EXHIBIT 2
ALARMGUARD HOLDINGS, INC.,
TYCO INTERNATIONAL LTD.
and
T16 ACQUISITION CORP.
AGREEMENT AND PLAN OF MERGER
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Dated as of January 8, 1999
TABLE OF CONTENTS
Page
ARTICLE I
TENDER OFFER AND MERGER
1.1. The Offer ................................................................................................ 2
1.2. Company Action............................................................................................ 4
1.3. Directors ................................................................................................ 5
1.4. The Merger ............................................................................................... 7
1.5. Effective Time............................................................................................ 7
1.6. Conversion of Shares...................................................................................... 7
1.7. Dissenting Shares......................................................................................... 8
1.8. Surrender of Shares....................................................................................... 9
1.9. Options and Warrants...................................................................................... 10
1.10. Certificate of Incorporation and Bylaws................................................................... 11
1.11. Directors and Officers.................................................................................... 11
1.12. Other Effects of Merger................................................................................... 11
1.13. Proxy Statement........................................................................................... 11
1.14. Additional Actions........................................................................................ 12
1.15. Merger Without Meeting of Stockholders.................................................................... 13
1.16. Lost, Stolen or Destroyed Certificates.................................................................... 13
1.17. Material Adverse Effect................................................................................... 13
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Organization and Good Standing............................................................................ 14
2.2. Capitalization............................................................................................ 14
2.3. Subsidiaries.............................................................................................. 15
2.4. Authorization; Binding Agreement.......................................................................... 15
2.5. Governmental Approvals.....................................................................................16
2.6. No Violations............................................................................................. 16
2.7. Securities Filings........................................................................................ 17
2.8. Company Financial Statements.............................................................................. 17
2.9. Absence of Certain Changes or Events...................................................................... 17
2.10. No Undisclosed Liabilities................................................................................ 18
2.11. Compliance with Laws...................................................................................... 18
2.12. Permits................................................................................................... 18
2.13. Litigation ............................................................................................... 18
2.14. Contracts ................................................................................................ 19
2.15. Employee Benefit Plans.................................................................................... 20
2.16. Taxes and Returns......................................................................................... 22
2.17. Intellectual Property..................................................................................... 25
2.18. Disclosure Documents...................................................................................... 25
2.19. Labor Matters............................................................................................. 26
2.20. Limitation on Business Conduct............................................................................ 26
2.21. Title to Property......................................................................................... 26
2.22. Leased Premises........................................................................................... 27
2.23. Environmental Matters..................................................................................... 27
2.24. Insurance................................................................................................. 29
2.25. Customers................................................................................................. 29
2.26. Interested Party Transactions............................................................................. 29
2.27. Alarm Contracts........................................................................................... 29
2.28. Finders and Investment Bankers............................................................................ 29
2.29. Fairness Opinion.......................................................................................... 29
2.30. Takeover Statutes......................................................................................... 30
2.31. Full Disclosure........................................................................................... 30
2.32. Year 2000................................................................................................. 30
2.33. Rights Agreement.......................................................................................... 31
2.34. Standard Form Contracts................................................................................... 31
2.35. Central Station/Inspection................................................................................ 32
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
3.1. Organization and Good Standing............................................................................ 33
3.2. Authorization; Binding Agreement.......................................................................... 33
3.3. Governmental Approvals.................................................................................... 33
3.4. No Violations............................................................................................. 33
3.5. Disclosure Documents...................................................................................... 34
3.6. Finders and Investment Bankers............................................................................ 34
3.7. Financing Arrangements.................................................................................... 34
3.8. No Prior Activities....................................................................................... 35
ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
4.1. Conduct of Business of the Company and the Company Subsidiaries .......................................... 35
4.2. Notification of Certain Matters........................................................................... 37
4.3. Access and Information.................................................................................... 38
4.4. Stockholder Approval...................................................................................... 38
4.5. Reasonable Best Efforts................................................................................... 38
4.6. Public Announcements...................................................................................... 39
4.7. Compliance ............................................................................................... 39
4.8. No Solicitation........................................................................................... 39
4.9. SEC and Stockholder Filings............................................................................... 42
4.10. Takeover Statutes......................................................................................... 42
4.11. Rights Agreement.......................................................................................... 42
ARTICLE V
ADDITIONAL COVENANTS OF PURCHASER AND PARENT
5.1. Reasonable Best Efforts................................................................................... 42
5.2. Public Announcements...................................................................................... 43
5.3. Compliance ............................................................................................... 43
5.4. Employee Benefit Plans.................................................................................... 43
5.5. Indemnification........................................................................................... 44
5.6. Voting of Shares.......................................................................................... 45
5.7. Guarantee of Parent....................................................................................... 45
ARTICLE VI
MERGER CONDITIONS
6.1. Offer..................................................................................................... 45
6.2. Stockholder Approval...................................................................................... 45
6.3. No Injunction or Action................................................................................... 45
6.4. Governmental Approvals.................................................................................... 46
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1. Termination .............................................................................................. 46
7.2. Effect of Termination and Abandonment..................................................................... 48
ARTICLE VIII
MISCELLANEOUS
8.1. Confidentiality........................................................................................... 48
8.2. Amendment and Modification................................................................................ 49
8.3. Waiver of Compliance; Consents............................................................................ 49
8.4. Survival ................................................................................................. 50
8.5. Notices................................................................................................... 50
8.6. Binding Effect; Assignment................................................................................ 51
8.7. Expenses ................................................................................................. 51
8.8. Governing Law............................................................................................. 53
8.9. Counterparts.............................................................................................. 53
8.10. Interpretation............................................................................................ 53
8.11. Entire Agreement.......................................................................................... 54
8.12. Severability ............................................................................................. 54
8.13. Specific Performance...................................................................................... 54
8.14. Third Parties............................................................................................. 55
8.15. Disclosure Letter......................................................................................... 55
Annex I................................................................................................ A1
Glossary of Defined Terms.............................................................................. G1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (THIS "AGREEMENT") is made
and entered into as of January 8, 1999, by and among ALARMGUARD HOLDINGS, INC.,
a Delaware corporation (the "COMPANY"), TYCO INTERNATIONAL LTD., a Bermuda
company ("PARENT"), and T16 ACQUISITION CORP., a Delaware corporation and an
indirect wholly owned subsidiary of Parent ("PURCHASER").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company,
Purchaser and Parent have approved the acquisition by Purchaser of the Company;
and
WHEREAS, in furtherance thereof, it is proposed that Purchaser
will make a cash tender offer (the "OFFER") to acquire all of the issued and
outstanding shares of common stock, par value $.0001 per share, of the Company
("COMPANY COMMON STOCK") together with the associated right to purchase shares
of Series C Junior Participating Preferred Stock of the Company, par value
$.0001 per share (the "RIGHTS"), issued pursuant to the Rights Agreement (the
"RIGHTS AGREEMENT"), dated as of April 10, 1998, between the Company and
American Stock Transfer & Trust Company, as Rights Agent (the shares of Company
Common Stock together with the associated Rights are referred to as the "COMMON
SHARES"), for $9.25 per share, or such higher price as may be paid in the Offer
(the "COMMON PER SHARE AMOUNT"), subject to any applicable withholding, net to
the seller in cash without interest; and
WHEREAS, Purchaser has entered into a Preferred Stock Purchase
Agreement (the "PREFERRED STOCK PURCHASE AGREEMENT") with the holders of at
least 75% of the issued and outstanding shares ("PREFERRED SHARES," and,
together with the Common Shares, the "SHARES") of the Series A and Series B
preferred stock of the Company ("COMPANY PREFERRED STOCK," and, together with
the Company Common Stock, the "COMPANY STOCK"), pursuant to which Purchaser will
acquire the Preferred Shares for $1,400 per share plus accrued but unpaid
dividends to and including the date of purchase (the "PREFERRED PER SHARE
AMOUNT," and together with the Common Per Share Amount, as applicable, the "PER
SHARE AMOUNT"), subject to any applicable withholding, net to the seller in cash
without interest; and
WHEREAS, also in furtherance of such acquisition, the
respective Boards of Directors of the Company, Purchaser and Parent have each
approved the merger (the "MERGER") of Purchaser with and into the Company
following the Offer in accordance with the laws of the State of Delaware; and
WHEREAS, the Board of Directors of the Company has approved
and resolved to recommend acceptance of the Offer and the Merger to the holders
of Shares and has determined that the consideration to be paid for each Share in
the Offer and the Merger is fair to and in the best interest of the holders of
Common Shares and to recommend that the holders
of such Shares accept the Offer and that the holders of Common Shares and
Preferred Shares approve this Agreement and the transactions contemplated
hereby; and
WHEREAS, the Company, Purchaser and Parent 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, the
parties hereto agree as follows:
ARTICLE I
TENDER OFFER AND MERGER
1.1 THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with SECTION 7.1 hereof and that none of the
events set forth in ANNEX I hereto shall have occurred and be existing,
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"SECURITIES EXCHANGE ACT")) the Offer as promptly as practicable, but in no
event later than five business days following the first public announcement of
the Offer, and shall use reasonable best efforts to consummate the Offer. The
obligation of Purchaser to accept for payment any Common Shares tendered shall
be subject to the satisfaction of only those conditions set forth in ANNEX I
hereto. The Common Per Share Amount payable in the Offer shall be net to each
seller in cash, subject to reduction only for any applicable federal back-up
withholding or stock transfer taxes payable by such seller. The Company agrees
that no Common Shares held by the Company or any Company Subsidiaries (as
defined below) will be tendered pursuant to the Offer.
