet minimum
tax withholding obligations in connection with the exercise of any Company Stock
Option, amend the terms or change the period of exercisability of, purchase,
repurchase, redeem or otherwise acquire, or permit any subsidiary to amend the
terms or change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
including, without limitation, shares of Company Common Stock, or any option,
warrant or right, directly or indirectly, to acquire any such securities, or
propose to do any of the foregoing (except that the Company may give notice of
redemption and redeem the Company Preferred Stock), (iv) settle, pay or
discharge any claim, suit or other action brought or threatened against the
Company with respect to or arising out of a stockholder equity interest in the
Company, or (v) make any cross-border capital contributions to a subsidiary.
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof other than those listed on Section 4.01 of the Company Disclosure
Schedule; (ii) incur any indebtedness for borrowed money, except for (A), after
providing Acquiror with prior notice of any such borrowing or reborrowing,
borrowings and reborrowings under the Company's or any of its subsidiaries'
existing committed or uncommitted credit facilities listed in the Company SEC
Documents or on Section 4.01 of the Company Disclosure Schedule in an amount not
to exceed the maximum amount available under such credit facilities on the date
hereof and (B) other borrowings not in excess of $4 million in the aggregate;
(iii) issue any debt securities or assume, guarantee (other than guarantees of
the Company's subsidiaries entered into in the ordinary course of business and
except as required by any agreement in effect on the date hereof and identified
in Section 4.01 of the Company Disclosure Schedule) or endorse, or otherwise as
an accommodation become responsible for, the obligations of any person, or make
any loans or advances, except in the ordinary course of business consistent with
past practice (but not loans or advances to employees of the Company to fund the
exercise price of Company Stock Options or otherwise to purchase shares of the
Company Common Stock, except rights of employees to receive such loans or
advances as such rights exist on the date hereof); (iv) authorize any capital
expenditures or purchases of fixed assets which are, in the aggregate, in excess
of $40 million over the next 12-month period; or (v) enter into or materially
amend any contract, agreement, commitment or arrangement to effect any of the
matters prohibited by this Section 4.01(e);
(f) except as set forth in Section 4.01 of the Company Disclosure
Schedule, as required by law or as provided in an existing obligation of the
Company, (i) increase the compensation or severance payable or to become payable
to its directors, officers, employees or consultants, except for increases in
salary, wages or bonuses of employees of the Company or its subsidiaries,
including in connection with promotions, in accordance with past practices; (ii)
grant any severance or termination pay (except to make payments required to be
made under obligations existing on the date hereof in accordance with the terms
of such obligations or in accordance with past practice) to, or enter into or
amend any employment or severance agreement, with any current or prospective
employee of the Company or any of its subsidiaries, except for new hire
employees and promotions in the ordinary course of business whose annual salary
does not exceed $100,000 and whose severance benefits do not exceed one times
annual salary; or (iii) establish, adopt, enter into or amend any collective
bargaining agreement, Company Employee Plan, including, without limitation, any
plan that provides for the payment of bonuses or incentive compensation, trust,
fund, policy or arrangement for the benefit of any current or former directors,
officers, employees or consultants or any of their beneficiaries, except, in
each case, as may be required by law or existing agreement or as would not
result in a material increase in the cost of maintaining such collective
bargaining agreement, Company Employee Plan, trust, fund, policy or arrangement;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable), except as
required by a change in GAAP occurring after the date hereof;
(h) make any Tax election or settle or compromise any United States
federal, state, local or non-U.S. Tax liability;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) in excess
of $5 million in the aggregate, other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected or reserved against in the financial
statements contained in the Company SEC Documents or incurred in the ordinary
course of business and consistent with past practice or incurred in connection
with this Agreement and the transactions contemplated hereby;
(j) enter into, modify or renew any contract, agreement or arrangement,
whether or not in writing, for the licensing of its technology other than user
licenses and license-back agreements for technology acquired or co-developed
after the date of this Agreement; or
(k) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.01(a) through (j) above, or any action which would
reasonably be expected to make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect or prevent the Company
from performing or cause the Company not to perform its covenants hereunder.
Additionally, the Company shall use its commercially
reasonable efforts to obtain any and all written consents of customers which,
pursuant to the terms of any contracts, agreements or arrangements with such
customers, are required to prevent the termination of such contracts, agreements
or arrangements in connection with, or as a result of, the transactions
contemplated by this Agreement, except if and insofar as the failure to obtain
such consents would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 4.02 No Solicitation. (a) The Company shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company or any of its subsidiaries, solicit or knowingly encourage the
initiation of (including by way of furnishing information) any inquiries or
proposals regarding any merger, sale of assets, sale of shares of capital stock
(including, without limitation, by way of a tender offer) or similar
transactions involving the Company or any subsidiaries of the Company that if
consummated would constitute an Alternative Transaction (as defined below) (any
of the foregoing inquiries or proposals being referred to herein as an
"Acquisition Proposal"). Nothing contained in this Agreement shall prevent the
Board of Directors of the Company from (i) furnishing information to a third
party which has made a bona fide Acquisition Proposal that the Board of
Directors of the Company concludes in good faith after consulting with a
nationally recognized investment banking firm would, if consummated, reasonably
be expected to constitute a Superior Proposal (as defined below) not solicited
in violation of this Agreement, provided that such third party has executed an
agreement with confidentiality provisions substantially similar to those then in
effect between the Company and a subsidiary of Guarantor or (ii) subject to
compliance with the other terms of this Section 4.02, including Sections 4.02(c)
and (d), considering and negotiating a bona fide Acquisition Proposal that the
Board of Directors of the Company concludes in good faith after consulting with
a nationally recognized investment banking firm would, if consummated,
constitute a Superior Proposal not solicited in violation of this Agreement;
provided, however, that, as to each of clauses (i) and (ii), the Board of
Directors of the Company reasonably determines in good faith (after due
consultation with independent counsel, which may be CGSH) that it is or is
reasonably likely to be required to do so in order to discharge properly its
fiduciary duties.
For purposes of this Agreement, "Alternative Transaction" means any of
(i) a transaction pursuant to which any person (or group of persons) other than
Acquiror or its affiliates (a "Third Party") acquires or would acquire more than
25% of the outstanding shares of any class of equity securities of the Company,
whether from the Company or pursuant to a tender offer or exchange offer or
otherwise, (ii) a merger or other business combination involving the Company
pursuant to which any Third Party acquires or would acquire more than 25% of the
outstanding equity securities of the Company or the entity surviving such merger
or business combination, (iii) any transaction pursuant to which any Third Party
acquires or would acquire control of assets (including for this purpose the
outstanding equity securities of subsidiaries of the Company and securities of
the entity surviving any merger or business combination including any of the
Company's subsidiaries) of the Company, or any of its subsidiaries having a fair
market value (as determined by the Board of Directors of the Company in good
faith) equal to more than 25% of the fair market value of all the assets of the
Company and its subsidiaries, taken as a whole, immediately prior to such
transaction, or (iv) any other consolidation, business combination,
recapitalization or similar transaction involving the Company or any Company
Significant Subsidiary, other than the transactions contemplated by this
Agreement; provided, however, that the term Alternative Transaction shall not
include any acquisition of securities by a broker dealer in connection with a
bona fide public offering of such securities.
For purposes of this Agreement, a "Superior Proposal" means any
proposal made by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, all of the Company Common
Stock entitled to vote generally in the election of directors or all or
substantially all the assets of the Company, on terms which the Board of
Directors of the Company reasonably believes (after consultation with a
financial advisor of nationally recognized reputation, which may be the Company
Financial Advisor) to be more favorable from a financial point of view to its
stockholders than the Merger and the transactions contemplated by this Agreement
taking into account at the time of determination any changes to the financial
terms of this Agreement proposed by Acquiror; provided, however, that a Superior
Proposal may be subject to a due diligence review of confidential information
and to other customary conditions.