(b) Without the prior written consent of the Company,
Purchaser shall not (i) decrease the Common Per Share Amount or change the form
of consideration payable in the Offer, (ii) decrease the number of Common Shares
sought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition
(as defined in ANNEX I hereto) or (iv) impose additional conditions to the Offer
or amend any other term of the Offer in any manner adverse to the holders of the
Common Shares. The Offer shall initially expire twenty (20) business days after
the date of its commencement, unless this Agreement is terminated in accordance
with ARTICLE VII hereof, in which case the Offer (whether or not previously
extended in accordance with the terms hereof) shall expire on such date of
termination. Purchaser agrees that it shall not terminate or withdraw the Offer
or extend the expiration date of the Offer unless at the expiration date of the
Offer the conditions to the Offer described in ANNEX I hereto shall not have
been satisfied or earlier waived. Notwithstanding the foregoing, Purchaser may,
without the consent of the Company, extend the Offer at any time, and from time
to time, (i) if at the then scheduled expiration date of the Offer any of the
conditions to Purchaser's obligation to accept for payment and pay for Common
Shares shall not have been satisfied or waived, until
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such time as such conditions are satisfied or waived; (ii) for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or its staff applicable to the Offer; or
(iii) if all conditions to Purchaser's obligation to accept for payment and pay
for Common Shares are satisfied or waived but the number of Common Shares
tendered is less than 90% of the then outstanding number of Common Shares, for
an aggregate period of not more than ten (10) business days (for all such
extensions) beyond the latest expiration date that would be permitted under
clause (i) or (ii) of this sentence.
(c) The Offer shall be made by means of an offer to purchase
(the "OFFER TO PURCHASE") having only the conditions set forth in ANNEX I
hereto. As soon as practicable on the date the Offer is commenced, Purchaser
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto, the "SCHEDULE 14D-1") with respect
to the Offer that will comply in all material respects with the provisions of,
and satisfy in all material respects the requirements of, such Schedule 14D-1
and all applicable federal securities laws and will contain (including as an
exhibit) or incorporate by reference the Offer to Purchase and forms of the
related letter of transmittal and summary advertisement (which documents,
together with any supplements or amendments thereto, and any other SEC schedule
or form which is filed in connection with the Offer and related transactions,
are referred to collectively herein as the "OFFER DOCUMENTS"). Each of Parent,
Purchaser and the Company agrees promptly to correct any information provided by
it for use in the Schedule 14D-1 or the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect and to supplement the information provided by it specifically for use in
the Schedule 14D-1 or the Offer Documents to include any information that shall
become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and Purchaser further
agrees to take all steps necessary to cause the Schedule 14D-1, as so corrected
or supplemented, to be filed with the SEC and the Offer Documents, as so
corrected or supplemented, to be disseminated to holders of Common Shares, in
each case as and to the extent required by applicable federal securities laws.
The Company and its counsel shall be given a reasonable opportunity to review
and comment on any Offer Documents before they are filed with the SEC, and
Parent and Purchaser shall consider any such comments in good faith.
(d) Upon the terms and subject to the conditions of the Offer,
Purchaser shall accept for payment and pay for Common Shares as soon as
permitted under the terms of the Offer and applicable law.
1.2 COMPANY ACTION. (a) The Company hereby approves and
consents to the Offer and represents and warrants that the Board of Directors of
the Company, at a meeting duly called and held on January 8, 1999, at which a
majority of the Directors was present, duly approved and adopted this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
recommended that stockholders of the Company accept the Offer, tender their
Common Shares pursuant to the Offer and approve this Agreement and the
transactions contemplated hereby, including the Merger, and determined that this
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Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interests of the stockholders of the
Company. The Company hereby consents to the inclusion in the Offer Documents of
such recommendation of the Board of Directors of the Company. The Company
represents that its Board of Directors has received the written opinion (the
"FAIRNESS OPINION") of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation (the
"FINANCIAL ADVISOR") that the proposed consideration to be received by the
holders of Common Shares pursuant to the Offer and the Merger is fair to such
holders from a financial point of view. The Company has been authorized by the
Financial Advisor to permit, subject to the prior review and consent by the
Financial Advisor (such consent not to be unreasonably withheld), the inclusion
of the Fairness Opinion (or a reference thereto) in the Offer Documents, the
Schedule 14D-9 (as hereinafter defined) and the Proxy Statement (as hereinafter
defined).
(b) The Company shall file with the SEC, as promptly as
practicable after the filing by Parent of the Schedule 14D-1 with respect to the
Offer, a Tender Offer Solicitation/ Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "SCHEDULE 14D-9") that
will comply in all material respects with the provisions of all applicable
federal securities laws. The Company shall mail such Schedule 14D-9 to the
stockholders of the Company as promptly as practicable after the commencement of
the Offer. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors of the Company described in SECTION
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and
to the extent that it shall become false or misleading in any material respect
(and each of Parent and Purchaser, with respect to written information supplied
by it specifically for use in the Schedule 14D-9, shall promptly notify the
Company of any required corrections of such information and cooperate with the
Company with respect to correcting such information) and to supplement the
information contained in the Schedule 14D-9 to include any information that
shall become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Company shall
take all steps necessary to cause the Schedule 14D-9 as so corrected or
supplemented to be filed with the SEC and disseminated to holders of Common
Shares to the extent required by applicable federal securities laws. Purchaser
and its counsel shall be given a reasonable opportunity to review and comment on
the Schedule 14D-9 before it is filed with the SEC, and the Company shall
consider any such comments in good faith.
(c) In connection with the Offer, the Company shall promptly
upon execution of this Agreement furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Common Shares and
security position listings of Common Shares held in stock depositories, each as
of a recent date, and shall promptly furnish Purchaser with such additional
information reasonably available to the Company, including updated lists of
stockholders, mailing labels and security position listings, and such other
information and assistance as Purchaser or its agents may reasonably request for
the purpose of communicating the Offer to the record and beneficial holders of
Common Shares. Subject
4
to the requirements of applicable law and except as necessary to disseminate the
Offer Documents and otherwise for the purpose of effecting the transactions
contemplated hereby, Parent and Purchaser shall hold in confidence the materials
furnished pursuant to this SECTION 1.2(c), use such information only in
connection with the Offer, the Merger and the other transactions contemplated by
this Agreement and, if this Agreement is terminated, as promptly as practicable
return to the Company such materials and all copies thereof in the possession of
Parent and Purchaser.
1.3 DIRECTORS. Promptly upon the purchase by Parent of Common
Shares pursuant to the Offer (and provided that the Minimum Condition has been
satisfied), Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
will give Parent, subject to compliance with Section 14(f) of the Securities
Exchange Act, representation on the Board of Directors of the Company equal to
at least that number of directors which equals the product of the total number
of directors on the Board of Directors of the Company (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Parent or any affiliate of
Parent (including for purposes of this SECTION 1.3 such Shares as are accepted
for payment pursuant to the Offer, but excluding Shares held by the Company)
bears to the number of Shares outstanding. For this purpose, each Common Share
shall be counted as one Share, and each Preferred Share shall be counted as the
number of Common Shares into which such Preferred Share is convertible. At such
time, if requested by Parent, the Company will also cause each committee of the
Board of Directors of the Company to include persons designated by Parent
constituting the same percentage of each such committee as Parent's designees
are of the Board of Directors of the Company. The Company shall, upon request by
Parent, promptly increase the size of the Board of Directors of the Company or
exercise reasonable best efforts to secure the resignations of such number of
directors as is necessary to enable Parent's designees to be elected to the
Board of Directors of the Company in accordance with the terms of this SECTION
1.3 and to cause Parent's designees so to be elected; PROVIDED, HOWEVER, that,
in the event that Parent's designees are appointed or elected to the Board of
Directors of the Company, until the Effective Time (as hereinafter defined) the
Board of Directors of the Company shall have at least two directors who are
directors on the date hereof and each of whom is neither an officer of the
Company nor a designee, shareholder, affiliate or associate (within the meaning
of the federal securities laws) of Parent (such directors, the "INDEPENDENT
DIRECTORS"); PROVIDED, FURTHER, that each Independent Director shall be
designated by the Company, unless (i) the Company is then required to comply
with Section VIII.2(j) of the Preferred Stock Purchase Agreement dated as of
February 2, 1998 between the Company and the holders on the date of this
Agreement of the Company Preferred Stock (the "CURRENT PREFERRED HOLDERS")
(which section permits Advance Capital Offshore Partners, L.P. ("ADVANCE") to
designate one director (the "ADVANCE DIRECTOR") so long as Advance owns any
Preferred Shares and at least 20% of the Preferred Shares remain outstanding),
in which case one Independent Director shall be an Advance Director and the
other Independent Director shall be designated by the Company, or (ii) the
5
Company is not then required to comply with the aforementioned Section VIII.2(j)
but the Current Preferred Holders continue to own at least 10% of the
outstanding Preferred Shares (the "CURRENT PREFERRED DIRECTOR CONDITION"), in
which case one Independent Director shall be designated by Current Preferred
Holders holding a majority of the outstanding Preferred Shares at such time
excluding any Preferred Shares then held by Parent or Purchaser (the "MAJORITY
OF CURRENT PREFERRED") and the other Independent Director shall be designated by
the Company; PROVIDED, FURTHER, that if no Independent Directors remain, persons
shall be designated to fill the vacancies by the Company or, if the Current
Preferred Director Condition is satisfied, one such person shall be designated
by the Company and one by the Majority of Current Preferred, in any event each
person so designated shall be neither an officer of the Company nor a designee,
shareholder, affiliate or associate of Parent, and each such person shall be
deemed to be an Independent Director for purposes of this Agreement. Subject to
applicable law, the Company shall promptly take all action necessary pursuant to
Section 14(f) of the Securities Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under this SECTION 1.3 and shall
include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer (or in an amendment thereof or an information
statement pursuant to Rule 14f-1 if Parent has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this SECTION 1.3. Parent will supply the Company and be
solely responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by such Section 14(f) and Rule
14f-1. Notwithstanding anything in this Agreement to the contrary, prior to the
Effective Time, the unanimous vote of the Independent Directors shall be
required to (i) amend or terminate this Agreement on behalf of the Company, (ii)
exercise or waive any of the Company's rights or remedies hereunder, (iii)
extend the time for performance of Parent's obligations hereunder, (iv) take any
other action by the Company in connection with this Agreement required to be
taken by the Board of Directors of the Company or (v) amend the Company's
Certificate of Incorporation or the Company's Bylaws, each as in effect on the
date of this Agreement.
1.4 THE MERGER. Upon the terms and subject to the conditions
of this Agreement, the Merger shall be consummated in accordance with the
Delaware General Corporation Law (the "DELAWARE CODE"). At the Effective Time
(as defined in SECTION 1.5 hereof), upon the terms and subject to the conditions
of this Agreement, Purchaser shall be merged with and into the Company in
accordance with the Delaware Code and the separate existence of Purchaser shall
thereupon cease, and the Company, as the surviving corporation in the Merger
(the "SURVIVING CORPORATION"), shall continue its corporate existence under the
laws of the State of Delaware as an indirect subsidiary of Parent. The parties
shall prepare and execute a certificate of merger (the "CERTIFICATE OF MERGER")
in order to comply in all respects with the requirements of the Delaware Code
and with the provisions of this Agreement.
1.5 EFFECTIVE TIME. The Merger shall become effective at the
time of the filing
6
of the Certificate of Merger with the Secretary of State of Delaware in
accordance with the applicable provisions of the Delaware Code or at such later
time as may be specified in the Certificate of Merger. As soon as practicable
after all of the conditions set forth in ARTICLE VI of this Agreement have been
satisfied or waived by the party or parties entitled to the benefit of the same,
the parties hereto shall cause the Merger to become effective. Parent and the
Company shall mutually determine the time of such filing and the place where the
closing of the Merger (the "CLOSING") shall occur. The time when the Merger
shall become effective is herein referred to as the "EFFECTIVE TIME", and the
date on which the Effective Time occurs is herein referred to as the "CLOSING
DATE."
1.6 CONVERSION OF SHARES. At the Effective Time, by virtue of
the Merger and without any action on the part of Purchaser, the Company or the
holder of any of the securities specified below:
(a) Each Common Share issued and outstanding immediately
before the Effective Time (other than any Dissenting Shares (as hereinafter
defined) and Common Shares to be canceled pursuant to SECTION 1.6(c)) shall be
canceled and extinguished and be converted into the right to receive the Common
Per Share Amount in cash payable to the holder thereof, without interest, upon
surrender of the certificate representing such Common Share in accordance with
SECTION 1.8 hereof. From and after the Effective Time, the holders of
certificates evidencing ownership of Common Shares outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such Common
Shares except as otherwise provided for herein or by applicable Law.
(b) Each Preferred Share issued and outstanding immediately
before the Effective Time (other than any Dissenting Shares and Preferred Shares
to be canceled pursuant to SECTION 1.6(c)) shall be canceled and extinguished
and be converted into the right to receive the Preferred Per Share Amount in
cash payable to the holder thereof, without interest, upon surrender of the
certificate representing such Preferred Share in accordance with SECTION 1.8
hereof. From and after the Effective Time, the holders of certificates
evidencing ownership of Preferred Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Preferred
Shares except as otherwise provided for herein or by applicable Law.
(c) Each Share held in the treasury of the Company and each
Share owned by Parent or any direct or indirect wholly owned subsidiary of
Parent immediately before the Effective Time shall be canceled and extinguished,
and no payment or other consideration shall be made with respect thereto.
(d) The shares of Purchaser common stock outstanding
immediately prior to the Merger shall be converted into 1,000 shares of the
common stock of the Surviving Corporation (the "SURVIVING CORPORATION COMMON
STOCK"), which shares of the Surviving Corporation Common Stock shall constitute
all of the issued and outstanding capital stock of
7
the Surviving Corporation and shall be owned by an indirect subsidiary of
Parent.