(b) The Company shall notify Acquiror promptly (but in no event later
than 24 hours) after receipt of any Acquisition Proposal, or any modification of
or amendment to any Acquisition Proposal, or any request for nonpublic
information relating to the Company or any of its subsidiaries in connection
with an Acquisition Proposal or for access to the properties, books or records
of the Company or any subsidiary by any person or entity that informs the Board
of Directors of the Company or any subsidiary that it is considering making, or
has made, an Acquisition Proposal. Such notice to Acquiror shall be made orally
and in writing, and shall indicate the identity of the person making the
Acquisition Proposal or intending to make an Acquisition Proposal or requesting
non-public information or access to the books and records of the Company or any
subsidiary, the terms of any such Acquisition Proposal or modification or
amendment to an Acquisition Proposal, and whether the Company is providing or
intends to provide the person making the Acquisition Proposal with access to
information concerning the Company as provided in Section 4.02(a). The Company
shall keep Acquiror fully informed, on a current basis, of any material changes
in the status and any material changes or modifications in the material terms of
any such Acquisition Proposal, indication or request. The Company shall also
promptly notify Acquiror, orally and in writing, if it enters into negotiations
concerning any Acquisition Proposal.
(c) (i) Except to the extent the Board of Directors of the Company
reasonably determines in good faith (after due consultation with independent
counsel, which may be CGSH) that it is or is reasonably likely to be required to
act to the contrary in order to discharge properly its fiduciary duties (and,
with respect to the approval, recommendation or entering into any, Acquisition
Proposal, it may take such contrary action only after the second full business
day following Acquiror's receipt of written notice of the Board of Directors'
intention to do so), neither the Company nor the Board of Directors of the
Company shall withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Acquiror, the approval by such Board of Directors of this Agreement,
the Offer or the Merger.
(ii) Notwithstanding the foregoing, the Board of Directors may
recommend and the Company or its directors, officers, employees, agents and
affiliates may advise the Company's stockholders, at any time prior to
consummation of the Offer, to delay the tender of their Shares into, or
temporarily withdraw tendered Shares from, the Offer in order to avoid (prior to
consummation of the Offer) the occurrence of a "change of control" or similar
event from occurring which may require prepayment pursuant to any indebtedness
of the Company. It is hereby agreed that any such recommendation or advice by
the Board of Directors or the Company or its directors, officers, employees,
agents and affiliates shall not be deemed a withdrawal or modification of, or a
proposal to withdraw or modify in any respect, the Recommendations or a breach
of this Agreement.
(d) The Company and the Board of Directors of the Company shall not
enter into any agreement (other than a confidentiality agreement entered into
not in violation of Section 4.02(a)) with respect to, or otherwise approve or
recommend, or propose to approve or recommend, any Acquisition Proposal or
Alternative Transaction, unless this Agreement has been terminated in accordance
with its terms.
(e) Nothing contained in this Section 4.02 shall prohibit the Company
from taking and disclosing to its stockholders a position required by Rule
14e-2(a) or Rule 14d-9 promulgated under the Exchange Act or from making any
disclosure to its stockholders required by applicable law, rule or regulation or
by the NYSE.
(f) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than Acquiror)
conducted heretofore with respect to any of the foregoing. The Company agrees
not to release any third party from the confidentiality and standstill
provisions of any agreement to which the Company is a party, except for a
release from standstill provisions in connection with a Superior Proposal.
(g) The Company shall ensure that the officers and directors of the
Company and the Company's subsidiaries and any investment banker or other
advisor or representative retained by the Company are aware of the restrictions
described in this Section 4.02. It is understood that any violation of the
restrictions set forth in this Section 4.02 by any officer or director of the
Company or the Company subsidiaries, by any investment banker, attorney or other
advisor or representative of the Company retained in connection with this
Agreement and the transactions contemplated hereby or by any other advisor or
representative of the Company at the direction or with the consent of the
Company shall be deemed to be a breach of this Section 4.02 by the Company.
SECTION 4.03 Conduct of Business by Guarantor Pending the Merger.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the initial acceptance of Shares
for exchange in the Offer, Acquiror covenants and agrees that, unless the
Company shall otherwise agree in writing, Acquiror shall take all action
necessary so that (i) Guarantor shall conduct its business, and cause the
businesses of its subsidiaries to be conducted, in the ordinary course of
business and consistent with past practice, including actions taken by Guarantor
or its subsidiaries in contemplation of the Offer or the Merger or other
business acquisitions otherwise in compliance with this Agreement, and (ii)
Guarantor shall not directly or indirectly do, or propose to do, any of the
following without the prior written consent of the Company:
(a) amend or otherwise change the Guarantor Charter Documents;
(b) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets of any other person, or dispose of any assets, which, in any
such case, would materially delay or prevent the consummation of the Offer, the
Merger and the other transactions contemplated by this Agreement;
(c) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly owned subsidiary of Guarantor may
declare and pay a dividend to its parent, and except that Guarantor may declare
and pay quarterly cash dividends on the Guarantor Common Shares of $0.0125 per
share consistent with past practice;
(d) take any action to change its accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable), except as
required by a change in GAAP occurring after the date hereof; or
(e) take or agree in writing or otherwise to take any of the actions
described in Sections 4.03(a) through (d) above that would make any of the
representations or warranties of Acquiror contained in this Agreement untrue or
incorrect or prevent Acquiror from performing or cause Acquiror not to perform
its covenants hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 Stockholder Approval; Preparation of Post-Effective
Amendment and Proxy Statement/Prospectus. (a) If Section 5.02(c) shall not apply
and approval of the Company's stockholders is required by applicable law in
order to consummate the Merger, the Company shall, and Acquiror shall cause
Guarantor to, as soon as practicable following the acceptance of Shares pursuant
to the Offer, prepare, and the Company shall file with the SEC, the Proxy
Statement/Prospectus with respect to the Company Stockholders Meeting, and the
Company shall, and Acquiror shall cause Guarantor to, prepare and Acquiror shall
cause Guarantor to file with the SEC a post-effective amendment to the
Registration Statement (the "Post-Effective Amendment") for the offer and
exchange of the Guarantor Common Shares pursuant to the Merger and in which the
Proxy Statement/Prospectus will be included as a prospectus. The Company shall,
and Acquiror shall cause Guarantor to, use all reasonable efforts to have the
Post-Effective Amendment declared effective under the Securities Act as promptly
as practicable after such filing and to maintain such effectiveness for so long
as shall be required for the issuance of the Guarantor Common Shares in the
Merger. The Company shall use all reasonable efforts to cause the Proxy
Statement/Prospectus to be mailed to the Company's stockholders as promptly as
practicable after the Post-Effective Amendment is declared effective under the
Securities Act. Acquiror shall also cause Guarantor to take any action (other
than qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under the applicable state securities laws in connection with the issuance
of Guarantor Common Shares in the Offer and the Merger, and the Company shall
furnish to Guarantor all information concerning the Company and the holders of
capital stock of the Company as may be reasonably requested in connection with
any such action and the preparation, filing and distribution of the Proxy
Statement/Prospectus. No filing of, or amendment or supplement to, or
correspondence to the SEC or its staff with respect to, the Post-Effective
Amendment or the Proxy Statement/Prospectus will be made by the Company or the
Guarantor, without providing the other party a reasonable opportunity to review
and comment thereon.
(b) Acquiror will advise the Company, promptly after Guarantor receives
notice thereof, of the time when the Post-Effective Amendment has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of the Guarantor Common Shares
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Post-Effective Amendment or
comments thereon and responses thereto or requests by the SEC for additional
information. The Company will advise Acquiror, promptly after it receives notice
thereof, of any request by the SEC for the amendment of the Proxy
Statement/Prospectus or comments thereon and responses thereto or requests by
the SEC for additional information. If at any time prior to the Effective Time
any information relating to the Company or Acquiror, or any of their respective
affiliates, officers or directors, should be discovered by the Company or
Acquiror which should be set forth in an amendment or supplement to either of
the Post-Effective Amendment or the Proxy Statement/Prospectus so that any of
such documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company.
(c) The Proxy Statement/Prospectus shall include the recommendation of
the Board of Directors of the Company in favor of approval of the Merger and
adoption of this Agreement. Notwithstanding anything to the contrary set forth
in this Section 5.01 or Section 5.02, the Company shall not be obligated to take
the action set forth in the preceding sentence of this Section 5.01(c) or to
take the actions set forth in Section 5.02 to the extent that the Board of
Directors of the Company determines (after due consultation with independent
counsel, which may be CGSH) that such action is, or is reasonably likely to be,
inconsistent with the proper discharge of its fiduciary duties.
SECTION 5.02 Company Stockholders Meeting. (a) If Section 5.02(c)
shall not apply and approval of this Agreement by the Company's stockholders is
required by applicable law in order to consummate the Merger, the Company shall,
prior to or as soon as practicable following the date upon which the
Post-Effective Amendment becomes effective, establish a record date for, duly
call, give notice of, convene and hold the Company Stockholders Meeting as
promptly as practicable for the purpose of voting upon the approval of this
Agreement, and the Company shall use all reasonable efforts to cause the Proxy
Statement/Prospectus to be mailed to the Company's stockholders and to hold the
Company Stockholders Meeting as promptly as practicable after the Post-Effective
Amendment is declared effective under the Securities Act. The Company shall
solicit from its stockholders proxies in favor of approval of this Agreement and
shall take all other reasonable action necessary or advisable to secure the vote
or consent of stockholders in favor of such approval.
(b) Acquiror agrees to vote all Shares acquired in the Offer or
otherwise beneficially owned by Acquiror, Guarantor or any of their subsidiaries
in favor of adoption of this Agreement and approval of the Merger at the Company
Stockholders Meeting and to take such other actions to effectuate as promptly as
practicable the Merger in accordance with Section 92A.190 of the NGCL and
Section 252 of the DGCL, on the terms and subject to the conditions set forth in
this Agreement.
(c) Notwithstanding the foregoing, if Acquiror shall acquire at least
90% of the Fully Diluted Shares in the Offer, the parties hereto shall take all
necessary actions to cause the Merger to become effective, as soon as
practicable after the expiration of the Offer and the redemption of any
outstanding Company Preferred Stock, without a meeting of stockholders of the
Company, in accordance with Section 92A.190 of the NGCL and Section 253 of the
DGCL.
SECTION 5.03 Access to Information; Confidentiality. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements (from
which such party shall use reasonable efforts to be released), the Company shall
(and shall cause its subsidiaries to) and Acquiror shall cause Guarantor and its
subsidiaries to (i) afford to the officers, employees, accountants, counsel and
other representatives of the other, reasonable access during reasonable hours,
during the period after the execution and delivery of this Agreement and prior
to the Effective Time, to the properties, books, contracts, commitments and
records of the Company or the Guarantor, as applicable, and, (ii) during such
period, furnish promptly to the other all information concerning the business,
properties and personnel of the Company or the Guarantor, as applicable, as such
other party may reasonably request, and each shall make available to the other
the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the Company's or Guarantor's, as applicable,
business, properties and personnel as either Acquiror or the Company may
reasonably request. Such information shall be kept confidential in accordance
with the terms of the confidentiality agreement, dated July 5, 2001 (the
"Confidentiality Agreement"), between Guarantor and the Company.
SECTION 5.04 Consents; Approvals. The Company and Acquiror shall each
use its reasonable best efforts (and Acquiror shall cause Guarantor to use its
reasonable best efforts) to obtain and to cooperate with each other in order to
obtain as promptly as practicable all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and
non-U.S. governmental and regulatory rulings and approvals), and the Company and
Acquiror shall make (and Acquiror shall cause Guarantor to make) as promptly as
practicable all filings (including, without limitation, all filings with United
States and non-U.S. governmental or regulatory agencies) required in connection
with the authorization, execution and delivery of this Agreement by the Company
and Acquiror and the consummation by them of the transactions contemplated
hereby. The Company and Acquiror shall promptly furnish (and Acquiror shall
cause Guarantor to furnish) all information required to be included in the Offer
Documents, Schedule TO, Schedule 14D-9, the filing pursuant to Section 14(f) and
Rule 14f-1 of the Exchange Act, Proxy Statement/Prospectus and the Registration
Statement, or for any application or other filing to be made pursuant to the
rules and regulations of any United States or non-U.S. governmental body in
connection with the transactions contemplated by this Agreement. The Company
shall, and Acquiror shall cause Guarantor to, cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under
Section 5.01 and this Section 5.04 to comply in all material respects with all
applicable requirements of law and the rules and regulations promulgated
thereunder.
SECTION 5.05 Agreements with Respect to Affiliates. The Company
shall deliver to Acquiror, prior to the date the Post-Effective Amendment
becomes effective under the Securities Act, a letter (the "Company Affiliate
Letter") identifying all persons who are anticipated to be "affiliates" of the
Company at the time of the Company Stockholders Meeting for purposes of Rule 145
under the Securities Act ("Rule 145"). The Company shall use its reasonable best
efforts to cause each person who is identified as an "affiliate" in the Company
Affiliate Letter to deliver to Acquiror, prior to the date of the initial
acceptance of Shares for exchange in the Offer, a written agreement (an
"Affiliate Agreement") restricting the sales of Guarantor securities by such
affiliates in accordance with the restrictions on affiliates under Rule 145, in
a form mutually agreeable to the Company and Acquiror.
SECTION 5.06 Indemnification and Insurance. (a) The Articles of
Incorporation and Bylaws of the Surviving Corporation shall contain all the
provisions with respect to indemnification set forth in the Company Charter
Documents on the date hereof, which provisions shall not be amended, modified or
otherwise repealed for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder as of the Effective
Time of individuals who at or prior to the Effective Time were directors,
officers, employees or agents of the Company, unless such modification is
required after the Effective Time by law and then only to the minimum extent
required by such law.
(b) The Surviving Corporation shall, to the fullest extent permitted
under applicable law or under the Surviving Corporation's Articles of
Incorporation or Bylaws, indemnify and hold harmless each present and former
director, officer or employee of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by this Agreement or (y) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
the Company Charter Documents or any applicable contract or agreement as in
effect on the date hereof, in each case for a period of six years after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time) and subject
to the specific terms of any indemnification contract, (i) any counsel retained
by the Indemnified Parties for any period after the Effective Time shall 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; provided that the
Indemnified Parties shall be required to reimburse the Surviving Corporation for
such payments in the circumstances and to the extent required by the Company
Charter Documents, any applicable contract or agreement or applicable law; 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); 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 in each
applicable jurisdiction 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, in which
case each Indemnified Party with respect to whom such a conflict exists (or
group of such Indemnified Parties who among them have no such conflict) may
retain one separate law firm in each applicable jurisdiction.
(c) The Surviving Corporation shall honor and fulfill in all respects
the obligations of the Company pursuant to indemnification agreements and
employment agreements (the employee parties under such agreements being referred
to as the "Covered Persons") with the Company's directors and officers existing
at or before the Effective Time.
(d) In addition, Acquiror shall provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's current directors and officers with an insurance
and indemnification policy that provides coverage for events occurring at or
prior to the Effective Time (the "D&O Insurance") that is no less favorable than
the existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that Acquiror and
the Surviving Corporation shall not be required to pay an annual premium for the
D&O Insurance in excess of 200% of the annual premium currently paid by the
Company for such insurance, but in such case shall purchase as much such
coverage as possible for such amount.
(e) From and after the Effective Time, Acquiror shall unconditionally
guarantee the timely payment of all funds owing by, and the timely performance
of all other obligations of, the Surviving Corporation under this Section 5.06.
(f) Nothing contained in this Section 5.06 is intended to limit in any
manner and at any time rights that any Indemnified Party may have under and in
accordance with all provisions of the Company Charter Documents, including, but
not limited to, rights under the respective Article of the Company's Restated
Certificate of Incorporation and the respective Article of the Company's Bylaws
in each case dealing with indemnification, or any contract or agreement in
effect on the date hereof or whose execution following the date hereof is
permitted by the terms of this Agreement, which rights shall survive the
Effective Time and shall be binding on the Surviving Corporation and all
successors and assigns of the Surviving Corporation, in accordance with their
respective terms.
(g) This Section 5.06 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, the Surviving
Corporation, the Indemnified Parties and the Covered Persons, shall be binding
on all successors and assigns of the Surviving Corporation and shall be
enforceable by the Indemnified Parties and the Covered Persons.
SECTION 5.07 Notification of Certain Matters. The Company shall give
prompt notice to Acquiror, and Acquiror shall give prompt notice to the Company,
of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would reasonably be expected to cause any representation
or warranty contained in this Agreement to be materially untrue or inaccurate,
or (ii) any failure of the Company or Acquiror, as the case may be, materially
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice; and provided further
that failure to give such notice shall not be treated as a breach of covenant
for purposes of Section 7.01(h) unless the failure to give such notice results
in material prejudice to the other party.
SECTION 5.08 Further Action/Tax Treatment. (a) Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use all
reasonable efforts to, take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement. The foregoing covenant shall include, without limitation,
(i) the obligation by the Company to, and (ii) the obligation by Guarantor to,
and/or to permit the Company to, agree to divest, abandon, license, hold
separate or take similar action with respect to any assets (tangible or
intangible) which are, in the aggregate, not material to Guarantor or the
Company, as applicable (but shall not include any obligation by Guarantor to
agree to divest, abandon, license, hold separate or take similar action with
respect to any assets (tangible or intangible) material, in the aggregate, to
Guarantor or the Company, as applicable).