1.7 DISSENTING SHARES. (a) Notwithstanding any provision of
this Agreement to the contrary, any Shares issued and outstanding immediately
prior to the Effective Time and held by a holder who has demanded and perfected
his demand for appraisal of his Shares in accordance with the Delaware Code
(including but not limited to Section 262 thereof), and as of the Effective Time
has neither effectively withdrawn nor lost his right to such appraisal
("DISSENTING SHARES"), shall not be converted into or represent a right to
receive cash pursuant to SECTION 1.6 hereof, but the holder thereof shall be
entitled to only such rights as are granted by the Delaware Code.
(b) Notwithstanding the provisions of SECTION 1.7(a) hereof,
if any holder of Shares who demands appraisal of his Shares under the Delaware
Code shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever occurs later, such holder's Shares shall
automatically be converted into and represent only the right to receive cash as
provided in SECTION 1.6 hereof, without interest thereon, upon surrender of the
certificate or certificates representing such Shares.
(c) The Company shall give Purchaser (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands and any other instruments served pursuant to the
Delaware Code received by the Company after the date hereof and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the Delaware Code. The Company shall not voluntarily make
any payment with respect to any demands for appraisal and shall not, except with
the prior written consent of Purchaser, settle or offer to settle any such
demands.
1.8 SURRENDER OF SHARES. (a) Prior to the Effective Time,
Purchaser shall appoint American Stock Transfer & Trust Company or such other
commercial bank or trust company designated by Purchaser and reasonably
acceptable to the Company to act as exchange agent hereunder (the "EXCHANGE
AGENT") for the payment of the Per Share Amount upon surrender of certificates
representing the Shares. All of the fees and expenses of the Exchange Agent
shall be borne by Purchaser.
(b) Parent shall cause the Surviving Corporation to provide
the Exchange Agent with cash in amounts necessary to pay for all of the Shares
pursuant to SECTION 1.8(c) hereof when and as such amounts are needed by the
Exchange Agent.
(c) On the Closing Date, Purchaser shall instruct the Exchange
Agent to mail to each holder of record of a certificate representing any Shares
canceled upon the Merger pursuant to SECTIONS 1.6(a) AND (b) hereof, within five
business days of receiving from the Company a list of such holders of record,
(i) a letter of transmittal (which shall specify that
8
delivery shall be effected, and risk of loss and title to the certificates shall
pass, only upon delivery of the certificates to the Exchange Agent and shall be
in such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the certificates.
Each holder of a certificate or certificates representing any Shares canceled
upon the Merger pursuant to SECTIONS 1.6(a) AND (b) hereof may thereafter
surrender such certificate or certificates to the Exchange Agent, as agent for
such holder, to effect the surrender of such certificate or certificates on such
holder's behalf for a period ending one year after the Effective Time. Upon the
surrender of certificates representing the Shares, Parent shall cause the
Exchange Agent to pay the holder of such certificates in exchange therefor cash
in an amount equal to the applicable Per Share Amount multiplied by the number
of Shares represented by such certificate. Until so surrendered, each such
certificate (other than certificates representing Dissenting Shares) shall
represent solely the right to receive the aggregate Per Share Amount relating
thereto.
(d) If payment of cash in respect of canceled Shares is to be
made to a person other than the person in whose name a surrendered certificate
or instrument is registered, it shall be a condition to such payment that the
certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the certificate or
instrument surrendered or shall have established to the satisfaction of Parent
or the Exchange Agent that such tax either has been paid or is not payable.
(e) At the Effective Time, the stock transfer books of the
Company shall be closed, and no transfer of Shares shall be made thereafter,
other than transfers of Shares that have occurred prior to the Effective Time.
In the event that, after the Effective Time, certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for cash as provided
in SECTIONS 1.6(a) AND (b).
(f) The Per Share Amount paid in the Merger shall be net to
the holder of Shares in cash, and without interest thereon subject to reduction
only for any applicable federal back-up withholding or stock transfer taxes
payable by such holder.
(g) Promptly following the date which is one year after the
Effective Time, the Exchange Agent shall deliver to Parent all cash,
certificates and other documents in its possession relating to the transactions
contemplated hereby, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a certificate representing Shares (other than
certificates representing Dissenting Shares and certificates representing Shares
held directly or indirectly by Parent or in the treasury of the Company) may
surrender such certificate to the Surviving Corporation and (subject to any
applicable abandoned property, escheat or similar law) receive in consideration
therefor the aggregate Per Share Amount relating thereto, without any interest
thereon.
9
(h) None of the Company, Parent, the Surviving Corporation or
the Exchange Agent shall be liable to any holder of Shares for any cash
delivered to a public official pursuant to any abandoned property, escheat or
similar law, rule, regulation, statute, order, judgment or decree.
1.9 OPTIONS AND WARRANTS. (a) Each of the Company and Parent
shall take all reasonable actions necessary to provide that all then outstanding
options to purchase Company Common Stock, whether or not then exercisable or
vested ("COMPANY OPTIONS"), shall become fully exercisable and vested upon the
consummation of the Offer. Holders of Company Options that have become fully
exercisable and vested upon the consummation of the Offer in accordance with the
provisions of the preceding sentence will have a period of sixty (60) days
following the consummation of the Offer to surrender their options to the
Company in exchange for cash equal to the excess of (i) the aggregate value of
the Common Shares underlying such options, based on the Common Per Share Amount,
over (ii) the aggregate exercise price for the Common Shares underlying such
options. Each of the Company and Parent shall take all reasonable actions
necessary to provide that, upon consummation of the Merger, all then outstanding
Company Options shall be converted into the right to receive cash equal to the
excess of (i) the aggregate value of the Common Shares underlying such options,
based on the Common Per Share Amount, over (ii) the aggregate exercise price for
the Common Shares underlying such options.
(b) Each of the Company and Parent shall take all reasonable
actions necessary so that each of the warrants to purchase 50,000 shares of
Company Common Stock at a price of $5.00 per share, subject to adjustment (the
"PATRICOF WARRANTS"), the warrants to purchase 80,000 shares of Company Common
Stock at a price of $8.66 per share, subject to adjustment (the "XXXXXX
WARRANTS"), and the warrants to purchase 215,939 shares of Company Common Stock
at a price of $11.11 per share, subject to adjustment (the "SUBORDINATED DEBT
WARRANTS" and together with the Patricof Warrants and the Xxxxxx Warrants, the
"COMPANY WARRANTS"), shall be exercisable, from and after the Effective Time,
for an amount of cash equal in the aggregate to the Common Per Share Amount
multiplied by the number of shares of Company Common Stock for which such
warrant was exercisable immediately prior to the Effective Time. Otherwise, the
exercise of any Company Warrant shall remain subject to all terms and conditions
provided in the applicable Company Warrant and/or Warrant Agreement.
1.10 CERTIFICATE OF INCORPORATION AND BYLAWS. Subject to
SECTION 5.5 hereof, unless otherwise determined by Parent prior to the Effective
Time, at and after the Effective Time (a) the Restated Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by the Delaware Code and such Certificate
of Incorporation; PROVIDED, HOWEVER, that (i) Article IV shall be amended and
restated in its entirety to provide that the capital stock of the Surviving
Corporation shall consist of 1,000 shares of Common Stock, par value $.01 per
share; (ii) Article V shall be amended and
10
restated in its entirety to provide that the Surviving Corporation's Board shall
consist of not less than three members, all of a single class, with the exact
number to be fixed from time to time by resolution of the Board of Directors;
and (iii) Article VII shall be deleted in its entirety; and (b) the Bylaws of
the Surviving Corporation shall be the Bylaws of Purchaser in effect at the
Effective Time (subject to any subsequent amendments).
1.11 DIRECTORS AND OFFICERS. At and after the Effective Time,
the directors of Purchaser immediately prior to the Effective Time shall be the
initial directors 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 successors are duly elected or
appointed and qualified.
1.12 OTHER EFFECTS OF MERGER. The Merger shall have all
further effects as specified in the applicable provisions of the Delaware Code.