(b) Notwithstanding anything herein to the contrary, each of Acquiror
and the Company shall, and Acquiror shall cause Guarantor to, use its reasonable
best efforts to cause the Transaction to qualify, and will not (either before or
after the Merger) take any actions, or fail to take any action, which could
reasonably be expected to prevent the Transaction from qualifying as a
reorganization under the provisions of Section 368(a) of the Code that is not
subject to Section 367(a)(1) of the Code pursuant to Treasury Regulation Section
1.367(a)-3(c) (other than with respect to Company stockholders who are or will
be "five-percent transferee shareholders" within the meaning of Treasury
Regulation Section 1.367(a)-3(c)(5)(ii) and do not enter into five-year gain
recognition agreements in the form provided in Treasury Regulation Section
1.367(a)-8). Acquiror shall, and shall cause the Surviving Corporation and
Guarantor to, report, to the extent required by the Code or the regulations
thereunder, the Transaction for United States federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. Each of
Acquiror and the Company shall make, and shall cause their affiliates (including
Guarantor) to make, such representations, warranties and covenants as shall be
requested reasonably in the circumstances by PricewaterhouseCoopers LLP and CGSH
in order for such firms to render their opinions referred to in Section 1.01(e).
SECTION 5.09 Public Announcements. Acquiror and the Company shall
consult with each other before issuing any press release or making any written
public statement with respect to the Transaction or this Agreement and the
transactions contemplated hereby and shall not issue any such press release or
make any such public statement without the prior consent of the other party,
which shall not be unreasonably withheld; provided, however, that either party
may, without the prior consent of the other, issue such press release or make
such public statement as may upon the advice of counsel be required by law
(including, without limitation, Rules 165 and 425 under the Securities Act and
Rule 14a-12 under the Exchange Act) or the rules and regulations of the NYSE if
it has used all reasonable efforts to consult with the other party.
SECTION 5.10 Guarantor Common Shares. (a) Acquiror shall take all
action necessary so that Guarantor shall transfer to Acquiror the Guarantor
Common Shares to be delivered by Acquiror to the holders of Company Common Stock
in the Transaction.
(b) Acquiror will take all action necessary so that Guarantor will use
its best efforts to cause the Guarantor Common Shares to be delivered by
Acquiror to the holders of Company Common Stock in the Transaction to be listed,
upon official notice of issuance, on the NYSE prior to the Effective Time.
SECTION 5.11 Conveyance Taxes. Acquiror and the Company shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time, and the
Company shall be responsible for the payment of all such taxes and fees.
SECTION 5.12 Stock Incentive Plans; Restricted Shares; Other Programs.
(a) At the Effective Time, Acquiror shall, and shall cause its affiliates to,
take all necessary action to provide that each outstanding Company Stock Option
shall become fully vested and exercisable and otherwise will continue to have,
and be subject to, the same terms and conditions set forth in the relevant
Company Stock Option Plan and applicable award agreement immediately prior to
the Effective Time; except that, (i) each Company Stock Option will be fully
vested and exercisable for that number of whole Guarantor Common Shares equal to
the product of the number of shares of Company Common Stock that were issuable
upon exercise of such the Company Stock Option, immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded to the nearest whole
number of Guarantor Common Shares, and (ii) the per share exercise price for the
Guarantor Common Shares issuable upon exercise of such Company Stock Option will
be equal to the quotient determined by dividing the exercise price per share of
the Company Common Stock at which such Company Stock option was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded to the
nearest whole cent (each such Company Stock Option, as modified, an "Adjusted
Option"); provided, however, that to the extent that any Company Stock Option
qualified as an incentive stock option pursuant to Section 422 of the Code
immediately prior to the Effective Time, the provisions of this Section 5.12
shall be applied in good faith to comply with Sections 422 and 424(a) of the
Code.
(b) At the Effective Time, Acquiror and the Company shall cause all
restrictions and forfeiture provisions applicable to any outstanding Company
Restricted Shares to lapse to the extent provided under any applicable
employment, consulting, severance, termination, change in control or similar
agreement or arrangement or any award agreement under or relating to any Company
Stock Option Plan, in each case, as in effect as of the date hereof, or the Long
Term Incentive Plan and shall cause such shares to be converted into Guarantor
Common Shares in accordance with Section 1.09.
(c) Acquiror will cause Guarantor to take all corporate action
necessary to reserve for issuance as of or as soon as administratively
practicable after the Effective Time a sufficient number of Guarantor Common
Shares for delivery upon exercise of the Adjusted Options, or upon the exchange
of Company Restricted Shares, and to deliver to holders of Adjusted Options upon
the exercise of such options, and to holders of Company Restricted Shares,
Guarantor Common Shares registered pursuant to the Securities Act and listed on
the NYSE.
(d) Beginning on the date hereof, the Company shall not establish any
new employee stock purchase plans or extend the availability of the Company
Stock Purchase Plans to any employees not previously eligible to be included in
the Company Stock Purchase Plans, or, in either case, implement any decisions to
do the same, whether or not such decisions have been communicated to employees.
The Company shall terminate Company Stock Purchase Plans prior to the Effective
Time. All shares of Company Common Stock under the Company Stock Purchase Plans
shall be treated as all other shares of Company Common Stock. Acquiror shall, to
the extent legally and administratively feasible, enable employees of the
Company and its subsidiaries to participate in Guarantor's employee stock
purchase plan, in a manner consistent with the current practice of Acquiror's
affiliates.
SECTION 5.13 Certain Employee Benefits. (a) From the Effective Time
through June 30, 2002 (the "Benefits Continuation Period"), the Surviving
Corporation shall provide each person who, as of the Effective Time, is an
employee of the Company or any subsidiary of the Company (a "Company Employee")
with salary and employee benefits that are comparable in the aggregate to those
provided to such Company Employee immediately prior to the Effective Time,
provided, however, that (i) the Surviving Corporation shall have the right to
amend any Company Employee Plans, including without limitation, any retiree
welfare benefit plans or pension benefit plans, in effect as of the Effective
Time and (ii) the Surviving Corporation shall have the right to commence the
participation of the Company Employees in Acquiror's health and welfare benefit
plans effective as of January 1, 2002. During the Benefits Continuation Period,
Acquiror shall cause the Surviving Corporation to maintain severance plans,
policies and programs for the benefit of each Company Employee that are at least
as favorable as the plans, policies and programs applicable to such employees
immediately prior to the Effective Time, without amendment or modification
adverse to any such employee.
(b) After the Benefits Continuation Period the Surviving Corporation
shall provide the Company Employees with employee benefits that are comparable
in the aggregate to those provided to similarly situated employees of
subsidiaries of the Guarantor. For the avoidance of doubt, it is understood that
the Surviving Corporation shall have no obligation to provide Company Employees
with post-termination welfare or pension benefits, except to the extent required
by applicable law or contractual agreement.
(c) With respect to the benefits provided pursuant to this Section
5.13, (i) service accrued by Company Employees during employment with the
Company and its subsidiaries (including any predecessor entity) prior to the
Effective Time shall be recognized for all purposes, except for benefit accruals
with respect to defined benefit pension plans, (ii) any and all pre-existing
condition limitations (to the extent such limitations did not apply to a
pre-existing condition under the applicable Company Employee Plan) and
eligibility waiting periods under any group health plan shall be waived with
respect to such Company Employees and their eligible dependents, and (iii)
Company Employees shall be given credit for amounts paid under a Company
Employee Plan during the applicable period for purposes of applying deductibles,
co-payments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the employee welfare plans in which
any Company Employee becomes entitled to participate.
(d) From and after the initial acceptance of Shares for exchange in the
Offer, the Company shall and Acquiror shall cause Company to, and from and after
the Effective Time, Acquiror shall cause the Surviving Corporation to, honor in
accordance with their terms all benefits and obligations under the Company
Employee Plans, and consulting agreements including without limitation each
employment, retirement, severance and change in control agreement, plan or
arrangement, each as in effect on the date of this Agreement (or as amended as
contemplated hereby or with the prior written consent of Acquiror); provided,
however, that nothing herein shall prevent the Surviving Corporation or any
other subsidiary of Guarantor from amending or modifying any employee benefit
plan, program or arrangement in any respect in accordance with its terms or,
subject to the terms of the Company Employee Plans (as so amended or modified,
if applicable), terminating or modifying the terms and conditions of employment
or other service of any particular employee or any other person, except in any
such case as precluded by law or the terms of a Company Employee Plan.
(e) If not paid prior to the Effective Time, Acquiror shall cause the
Surviving Corporation to pay each Company Employee his or her respective annual
bonus for the Company's fiscal year ended June 30, 2001, in accordance with the
terms of any applicable Company Employee Plan, program or arrangement and in
accordance with the Company's customary practices.
(f) It is expressly agreed that the provisions of Section 5.13 are not
intended to be for the benefit of or otherwise enforceable by any third party,
including, without limitation, any Company Employees.
(g) The Company shall amend its 401(k) savings plan and any other
Company Employee Plan which permits participants to elect to invest in stock of
the Company, where necessary, to preclude any additional purchases of stock of
the Company, as of a date no later than two (2) days prior to the Effective
Time, and the Company shall communicate this amendment to the participants in
such plans.
SECTION 5.14 Reports of Tenders. From and after the day following
the commencement of the Offer pursuant to Section 1.01(a), Acquiror shall
instruct the exchange agent for the Offer (I) to deliver to the Company and to
CGSH a daily report (the "Daily Report") at the end of each business day during
the period from the day following commencement of the Offer until the Offer is
consummated of (i) the total number of Shares tendered and the total number of
Shares withdrawn pursuant to the Offer from the day of commencement of the Offer
through and including the day of such Daily Report and (ii) the percentage that
the total number of tendered Shares represents of the total number of
outstanding Shares and (II) to respond to any reasonable inquiries from the
Company or CGSH concerning the foregoing matters.
SECTION 5.15 Accountant's Letters. Upon reasonable notice from the
other, the Company shall use its best efforts to cause PricewaterhouseCoopers
LLP to deliver to Acquiror, and Acquiror shall use its best efforts to cause
PricewaterhouseCoopers to deliver to the Company, a letter covering such matters
as are reasonably requested by Acquiror or the Company, as the case may be, and
as are customarily addressed in accountants' "comfort letters."
SECTION 5.16 Compliance with State Property Transfer Statutes. The
Company agrees that it shall use its reasonable commercial efforts to comply
promptly with all requirements of applicable state property transfer laws as may
be required by the relevant state agency and shall take all action necessary to
cause the transactions contemplated hereby to be effected in compliance with
applicable state property transfer laws. The Company, after consultation with
Acquiror, shall determine which actions must be taken prior to or after the
Effective Time to comply with applicable state property transfer laws. The
Company agrees to provide Acquiror with any documents required to be submitted
to the relevant state agency prior to submission, and the Company shall not take
any action to comply with applicable state property transfer laws without
Acquiror's prior consent, which consent shall not be unreasonably withheld or
delayed. Acquiror shall provide, and shall take all action necessary such that
Guarantor shall provide, to the Company any assistance reasonably requested by
the Company with respect to such compliance.
SECTION 5.17 Redemption of Company Preferred Stock. The Company shall
redeem the Company Preferred Stock in accordance with the announcement and
notice specified in Section 1.02(d).
SECTION 5.18 Prepayment of Company Indebtedness. Following the
initial acceptance of Shares for exchange in the Offer, Acquiror shall cause to
be provided to the Company funds, in such amount or amounts and at such time or
times as shall be required by the Company (i) in order to prepay those of the
Company's outstanding 8.21% Senior Notes due January 30, 2003 (the "8.21%
Notes") and outstanding 7.74% Senior Notes due March 29, 2006 (the "7.74%
Notes", and together with the 8.21% Notes the "Notes") as shall be presented for
prepayment in accordance with their terms arising as a result of the
consummation of the Offer or (ii) in order to prepay the Notes as may otherwise
be required in connection with this Agreement.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Post-Effective
Amendment shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Post-Effective Amendment
shall have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statement/Prospectus shall have been
initiated or threatened by the SEC;
(b) Stockholder Approval. Unless Section 5.02(c) shall apply, this
Agreement and the Merger shall have been approved by the requisite vote of the
stockholders of the Company;
(c) Antitrust. All waiting periods applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated, and all
clearances and approvals required to be obtained in respect of the Merger prior
to the Effective Time under any Non-U.S. Monopoly Laws shall have been obtained,
except where the failure to have obtained any such clearances or approvals with
respect to any Non-U.S. Monopoly Laws would not reasonably be expected to have a
Material Adverse Effect on the Company, Guarantor or Guarantor's Fire and
Security Group;
(d) Governmental Actions. There shall not be in effect any judgment,
decree or order of any Governmental Authority, administrative agency or court of
competent jurisdiction preventing consummation of the Merger;
(e) Illegality. No statute, rule, regulation or order shall be enacted,
entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal; and
(f) Redemption of Company Preferred Stock. All shares of Company
Preferred Stock shall have been redeemed or converted and shall cease to be
outstanding.
ARTICLE VII
TERMINATION
SECTION 7.01 Termination. This Agreement may be terminated:
(a) prior to the initial acceptance of Shares for exchange in the
Offer, by mutual written consent duly authorized by the Boards of Directors of
Acquiror and the Company; or
(b) prior to the initial acceptance of Shares for exchange in the
Offer, by either Acquiror or the Company if the initial acceptance of Shares for
exchange in the Offer shall not have been consummated on or prior to the
Terminal Date; provided, however, that the right to terminate this Agreement
under this Section 7.01(b) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement has been the cause of, or
resulted in, the failure of the acceptance of Shares for exchange in the Offer
to occur on or prior to such date; or
(c) by either Acquiror or the Company if the Offer shall have
terminated or expired in accordance with its terms without the exchange of
Shares pursuant to the Offer, provided that the right to terminate this
Agreement under this Section 7.01(c) shall not be available to any party who
failed to fulfill any of its obligations under this Agreement or, whose failure
to fulfill such obligations has been the cause of, or resulted in the failure
of, any conditions to the Offer to be satisfied or the failure to exchange
Shares pursuant to the Offer; or
(d) at any time prior to the Effective Time by either Acquiror or the
Company if a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued a nonappealable final
order, decree or ruling or taken any other nonappealable final action having the
effect of permanently restraining, enjoining or otherwise prohibiting the Offer
or the Merger; or
(e) prior to the initial acceptance of Shares for exchange in the
Offer, by Acquiror, if, whether or not permitted to do so by this Agreement, the
Board of Directors of the Company or the Company shall (x) (i) withdraw, modify
or change its approval or recommendation of this Agreement, the Offer or the
Merger in a manner adverse to Acquiror, (ii) approve or recommend to the
stockholders of the Company an Acquisition Proposal or Alternative Transaction;
or (iii) approve or recommend that the stockholders of the Company tender their
shares in any tender or exchange offer that is an Alternative Transaction or (y)
take any position or make any disclosures to the Company's stockholders
permitted pursuant to Section 4.02(e) which has the effect of any of the
foregoing; or
(f) prior to the initial acceptance of Shares for exchange in the
Offer, by Acquiror or the Company, if any representation or warranty of the
Company or Acquiror, respectively, set forth in this Agreement shall be untrue
when made (a "Terminating Misrepresentation"); provided that, if such
Terminating Misrepresentation is curable prior to the Designated Expiration Date
(as the same may be from time to time extended in accordance with Section
1.01(c)) by the Company or Acquiror, as the case may be, through the exercise of
its reasonable best efforts neither Acquiror nor the Company, respectively, may
terminate this Agreement under this Section 7.01(f) prior to the Designated
Expiration Date except upon not less than five (5) business days' prior notice
and thereafter for so long as the Company or Acquiror, as the case may be,
continues to exercise such reasonable best efforts; or
(g) prior to the initial acceptance of Shares for exchange in the
Offer, by Acquiror or the Company, if any representation or warranty of the
Company or Acquiror, respectively, set forth in this Agreement (other than those
made as of a specified date), shall have become untrue (a "Terminating Change"),
in either case other than by reason of a Terminating Breach; provided that, if
any such Terminating Change is curable, prior to the Designated Expiration Date
(as the same may be from time to time extended in accordance with Section
1.01(c)), by the Company or Acquiror, as the case may be, through the exercise
of its reasonable best efforts, neither Acquiror nor the Company, respectively,
may terminate this Agreement under this Section 7.01(g) prior to the Designated
Expiration Date except upon not less than five (5) business days' prior notice