1.13 PROXY STATEMENT. (a) Following the consummation of the
Offer and if required by the Securities Exchange Act because of action by the
Company's stockholders necessary in order to consummate the Merger, the Company
shall prepare and file with the SEC and, when cleared by the SEC, shall mail to
stockholders, a proxy statement in connection with a meeting of the Company's
stockholders to vote upon the adoption of this Agreement and the Merger and the
transactions contemplated hereby and thereby (the "COMPANY PROPOSALS"), or an
information statement, as appropriate, satisfying all requirements of the
Securities Exchange Act (such proxy or information statement in the form mailed
by the Company to its stockholders, together with any and all amendments or
supplements thereto, is herein referred to as the "PROXY STATEMENT").
(b) Parent will furnish the Company with such information
concerning Parent and its subsidiaries as is necessary in order to cause the
Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply
with applicable Law. Parent agrees promptly to advise the Company if, at any
time prior to the meeting of stockholders of the Company referenced herein, any
Parent Information (as defined below) in the Proxy Statement is or becomes
incorrect or incomplete in any material respect and to provide the Company with
the information needed to correct such inaccuracy or omission. Parent will
furnish the Company with such supplemental information as may be necessary in
order to cause the Proxy Statement, insofar as it relates to Parent and its
subsidiaries, to comply with applicable Law after the mailing thereof to the
stockholders of the Company.
(c) The Company and Parent agree to cooperate in making any
preliminary filings of the Proxy Statement with the SEC, as promptly as
practicable, pursuant to Rule 14a-6 under the Securities Exchange Act.
(d) The Company shall provide Parent for its review a copy of
the Proxy Statement prior to each filing thereof, with reasonable time and
opportunity for such review.
11
Parent authorizes the Company to utilize in the Proxy Statement the information
concerning Parent and its subsidiaries provided to the Company in connection
with, or contained in, the Proxy Statement.
1.14 ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Purchaser or the Company or otherwise to carry
out this Agreement, the officers and directors of the Company and Purchaser
shall be authorized to execute and deliver, in the name and on behalf of
Purchaser or the Company, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of Purchaser or the
Company, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
1.15 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
the foregoing provisions of this ARTICLE I, in the event that Purchaser, or any
other direct or indirect subsidiary of Parent, shall acquire at least 90 percent
of the outstanding shares of each class of Shares, the parties hereto agree to
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
meeting of stockholders of the Company, in accordance with Section 253 of the
Delaware Code.
1.16 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates representing shares of Company Stock shall have been lost, stolen
or destroyed, the Exchange Agent shall make such payment in exchange for such
lost, stolen or destroyed certificates upon the making of an affidavit of that
fact by the holder thereof; PROVIDED, HOWEVER, that Parent may, in its
discretion and as a condition precedent to the issuance thereof, 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 Parent or the Exchange Agent with respect to the certificates alleged to
have been lost, stolen or destroyed.
1.17 MATERIAL ADVERSE EFFECT. When used in connection with the
Company or any Company Subsidiaries or Parent or any of its subsidiaries, as the
case may be, the term "MATERIAL ADVERSE EFFECT" means any change, effect or
circumstance that, individually or when taken together with all other similar
changes, effects or circumstances that have occurred during the period relevant
to the determination of such Material Adverse Effect, is or is reasonably likely
to be materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of the Company and any Company
Subsidiaries or Parent and its subsidiaries, as the case may be, in each case
taken as a whole; PROVIDED, HOWEVER, that any change, effect or circumstance
directly resulting from the resignation of any
12
of the Company's employees in response to the public announcement of the
transactions contemplated by this Agreement shall not be taken into
consideration in determining whether a Material Adverse Effect has occurred with
respect to the Company. Changes, effects and circumstances referred to in any of
the provisions of SECTION 2.15 hereof shall be deemed similar for purposes of
this SECTION 1.17.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser
that, except as set forth in the correspondingly numbered Sections of the
letter, dated the date hereof, from the Company to Parent (the "COMPANY
DISCLOSURE LETTER"):
2.1 ORGANIZATION AND GOOD STANDING. The Company and each of
the Company Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company and
each of the Company Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not reasonably be
expected to have a Material Adverse Effect. The Company has heretofore made
available to Parent accurate and complete copies of the Certificate of
Incorporation and Bylaws, as currently in effect, of the Company. For purposes
of this Agreement, the term "COMPANY SUBSIDIARY" shall mean any "subsidiary" (as
such term is defined in Rule 1-02 of Regulation S-X of the SEC) of the Company.
2.2 CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (A) 25,000,000 shares of Company Common
Stock and (B) 5,000,000 shares of Company Preferred Stock, of which 35,700 have
been designated as Series A Preferred Stock and 5,000 shares have been
designated as Series B Preferred Stock. As of December 23, 1998, (i) 5,569,983
shares of Company Common Stock were issued and outstanding, (ii) 35,700 shares
of Series A Preferred Stock were issued and outstanding, (iii) 5,000 shares of
Series B Preferred Stock were issued and outstanding, (iv) no shares of Company
Common Stock or shares of Company Preferred Stock were issued and held in the
treasury of the Company, (vi) no shares of Company Common Stock or Company
Preferred Stock were held by Company Subsidiaries, (vii) 4,972,434 shares of
Company Common Stock were reserved for future issuance upon conversion of the
outstanding shares of Company Preferred Stock, (viii) 849,083 shares of Company
Common Stock were reserved for future issuance pursuant to outstanding Company
Options, and (ix) 345,939 shares of Company Common Stock were reserved for
future issuance upon exercise of Company Warrants. No material change in the
capitalization of the Company has occurred between December 23, 1998 and the
date hereof. No other capital stock of the Company is authorized or issued. All
13
issued and outstanding shares of the Company Stock are duly authorized, validly
issued, fully paid and non-assessable. Except as set forth in the Company
Securities Filings (as hereinafter defined) filed prior to the date of this
Agreement or as otherwise contemplated by this Agreement, as of the date hereof,
there are no outstanding rights, subscriptions, warrants, puts, calls,
unsatisfied preemptive rights, options or other agreements of any kind relating
to any of the outstanding, authorized but unissued or treasury shares of the
capital stock or any other security of the Company, and there is no authorized
or outstanding security of any kind convertible into or exchangeable for any
such capital stock or other security. Except as disclosed in the Company
Securities Filings filed prior to the date of this Agreement, there are no
obligations, contingent or other, of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of any Company Subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such Company Subsidiary or any other entity.
2.3 SUBSIDIARIES. Section 2.3 of the Company Disclosure Letter
sets forth the name and jurisdiction of incorporation of each Company
Subsidiary, each of which is wholly owned by the Company except as otherwise
indicated in said Section 2.3 of the Company Disclosure Letter. All of the
capital stock and other interests of the Company Subsidiaries so held by the
Company are owned by it or a Company Subsidiary as indicated in said Section 2.3
of the Company Disclosure Letter, free and clear of any claim, lien, encumbrance
or security interest with respect thereto. All of the outstanding shares of
capital stock of each of the Company Subsidiaries directly or indirectly held by
the Company are duly authorized, validly issued, fully paid and non-assessable
and were issued free of preemptive rights and in compliance with applicable
Laws. No equity securities or other interests of any of the Company Subsidiaries
are or may become required to be issued or purchased by reason of any options,
warrants, rights to subscribe to, puts, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any capital stock of any Company Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Company
Subsidiary is bound to issue additional shares of its capital stock, or options,
warrants or rights to purchase or acquire any additional shares of its capital
stock or securities convertible into or exchangeable for such shares. Except as
set forth in the Company Securities Filings filed prior to the date of this
Agreement or Section 2.3 of the Company Disclosure Letter, the Company does not
directly or indirectly own 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, with respect to which interest the Company has invested
or is required to invest $100,000 or more, excluding securities in any publicly
traded company held for investment by the Company and comprising less than five
percent of the outstanding stock of such company.