and thereafter for so long as the Company or Acquiror, as the case may be,
continues to exercise such reasonable best efforts; or
(h) prior to the initial acceptance of Shares for exchange in the
Offer, by Acquiror or the Company, upon a material breach of any covenant or
agreement on the part of the Company or Acquiror, respectively, set forth in
this Agreement (a "Terminating Breach"); provided that, except for any breach of
the Company's obligations under Section 4.02, if such Terminating Breach is
curable prior to the Designated Expiration Date (as the same may be from time to
time extended in accordance with Section 1.01(c)), by the Company or Acquiror,
as the case may be, through the exercise of its reasonable best effort, neither
Acquiror nor the Company, respectively, may terminate this Agreement under this
Section 7.01(h) prior to the Designated Expiration Date except upon not less
than five (5) business days' prior notice and thereafter for so long as the
Company or Acquiror, as the case may be, continues to exercise such reasonable
best efforts; or
(i) prior to the initial acceptance of Shares for exchange in the
Offer, by the Company, in order to accept a Superior Proposal; provided that (A)
the Board of Directors of the Company shall have authorized the Company, subject
to complying with the terms of this Agreement, including Section 4.02, to enter
into a definitive agreement with respect to a Superior Proposal and the Company
shall have notified Acquiror in writing that it intends to enter into such an
agreement, attaching a summary of the material terms thereof, (B) Acquiror shall
not have made, within two full business days (disregarding any partial business
days) of receipt of the Company's written notification of its intention to enter
into a definitive agreement with respect to a Superior Proposal, a written offer
that the Board of Directors of the Company determines, in good faith after
consultation with its financial advisors, is at least as favorable to the
Company and its stockholders as the Superior Proposal, and (C) the Company prior
to such termination pursuant to this clause shall have paid or caused to be paid
to Acquiror in immediately available funds the Fee and the Expenses required to
be paid pursuant to Section 7.03(b); or
(j) prior to the initial acceptance of Shares for exchange in the
Offer, by Acquiror, if the Average Share Price is less than $46.25, provided
that (i) Acquiror shall have given the Company notice of its intention to
terminate pursuant to this Section 7.01(j) prior to 5:00 p.m. New York City time
on the third trading day immediately preceding and not including the Designated
Expiration Date and (ii) the Company shall not, by 5:00 p.m. New York City time
on the second trading day immediately preceding and not including the Designated
Expiration Date, have delivered a notice to Acquiror agreeing that the Exchange
Ratio shall equal 0.5189; provided further that if the Company shall deliver the
notice referred to in the preceding clause (ii), this Agreement shall not be
terminated under this Section 7.01(j) and the Exchange Ratio for all purposes of
this Agreement shall equal 0.5189 or, if the parties shall so agree in their
respective sole and absolute discretion, a higher number.
For purposes of Section 7.01(f) and 7.01(g) and paragraph (f) of the
Offer Conditions,
(w) all representations and warranties shall be interpreted without
giving effect to the words "materially" or "material" or to any qualification
based on such terms or based on the defined term "Material Adverse Effect";
(x) any representation and warranty (other than those contained in
Sections 2.03(a), 2.04, 2.13, 2.18, 2.23, 3.02, 3.03, 3.11, 3.12 and 3.13) shall
be deemed untrue if such representation and warranty shall fail to be true and
correct in all respects except (A) as a result of acts or omissions required or
permitted under this Agreement or (B) where the failure of such representations
and warranties to be true and correct would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Company or Guarantor, as the case may be;
(y) any representation and warranty contained in Section 2.03(a), 2.04,
2.13, 2.18, 2.23, 3.02 (a) and (b), 3.03, 3.11, 3.12 and 3.13 shall be deemed
untrue if such representation and warranty shall fail to be true and correct in
all material respects; and
(z) the representation contained in Section 3.02(c) shall be deemed
untrue if it shall fail to be true and correct in any respect.
SECTION 7.02 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 7.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto or
any of its affiliates, directors, officers or stockholders except that the
Company or Acquiror may have liability or obligations as set forth in Section
7.03 and as set forth in or contemplated by Section 8.01 hereof. Notwithstanding
the foregoing, nothing herein shall relieve the Company or Acquiror from
liability for any willful breach hereof or willful misrepresentation herein (it
being understood that (x) the provisions of Section 7.03 do not constitute a
sole or exclusive remedy for such willful breach or misrepresentation and (y)
the mere existence of a Material Adverse Effect, by itself, shall not constitute
such a willful breach).
SECTION 7.03 Fees and Expenses. (a) Except as set forth in this Section
7.03, all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Offer or the Merger is consummated; provided,
however, that if the Offer or Merger is not consummated, Acquiror and the
Company shall share equally (i) all SEC filing fees and printing expenses
incurred in connection with the printing and filing of the Registration
Statement (including financial statements and exhibits), the Offer Documents,
the Schedule 14D-9, the Post-Effective Amendment (including financial statement
and exhibits) and the Proxy Statement/Prospectus (including any preliminary
materials related thereto) and any amendments or supplements thereto and (ii)
conveyance and similar taxes required to be paid by the Company prior to the
Effective Time pursuant to Section 5.11.
(b) The Company shall pay Guarantor a fee of $70 million (the "Fee"),
and shall pay Acquiror's and Guarantor's respective actual, documented and
reasonable out-of-pocket expenses, relating to the transactions contemplated by
this Agreement (including, but not limited to, reasonable fees and expenses of
counsel and accountants and out-of-pocket expenses (but not fees) of financial
advisors) ("Expenses," as applicable to Acquiror, Guarantor or the Company),
such payment of Expenses not to exceed $5 million, upon the first to occur of
any of the following events:
(i) the termination of this Agreement by Acquiror or the Company
pursuant to 7.01(b) or Section 7.01(c); provided that (i) the Minimum Condition
shall not have been satisfied and no other condition to the Offer shall have
been unsatisfied at the time of termination (other than any condition that shall
not have been satisfied as a result of a Terminating Misrepresentation,
Terminating Change or a Terminating Breach on the part of the Company) and there
shall not have been a Terminating Misrepresentation, Terminating Change or
Terminating Breach on the part of Acquiror and (ii) (A) prior to such
termination, (1) there shall be outstanding a bona fide Acquisition Proposal
which has been made directly to the stockholders of the Company or has otherwise
become publicly known or (2) there shall be outstanding an announcement by any
credible third party of a bona fide intention to make an Acquisition Proposal
(in each case whether or not conditional and whether or not such proposal shall
have been rejected by the Board of Directors of the Company) or (B) an
Alternative Transaction shall be publicly announced by the Company or any third
party within nine (9) months following the date of termination of this
Agreement, and such transaction, in the case of clause (A) or (B), shall at any
time thereafter be consummated on substantially the terms theretofore announced
(or on terms that are more favorable to the stockholders of the Company), and
shall provide for a per share consideration with a fair market value at least
equal to the Exchange Ratio multiplied by the Average Share Price.
(ii) the termination of this Agreement by Acquiror pursuant to Section
7.01(e); or
(iii) the termination of this Agreement by the Company pursuant to
Section 7.01(i).
(c) Upon a termination of this Agreement by Acquiror or the Company, as
the case may be, pursuant to Section 7.01(h), the Company shall pay to Guarantor
and Acquiror or Guarantor or Acquiror shall pay the Company, as the case may be,
their respective Expenses relating to the transactions contemplated by this
Agreement, but in no event more than $5 million. In addition, if termination is
by Acquiror, the Company shall pay Guarantor the Fee if the Terminating Breach
is willful and either (A) prior to such termination, (1) there shall be
outstanding a bona fide Acquisition Proposal which has been made directly to the
stockholders of the Company or has otherwise become publicly known or (2) there
shall be outstanding an announcement by any credible third party of a bona fide
intention to make an Acquisition Proposal (in each case whether or not
conditional and whether or not such proposal shall have been rejected by the
Board of Directors of the Company) or (B) an Alternative Transaction shall be
publicly announced by the Company or any third party within nine (9) months
following the date of termination of this Agreement, and such transaction, in
the case of clause (A) or (B), shall at any time thereafter be consummated on
substantially the terms theretofore announced (or on terms that are more
favorable to the stockholders of the Company). The remedies available pursuant
to this Section 7.03(c) shall be in addition to, but without duplication in any
way of, the remedies referred to in Section 7.02.