2.4 AUTHORIZATION; BINDING AGREEMENT. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the
14
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, including, but not
limited to, the Merger, have been duly and validly authorized by the Company's
Board of Directors, and no other corporate proceedings on the part of the
Company or any Company Subsidiary are necessary to authorize the execution and
delivery of this Agreement or to consummate the transactions contemplated hereby
(other than (i) the consent of the holders of 75% of the outstanding Preferred
Shares and (ii) adoption of this Agreement by the holders of Shares with voting
power equal to a majority of the voting power of all outstanding Shares in
accordance with the Delaware Code). This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except to the extent that enforceability thereof may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies ("ENFORCEABILITY EXCEPTIONS").
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("CONSENT") any nation
or government, any state or other political subdivision thereof or any entity,
authority or body exercising executive, legislative, judicial or regulatory
functions of or pertaining to government, including, without limitation, any
governmental or regulatory authority, agency, department, board, commission or
instrumentality, any court, tribunal or arbitrator and any self-regulatory
organization ("GOVERNMENTAL AUTHORITY"), on the part of the Company or any of
the Company Subsidiaries is required in connection with the execution or
delivery by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby other than (i) the filing of the
Certificate of Merger with the Secretary of State of Delaware in accordance with
the Delaware Code, (ii) filings with the SEC, (iii) filings under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR ACT"), (iv) consents or filings
required under the Communications Act of 1934, as amended, relating to change in
ownership or control of certain business radio and related licenses held by the
Company or the Company Subsidiaries, (v) filings pursuant to the rules and
regulations of the American Stock Exchange ("AMEX") and (vi) those Consents
that, if they were not obtained or made, would not reasonably be expected to
have a Material Adverse Effect.
2.6 NO VIOLATIONS. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by the Company with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of the Company or any of the Company Subsidiaries, (ii)
require any Consent under or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of, any Company Material Contract (as hereinafter
defined), (iii) result in the creation or imposition of any lien or encumbrance
of any kind upon any of the assets of the Company or
15
any Company Subsidiary or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in SECTION 2.5 hereof, violate any
applicable provision of any statute, law, rule or regulation or any order,
decision, injunction, judgment, award or decree ("LAW") to which the Company or
any Company Subsidiary or its assets or properties are subject, except, in the
case of each of clauses (ii), (iii) and (iv) above, for any deviations from the
foregoing which would not reasonably be expected to have a Material Adverse
Effect.
2.7 SECURITIES FILINGS. The Company has made available to
Parent true and complete copies of (i)its Annual Report on Form 10-K, for the
year ended December 31, 1997, as filed with the SEC, (ii) its proxy statements
relating to all of the meetings of stockholders (whether annual or special) of
the Company since January 1, 1996 as filed with the SEC, and (iii) all other
reports, statements and registration statements and amendments thereto
(including, without limitation, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as amended) filed by the Company with the SEC since January
1, 1998. The reports and statements set forth in clauses (i) through (iii)
above, and those subsequently provided or required to be provided pursuant to
this SECTION 2.7, are referred to collectively herein as the "COMPANY SECURITIES
FILINGS." Except as set forth in Section 2.7 of the Company Disclosure Letter,
as of their respective dates, or as of the date of the last amendment thereof,
if amended after filing, the Company Securities Filings (i) were prepared in all
material respects in accordance with the requirements of the Securities Act of
1933, as amended (the "SECURITIES ACT") and the rules and regulations
promulgated thereunder, or the Securities Exchange Act, as the case may be, and
none of the Company Securities Filings contained or, as to the Company
Securities Filings subsequent to the date hereof, will contain, any untrue
statement of a material fact or omitted or, as to the Company Securities Filings
subsequent to the date hereof, will omit, to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2.8 COMPANY FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited interim financial statements of the Company
included in the Company Securities Filings (the "COMPANY FINANCIAL STATEMENTS")
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and present fairly, in all material respects, the financial
position of the Company and the Company Subsidiaries as at the dates thereof and
the results of their operations and cash flows for the periods then ended
subject, in the case of the unaudited interim financial statements, to normal
year-end audit adjustments, any other adjustments described therein and the fact
that certain information and notes have been condensed or omitted in accordance
with the Securities Exchange Act.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Company Securities Filings filed prior to the date of this Agreement or
Section 2.9 of the Company Disclosure Letter, since December 31, 1997, through
the date of this Agreement, there has not been: (i) any event that has had or
would reasonably be expected to have a
16
Material Adverse Effect; (ii) any declaration, payment or setting aside for
payment of any dividend or other distribution or any redemption or other
acquisition of any shares of capital stock or securities of the Company by the
Company; (iii) any material damage or loss to any material asset or property,
whether or not covered by insurance; (iv) any change by the Company in
accounting principles or practices; (v) any material revaluation by the Company
of any of its assets, including writing down the value of inventory or writing
off notes or accounts receivable other than in the ordinary course of business;
(vi) any sale of a material amount of property of the Company, except in the
ordinary course of business; or (vii) any other action or event, involving an
amount exceeding $250,000, that would have required the consent of Parent
pursuant to SECTION 4.1 hereof had such action or event occurred after the date
of this Agreement.
2.10 NO UNDISCLOSED LIABILITIES. Except as set forth in the
Company Securities Filings filed prior to the date of this Agreement or Section
2.10 of the Company Disclosure Letter, neither the Company nor any Company
Subsidiary has any liabilities (absolute, accrued, contingent or otherwise),
except liabilities (a) in the aggregate adequately provided for in the Company's
audited balance sheet (including any related notes thereto) for the fiscal year
ended December 31, 1997 included in the Company's 1997 Annual Report on Form
10-K (the "1997 BALANCE SHEET"), (b) incurred in the ordinary course of business
and not required under generally accepted accounting principles to be reflected
on the 1997 Balance Sheet, (c) incurred since December 31, 1997 in the ordinary
course of business consistent with past practice, (d) incurred in connection
with this Agreement or (e) which would not reasonably be expected to have a
Material Adverse Effect.
2.11 COMPLIANCE WITH LAWS. The business of the Company and
each of the Company Subsidiaries has been operated in compliance with all Laws
applicable thereto, except for any non-compliance which would not reasonably be
expected to have a Material Adverse Effect.
2.12 PERMITS. Except as set forth in Section 2.12 of the
Company Disclosure Letter, (i) the Company and the Company Subsidiaries have all
permits, certificates, licenses, approvals and other authorizations from
Governmental Authorities required in connection with the operation of their
respective businesses (collectively, "COMPANY PERMITS"), (ii) neither the
Company nor any Company Subsidiary is in violation of any Company Permit and
(iii) no proceedings are pending or, to the knowledge of the Company,
threatened, to revoke or limit any Company Permit, except, in the case of each
of clauses (i), (ii) and (iii) above, those the absence or violation of which
would not reasonably be expected to have a Material Adverse Effect.
2.13 LITIGATION. Except as disclosed in the Company Securities
Filings filed prior to the date of this Agreement or Section 2.13 of the Company
Disclosure Letter, there is no suit, action or proceeding ("LITIGATION") pending
or, to the knowledge of the Company, threatened against the Company or any of
the Company Subsidiaries which, individually or in
17
the aggregate, would reasonably be expected to have a Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Authority outstanding against the Company or any Company Subsidiary which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. Except as set forth in the Company Securities Filings
filed prior to the date of this Agreement or Section 2.13 of the Company
Disclosure Letter, since December 31, 1997, and prior to or on the date hereof,
there have been no actions, suits or proceedings made or pending against the
Company or any Company Subsidiary alleging (x) any Environmental Claims (as
hereinafter defined) or (y) any claim against the Company in connection with its
rendering of any security services, except for (i) such claims (not resulting as
of the date hereof in an action, suit or proceeding) not exceeding in any
individual case $500,000 or (ii) such actions, suits or proceedings which, in
the case of either clause (x) or (y) above, would not reasonably be expected to
result in liability to the Company or any Company Subsidiary, not covered by
insurance, of $100,000 or more in any individual case or (without regard to
whether or not any thereof is covered by insurance) $500,000 in the aggregate.
The Company has not established any reserves in the Company Financial Statements
with respect to claims referred to in clauses (x) and (y) of the preceding
sentence. Section 2.13 of the Company Disclosure Letter lists all letters
received by the Company from insurance carriers asserting a reservation of
rights with respect to any action, suit or proceeding in which $25,000 or more
is at stake.
2.14 CONTRACTS. Section 2.14 of the Company Disclosure Letter
includes a list of all loan agreements and financing agreements and of all
equipment lease financing agreements involving obligations of the Company or any
Company Subsidiary in excess of $250,000. Neither the Company nor any of the
Company Subsidiaries is a party or is subject to any note, bond, mortgage,
indenture, contract, lease, license, agreement or instrument that is required to
be described in or filed as an exhibit to any Company Securities Filing filed
prior to the date of this Agreement (collectively with those agreements listed
in Section 2.14 of the Company Disclosure letter, the "COMPANY MATERIAL
CONTRACTS") that is not so described in or filed as required by the Securities
Act or the Securities Exchange Act, as the case may be. The Company is not a
party to any agreements to acquire in the future the stock or substantially all
the assets of another person. Except as disclosed in the Company Securities
Filings filed prior to the date of this Agreement, all such Company Material
Contracts are valid and binding and are in full force and effect and nforceable
against the Company or such Company Subsidiary in accordance with their
respective terms, subject to the Enforceability Exceptions. Neither the Company
nor any Company Subsidiary is in violation or breach of or default under any
such Company Material Contract where such violation or breach would reasonably
be expected to have a Material Adverse Effect. To the knowledge of the Company,
no party (other than the Company or Company Subsidiaries) is in default,
violation or breach of any Company Material Contract where such violation or
breach would reasonably be expected to have a Material Adverse Effect.
2.15 EMPLOYEE BENEFIT PLANS. (a) Section 2.15(a) of the
Company Disclosure Letter lists all employee pension benefit plans (as defined
in Section 3(2) of the Employee
18
Retirement Income Security Act of 1974, as amended ("ERISA")), all employee
welfare benefit plans (as defined in Section 3(1) of ERISA) 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, and any employment, executive compensation or
severance agreements, written or otherwise, as amended, modified or
supplemented, for the benefit of, or relating to, any former or current
employee, officer or consultant who is an individual or an individual doing
business in a corporate form (or any of their beneficiaries) of the Company or
any other entity (whether or not incorporated) which is a member of a controlled
group including the Company or which is under common control with the Company
(an "ERISA AFFILIATE") within the meaning of Section 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986, as amended, and the regulations thereunder
(the "CODE") or Section 4001(a)(14) or (b) of ERISA, or any Company Subsidiary,
with respect to which the Company has or could have any current (actual or
contingent) material liability (together for purposes of this SECTION 2.15, the
"EMPLOYEE PLANS"). Prior to the date of this Agreement, the Company has provided
or made available to Parent copies of (i) each such written Employee Plan (or a
written description of any Employee Plan which is not written) and all related
trust agreements, insurance and other contracts (including policies), summary
plan descriptions, summaries of material modifications and any material
communications to plan participants, (ii) the three most recent annual reports
on Form 5500 series, with accompanying schedules and attachments, filed with
respect to each Employee Plan required to make such a filing, (iii) the latest
reports which have been filed with the Department of Labor with respect to each
Employee Plan required to make such filing and (iv) the most recent favorable
determination letters issued for each Employee Plan and related trust which is
subject to Parts 1, 2 and 4 of Subtitle B of Title I of ERISA (and, if an
application for such determination is pending, a copy of the application for
such determination).
(b) (i) None of the Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person (other than in
accordance with Section 4980B of the Code or Part 6 of Subtitle B of Title I of
ERISA), and none of the Employee Plans is a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA; (ii) to the knowledge of the Company, no
"party in interest" or "disqualified person" (as defined in Section 3(14) of
ERISA and Section 4975 of the Code) has at any time engaged in a transaction
with respect to any Employee Plan which could subject the Company or any ERISA
Affiliate, directly or indirectly, to a tax, penalty or other liability for
prohibited transactions under ERISA or Section 4975 of the Code, except for any
such tax, penalty or liability that would not reasonably be expected to result
in a Material Adverse Effect; (iii) to the knowledge of the Company, no
fiduciary of any Employee Plan has breached any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA, except where such
breach would not reasonably be expected to result in a Material Adverse Effect;
(iv) all Employee Plans have been established and maintained substantially in
accordance with their terms and have operated in compliance with the
requirements prescribed by any and all statutes (including ERISA and the Code),
orders, or governmental rules and regulations currently in effect with respect
thereto (including all applicable requirements for notification to participants
or the
19
Department of Labor, the Internal Revenue Service (the "IRS") or the Secretary
of the Treasury), except where failure to do so would not reasonably be expected
to result in a Material Adverse Effect; and the Company and each Company
Subsidiary have performed all obligations required to be performed by them
under, are not in default under or in violation of any Employee Plan except
where failure to do so would not reasonably be expected to result in a Material
Adverse Effect, and have no knowledge of any default or violation by any other
party to, any of the Employee Plans; (v) each Employee Plan which is subject to
Parts 1, 2 and 4 of Subtitle B of ERISA is the subject of a favorable
determination letter from the IRS, and to the knowledge of the Company nothing
has occurred which may reasonably be expected to impair such determination; (vi)
all contributions required to be made with respect to any Employee Plan pursuant
to the terms of the Employee Plan have been made on or before their due dates
except for any failure to make contributions that would not reasonably be
expected to result in a Material Adverse Effect; (vii) no facts exist or have
existed under which the Company or any ERISA Affiliate could incur any liability
under Title IV of ERISA; and (viii) there are no complaints, charges or claims
against the Company pending or to the Company's knowledge 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.
(c) Section 2.15(c) of the Company Disclosure Letter sets
forth a true and complete list of each current or former employee, officer or
director of the Company or any Company Subsidiary who holds (i) any option to
purchase Company Common Stock as of the date hereof, together with the number of
shares of Company Common Stock subject to such option, the option 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; (ii) any
shares of Company Common Stock that are restricted as a result of an agreement
with or stock plan of the Company; and (iii) any other right, directly or
indirectly, to receive Company Common Stock, except as otherwise disclosed in
Section 2.15 of the Company Disclosure Letter, together with the number of
shares of Company Stock subject to such right. Section 2.15(c) of the Company
Disclosure Letter also sets forth the total number of any such ISOs and any such
nonqualified options and other such rights.
(d) Unless otherwise disclosed in Section 2.15(a) of the
Company Disclosure Letter, Section 2.15(d) of the Company Disclosure Letter sets
forth a true and complete list of (i) all employment agreements with officers of
the Company or any of the Company Subsidiaries; (ii) all agreements with
consultants who are individuals obligating the Company or any of the Company
Subsidiaries to make annual cash payments in an amount exceeding $100,000; (iii)
all agreements which individually or in the aggregate are or could be material
with respect to the services of independent contractors or leased employees who
are individuals or individuals doing business in a corporate form whether or not
they participate in any of the Employee Plans; (iv) all officers of the Company
or any of the Company
20
Subsidiaries who have executed a non-competition agreement with the Company or
any of the Company Subsidiaries; (v) all severance agreements, programs and
policies of the Company or any of the Company Subsidiaries with or relating to
its employees, in each case with outstanding commitments exceeding $100,000,
excluding programs and policies required to be maintained by law; and (vi) all
plans, programs, agreements and other arrangements of the Company which contain
change in control provisions.