(d) Upon a termination of this Agreement by Acquiror pursuant to
Section 7.01(f), the Company shall pay to Guarantor and Acquiror their
respective Expenses relating to the transactions contemplated by this Agreement,
but in no event more than $5 million. Upon a termination of this Agreement by
the Company pursuant to Section 7.01(f), Acquiror shall pay to the Company its
Expenses relating to the transactions contemplated by this Agreement, but in no
event more than $5 million.
(e) The Fee and/or Expenses payable pursuant to Section 7.03(b),
7.03(c) or 7.03(d) shall be paid within one business day after a demand for
payment following the first to occur of any of the events described in Section
7.03(b), 7.03(c) or 7.03(d) as applicable; provided that in no event shall the
Company or Acquiror, as the case may be, be required to pay such Fee and/or
Expenses to the entities entitled thereto if, immediately prior to the
termination of this Agreement, the other entity entitled to receive such Fee
and/or Expenses was in material breach of its obligations under this Agreement.
(f) For purposes of this Section 7.03, the definition of Alternative
Transaction set forth in Section 4.02(a) shall be modified to replace "25%," as
it appears in such definition, with "40%".
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01 Effectiveness of Representations, Warranties and
Agreements. (a) Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01, except that the agreements set forth in Article I and
Sections 5.06 and 5.08(b) and any other agreement in this Agreement which
contemplates performance after the Effective Time shall survive the Effective
Time indefinitely and those set forth in Sections 7.02 and 7.03 and this Article
VIII shall survive termination indefinitely. The Confidentiality Agreement shall
survive termination of this Agreement in accordance with its terms.
(b) Any disclosure made with reference to one or more Sections of the
Company Disclosure Schedule or the Supplemental Company Disclosure Schedule
shall be deemed disclosed with respect to each other section therein as to which
such disclosure is relevant; provided that such relevance is reasonably
apparent. Disclosure of any matter in the Company Disclosure Schedule or the
Supplemental Company Disclosure Schedule shall not be deemed an admission that
such matter is material or is required to be disclosed.
SECTION 8.02 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a party as shall be specified by like notice):
(a) If to Acquiror:
Tyco Acquisition Corp. XXIV (NV)
c/o Tyco International (US) Inc.
Xxx Xxxx Xxxx
Xxxxxx, XX 00000
Attn: President
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
With a copy (which shall not constitute notice) to:
Tyco International (US) Inc.
Xxx Xxxx Xxxx
Xxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
and
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
If to the Company:
Sensormatic Electronics Corporation
000 Xxxxxx Xxxx
Xxxx Xxxxx, XX 00000
Attn: President and Chief Executive Officer
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
With a copy (which shall not constitute notice) to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
and a copy to:
Salans, Hertzfeld, Xxxxxxxxx,
Xxxxxxx & Xxxxxx
Xxxxxxxxxxx Center
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx XxXxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
SECTION 8.03 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates", with respect to any person, means a person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned person;
(b) "business day" means any day other than a day on which banks in New
York City are required or authorized to be closed;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "dollars" or "$" means United States dollars;
(e) "knowledge" means, with respect to any matter in question, that the
executive officers, or the responsible employee having primary or substantial
oversight responsibility for the matter (the "Responsible Employees"), of the
Company, Acquiror or Guarantor, as the case may be, have or at any time had
actual knowledge of such matter. The Responsible Employees of the Company for
the matters that are the subject of the following Sections of this Agreement are
as follows: for Section 2.03 Compliance; Permits, the Executive Vice President -
Integrated Solutions Group; for Section 2.10 Absence of Litigation, the Vice
President - General Counsel; for Section 2.11 Employee Benefit Plans; Employment
Agreements, the Senior Vice President - Human Resources; for Section 2.12
Employment and Labor Matters, the Senior Vice President - Human Resources; for
Section 2.14 Restrictions on Business Activities, the Vice President - General
Counsel; for Section 2.15 Title to Property, the Senior Vice President and Chief
Financial Officer; for Section 2.16 Taxes, the Director of Corporate Tax; for
Section 2.17 Environmental Matters, the Vice President - General Counsel; for
Section 2.19 Intellectual Property, the Intellectual Property Counsel; and for
Section 2.22 Product Liability and Recalls, the Executive Vice President -
Integrated Solutions Group;
(f) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(g) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Acquiror, Guarantor or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company, the
Surviving Corporation, Acquiror, Guarantor or such other person, as the case may
be (either alone or through or together with any other subsidiary), owns,
directly or indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
When reference is made in this Agreement to the Company, Acquiror or
Guarantor, such reference shall include their respective subsidiaries, as and to
the extent the context so requires, whether or not explicitly stated in this
Agreement.
SECTION 8.04 Amendment. Subject to Section 1.03, this Agreement may
be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of the Merger and this Agreement by the
stockholders of the Company, no amendment may be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended, except by an instrument in writing signed by the
parties hereto.
SECTION 8.05 Waiver. Subject to Section 1.03, at any time prior to
the Effective Time, any party hereto may with respect to any other party hereto
(a) extend the time for the performance of any of the obligations or other acts,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (c) waive compliance
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
SECTION 8.06 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.07 Severability. (a) If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon a determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
(b) The Company and Acquiror agree that the Fee provided in Section
7.03(b) is fair and reasonable in the circumstances. If a court of competent
jurisdiction shall nonetheless, by a final, nonappealable judgment, determine
that the amount of the Fee exceeds the maximum amount permitted by law, then the
amount of the Fee shall be reduced to the maximum amount permitted by law in the
circumstances, as determined by such court of competent jurisdiction.
SECTION 8.08 Entire Agreement. This Agreement and the Guarantor's
guarantee hereof constitute the entire agreement and supersede all prior
agreements and undertakings (other than the Confidentiality Agreement), both
written and oral, among the parties, or any of them, with respect to the subject
matters hereof and thereof, except as otherwise expressly provided herein or
therein.
SECTION 8.09 Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that all or any of the rights of Acquiror
hereunder may be assigned to Guarantor or any direct or indirect wholly-owned
subsidiary of Guarantor provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
SECTION 8.10 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation, other
than Section 5.06 (which is intended to be for the benefit of the Indemnified
Parties and Covered Persons and may be enforced by such Indemnified Parties and
Covered Persons) and Section 7.03 (which contains provisions intended to be for
the benefit of Guarantor and may be enforced by Guarantor) and other than the
right of the stockholders of the Company to receive the Merger Consideration if,
but only if, the Merger is consummated and not otherwise.
SECTION 8.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 8.12 Governing Law; Jurisdiction. (a) This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York applicable to contracts executed and fully performed within the State
of New York, except to the extent that the DGCL applies and, to that extent, by
the internal laws of the State of Delaware.
(b) Each of the parties hereto submits to the exclusive jurisdiction of
the courts of the State of New York and the federal courts of the United States
located in the City of New York, Borough of Manhattan, with respect to any claim
or cause of action arising out of this Agreement or the transactions
contemplated hereby.
SECTION 8.13 Counterparts. This Agreement may be executed in two or
more counterparts, and by the different parties hereto in separate counterparts
(by facsimile or original signature), each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
SECTION 8.14 WAIVER OF JURY TRIAL. EACH OF ACQUIROR AND THE COMPANY
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.15 Performance of Guarantee. Unless otherwise previously
performed, Acquiror shall cause Guarantor to perform all of its obligations
under the Guarantee.
SECTION 8.16 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. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
IN WITNESS WHEREOF, Acquiror and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
TYCO ACQUISITION CORP. XXIV (NV)
By: /s/ Xxxx X. Xxxxxx
-------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
SENSORMATIC ELECTRONICS CORPORATION
By: /s/ Per-Xxxx Xxxx
-------------------
Name: Per-Xxxx Xxxx
Title: President and Chief
Executive Officer
GUARANTEE
Tyco International Ltd. ("Guarantor") irrevocably guarantees each and
every representation, warranty, covenant, agreement and other obligation of
Acquiror, and/or any of its permitted assigns (and where any such representation
or warranty is made to the knowledge of Acquiror, such representation or
warranty shall be deemed made to the knowledge of Guarantor), and the full and
timely performance of their respective obligations under the provisions of the
foregoing Agreement between Tyco Acquisition Corp. XXIV (NV) and Sensormatic
Electronics Corporation. This is a guarantee of payment and performance, and not
of collection, and Guarantor acknowledges and agrees that this guarantee is full
and unconditional, and no release or extinguishment of Acquiror's obligations or
liabilities (other than in accordance with the terms of the Agreement), whether
by decree in any bankruptcy proceeding or otherwise, shall affect the continuing
validity and enforceability of this guarantee, as well as any provision
requiring or contemplating performance by Guarantor.
Guarantor hereby waives, for the benefit of the Company, (i) any right
to require the Company as a condition of payment or performance by Guarantor, to
proceed against Acquiror or pursue any other remedy whatsoever and (ii) to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors or
sureties, except to the extent that any such defense is available to Acquiror.
Without limiting in any way the foregoing guarantee, Guarantor
covenants and agrees to take all actions to enable Acquiror to adhere to the
provisions of Sections 1.01, 1.09, 1.10, 1.13, 4.03, 5.01, 5.03, 5.04, 5.08,
5.10, 5.12, 5.15 and 5.16 and each other provision of the Agreement which
requires an act or omission on the part of Guarantor or any of its subsidiaries
to enable Acquiror to comply with its obligations under the Agreement.
The provisions of Article VIII of the Agreement are incorporated
herein, mutatis mutandis, except that notices and other communications hereunder
to Guarantor shall be delivered to Tyco International Ltd., The Zurich Centre,
Second Floor, 90 Xxxxx Bay Road, Pembroke HM 08, Bermuda, Attn: Chief Corporate
Counsel and Chief Financial Officer, Telecopy No. (000) 000-0000, Confirm No.
(000) 000-0000 (with a copy as provided therefor in Section 8.02(a)).
All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Agreement.
We understand that the Company is relying on this guarantee in entering
into the Agreement and may enforce this guarantee as if Guarantor were a party
thereto.
TYCO INTERNATIONAL LTD.
By: /s/ Xxxx X. Xxxxxx
-------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
ANNEX I
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provision of the Offer, subject to the terms
of this Agreement, Acquiror shall not be required to accept for exchange or
exchange or deliver any Guarantor Common Shares for any Shares tendered (subject
to any applicable rules and regulations of the SEC, including Rule 14e-1(c)
under the Exchange Act relating to Acquiror's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), if by the
Designated Expiration Date (as such date may be extended in accordance with the
requirements of Section 1.01(c)), (1) the Minimum Condition shall not have been
satisfied, (2) the applicable waiting period under the HSR Act and any
applicable material Non-U.S. Monopoly Laws shall not have expired or been
terminated (provided that a Non-U.S. Monopoly Law shall not be deemed immaterial
if a violation of such law would result in criminal liability), (3) the
Registration Statement shall not have become effective under the Securities Act
or shall be the subject of any stop order or proceedings seeking a stop order,
(4) the Guarantor Common Shares to be issued in the Offer and the Merger shall
not have been approved for listing on the NYSE, subject to official notice of
issuance, (5) the tax opinion of PricewaterhouseCoopers LLP and CGSH required to
be filed as an exhibit to the Registration Statement pursuant to Section 1.01(e)
shall not have been filed or shall have been withdrawn (the conditions set forth
in clauses (1) through (5) being referred to as the "Basic Conditions") or (6)
at any time on or after the date of this Agreement and prior to the acceptance
for exchange of Shares pursuant to the Offer, any of the following conditions
exist:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a Governmental Authority of competent jurisdiction or a
statute, rule, regulation or order shall have been promulgated, or enacted by a
Governmental Authority of competent jurisdiction which in any such case (i)
restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger, (ii) prohibits or restricts the ownership or
operation by Acquiror (or any of its affiliates or subsidiaries) of any material
portion of the Company's business or assets, or any material portion of
Guarantor's security or safety business or which would substantially deprive
Acquiror and/or its affiliates or subsidiaries of the benefit of ownership of
the Company's business or assets, or compels Acquiror (or any of its affiliates
or subsidiaries) to dispose of or hold separate any material portion of the
Company's business or assets, or any material portion of Guarantor's security or
safety business or which would substantially deprive Acquiror and/or its
affiliates or subsidiaries of the benefit of ownership of the Company's business
or assets, (iii) imposes material limitations on the ability of Acquiror
effectively to acquire or to hold or to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote Shares acquired by
Acquiror pursuant to the Offer or the Merger on all matters properly presented
to the stockholders of the Company, (iv) imposes any material limitations on the
ability of Acquiror and/or its affiliates or subsidiaries effectively to control
in any material respect the business and operations of the Company, (v) as a
result of the Transaction materially restricts any future business activity by
Guarantor (or any of its affiliates) relating to the security or safety
business, including, without limitation, by requiring the prior consent of any
person or entity (including any Governmental Authority) to future transactions
by Guarantor (or any of its affiliates), or (vi) imposes any liability as a
result of the Offer or Merger on the other transactions contemplated by this
Agreement which, if borne by the Company, would have a Material Adverse Effect
on the Company; or
(b) there shall have been instituted, pending or threatened an action
by a Governmental Authority seeking to restrain or prohibit the making or
consummation of the Offer, the consummation of the Merger or to impose any other
restriction, prohibition, obligation or limitation referred to in the foregoing
paragraph (a); or
(c) this Agreement shall have been terminated by the Company or
Acquiror in accordance with its terms; or
(d) there shall have occurred and shall be continuing (i) any general
suspension of, or limitation on prices for, trading in the Shares or the trading
of the Guarantor Common Shares on the NYSE, (ii) a declaration of a banking
moratorium or any general suspension of payments in respect of banks in the
United States or (iii) in the case of any of the foregoing existing at the time
of the execution of this Agreement, a material acceleration or worsening
thereof; or
(e) Acquiror and the Company shall have agreed that Acquiror shall
amend the Offer to terminate the Offer or postpone the exchange of Shares
pursuant thereto; or
(f) applying the principles of the final paragraph of Section 7.01, any
of the representations and warranties of the Company contained in the Agreement
shall have been untrue when made (or, if made as of a specified date, as of such
date) or the representations and warranties of the Company contained in the
Agreement (other than those made as of a specified date) shall have become
untrue; or
(g) the Company shall not have performed each obligation and agreement
and complied with each covenant to be performed and complied with by it under
this Agreement in all material respects; or
(h) the Company's Board of Directors shall have modified or amended its
recommendation of the Offer in any manner adverse to Acquiror or shall have
withdrawn its recommendation of the Offer, or shall have recommended acceptance
of any Acquisition Proposal or Alternative Transaction or shall have resolved to
do any of the foregoing; or
(i) (A) any corporation, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) ("person/group"), other than Acquiror and its
affiliates, shall have acquired beneficial ownership of more than 25% of the
outstanding Shares, or shall have been granted any options or rights,
conditional or otherwise, to acquire a total of more than 25% of the outstanding
Shares and which, in each case, does not tender the Shares beneficially owned by
it in the Offer; (B) any new group shall have been formed which beneficially
owns more than 25% of the outstanding Shares and which does not tender the
Shares beneficially owned by it in the Offer; or (C) any person/group (other
than Acquiror or one or more of its affiliates) shall have entered into an
agreement in principle or definitive agreement with the Company with respect to
a tender or exchange offer for any Shares or a merger, consolidation or other
business combination with or involving the Company; or
(j) any change, development, effect or circumstance shall have occurred
and shall be continuing that would reasonably be expected to have a Material
Adverse Effect on the Company; or
(k) the Company shall commence a case under any chapter of Title XI of
the United States Code or any similar law or regulation; or a petition under any
chapter of Title XI of the United States Code or any similar law or regulation
is filed against the Company which is not dismissed within two (2) business
days;
which, in the good faith judgment of Acquiror in any such case, and
regardless of the circumstances (including any action or omission by Acquiror or
its affiliates that does not constitute a breach of this Agreement) giving rise
to any such condition, makes it inadvisable to proceed with such acceptance for
exchange or exchange.
The foregoing conditions are for the sole benefit of Acquiror and may
be asserted by Acquiror regardless of the circumstances (including any action or
omission by Acquiror or its affiliates that does not constitute a breach of this
Agreement) giving rise to any such condition or (other than the Basic
Conditions) may, subject to the terms of this Agreement, be waived by Acquiror
in its reasonable discretion in whole at any time or in part from time to time.
The failure by Acquiror at any time to exercise its rights under any of the
foregoing conditions shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances, and each
such right shall be deemed an ongoing right which may be asserted at any time or
from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered Shares not theretofore accepted for exchange shall promptly be
returned to the tendering stockholders.