(e) (i) Except as set forth in Section 2.15(e) of the Company
Disclosure Letter, no Employee Plan is an employee stock ownership plan (within
the meaning of Section 4975(e)(7) of the Code) or otherwise invests in Company
Stock; and (ii) the consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or accelerate the vesting or timing of payment of any benefits or
compensation payable in respect of any employee except as otherwise provided in
SECTION 1.9 hereof or disclosed in Section 2.15(e) of the Company Disclosure
Letter or except where such increase or acceleration would not reasonably be
expected to result in a Material Adverse Effect. The Company will take all
actions within its control to ensure that all actions required to be taken by a
fiduciary of any Employee Plan in order to effectuate the transaction
contemplated by this Agreement shall comply with the terms of such Plan, ERISA
and other applicable laws. The Company will take all actions within its control
to ensure that all actions required to be taken by a trustee of any Employee
Plan that owns Company Stock shall have been duly authorized by the appropriate
fiduciaries of such Plan and shall comply with the terms of such Plan, ERISA and
other applicable laws.
(f) The Company maintains no Employee Plan covering non-U.S.
employees.
(g) The Company has fiduciary liability insurance of at least
$500,000 in effect covering the fiduciaries of the Employee Plans (including the
Company) with respect to whom the Company may have liability.
2.16 TAXES AND RETURNS. (a) The Company and each of the
Company Subsidiaries has timely filed, or caused to be timely filed, all
material Tax Returns (as hereinafter defined) required to be filed by it, and
all such tax returns are true, complete and correct in all material respects,
and has timely paid, collected or withheld, or caused to be paid, collected or
withheld, all material amounts of Taxes (as hereinafter defined) required to be
paid, collected or withheld, other than such Taxes for which adequate reserves
in the Company Financial Statements have been established or which are being
contested in good faith. Except as set forth in Section 2.16 of the Company
Disclosure Letter, there are no material claims or assessments pending against
the Company or any of the Company Subsidiaries for any alleged deficiency in any
Tax, and the Company has not been notified in writing of any proposed Tax claims
or assessments against the Company or any of the Company Subsidiaries (other
than in each case, claims or assessments for which adequate reserves in the
Company Financial Statements have been established or which are being contested
in good faith or are immaterial in amount). Except as would not reasonably be
21
expected to have a Material Adverse Effect: (i) neither the Company nor any of
the Company Subsidiaries has executed any waivers or extensions of any
applicable statute of limitations to assess any material amount of Taxes; and
(ii) there are no outstanding requests by the Company or any of the Company
Subsidiaries for any extension of time within which to file any material Tax
Return or within which to pay any material amounts of Taxes shown to be due on
any Tax Return. The statute of limitations period for assessment of federal
income taxes has expired for all taxable years through the taxable year of
Security Systems Holdings, Inc. ending December 31, 1994, and of Triton Group
Ltd. ending March 31, 1994. To the best knowledge of the Company, there are no
liens for material amounts of Taxes on the assets of the Company or any of the
Company 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 the Company Subsidiaries with respect to Tax
matters.
(b) For purposes of this Agreement, the term "TAX" shall mean
any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
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 of any
kind whatsoever, together with any interest or penalty imposed by any
Governmental Authority. 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 entity with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
(c) (i) Except as set forth in Section 2.16 of the Company
Disclosure Letter, neither the Company nor any of the Company Subsidiaries has,
since consummation of the Triton Group Ltd. plan of reorganization pursuant to
Chapter 11 of the United States Bankruptcy Code on June 25, 1993, been a member
of an affiliated group within the meaning of Section 1504 of the Code or filed
or been included in a combined, consolidated or unitary Tax Return, other than
of the Company and the Company Subsidiaries; (ii) other than with respect to the
Company and the Company Subsidiaries, neither the Company nor any of the Company
Subsidiaries is currently liable for Taxes of any other person, or is currently
under any contractual obligation to indemnify any person with respect to Taxes
(except for customary agreements to indemnify lenders or securityholders in
respect of taxes other than income taxes), or is a party to any tax sharing
agreement or any other agreement providing for payments by the Company or any of
the Company Subsidiaries with respect to Taxes; (iii) neither the Company nor
any of the Company Subsidiaries is a party to any joint venture, partnership or
other arrangement or contract which could be treated as a partnership for
federal income tax purposes; (iv) neither the Company nor any of the Company
Subsidiaries has entered into any sale leaseback or any leveraged lease
transaction that fails to satisfy the requirements of Revenue Procedure 75-21
(or similar provisions of foreign law); (v) neither the Company nor any of the
Company Subsidiaries has agreed or is required, as a result of a
22
change in method of accounting or otherwise, to include any adjustment under
Section 481 of the Code (or any corresponding provision of state, local or
foreign law) in taxable income; (vi) neither the Company nor any of the Company
Subsidiaries is a party to any agreement, contract, arrangement or plan that
would result (taking into account the transactions contemplated by this
Agreement), separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code; (vii) the
prices for any property or services (or for the use of property) provided by the
Company or any of the Company Subsidiaries to any other subsidiary or to the
Company have been arm's length prices, determined using a method permitted by
the Treasury Regulations under Section 482 of the Code; (viii) neither the
Company nor any of the Company Subsidiaries is liable with respect to any
indebtedness the interest of which is not deductible for applicable federal,
foreign, state or local income tax purposes; (ix) neither the Company nor any of
the Company Subsidiaries is a "consenting corporation" under Section 341(f) of
the Code or any corresponding provision of state, local or foreign law; and (x)
none of the assets owned by the Company or any of the Company Subsidiaries is
property that is required to be treated as owned by any other person pursuant to
Section 168(g)(8) of the Internal Revenue Code of 1954, as amended, as in effect
immediately prior to the enactment of the Tax Reform Act of 1986, or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(d) The amount of net operating losses (as defined in Section
172 of the Code) of the Company and the Company Subsidiaries as of the end of
the fiscal year ended December 31, 1997 is as set forth in the Company's
financial statements for such year.
Each of the statements made in this SECTION 2.16 shall be deemed true and
correct for purposes of this Agreement unless in any such case any failure of
such statement to be true or correct would reasonably be expected to result in a
Material Adverse Effect.
2.17 INTELLECTUAL PROPERTY. The Company or the Company
Subsidiaries own, or are licensed or otherwise possess legal enforceable rights
to use, all patents, trademarks, trade names, service marks, copyrights and any
applications therefor, technology, know-how, trade secrets, computer software
programs or applications, domain names and tangible or intangible proprietary
information or materials that are used in the respective businesses of the
Company and the Company Subsidiaries as currently conducted, except for any such
failures to own, be licensed or possess that would not reasonably be expected to
have a Material Adverse Effect. To the best knowledge of the Company, there are
no valid grounds for any bona fide claims (i) to the effect that the business of
the Company or any of the Company Subsidiaries infringes on any copyright,
patent, trademark, service xxxx or trade secret; (ii) against the use by the
Company or any of the Company Subsidiaries of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software programs
and applications used in the business of the Company or any of the Company
Subsidiaries as currently conducted or as proposed to be conducted; (iii)
challenging the ownership, validity or effectiveness of any of the patents,
registered and material unregistered trademarks and service marks, registered
copyrights, trade names and any applications
23
therefor owned by the Company or any of the Company Subsidiaries (the "COMPANY
INTELLECTUAL PROPERTY RIGHTS") or other trade secret material to the Company; or
(iv) challenging the license or legally enforceable right to use of any
third-party patents, trademarks, service marks and copyrights by the Company or
any of the Company Subsidiaries, except, in the case of each of clauses (i),
(ii), (iii) and (iv) above, for matters that, if determined adversely to the
Company, would not reasonably be expected to have a Material Adverse Effect. To
the best knowledge of the Company, all material patents, registered trademarks,
service marks and copyrights held by the Company are valid and subsisting.
Except as set forth in the Company Securities Filings filed prior to the date of
this Agreement or Section 2.17 of the Company Disclosure Letter, to the
Company's knowledge, there is no material unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property by any third party,
including any employee or former employee of the Company or any of the Company
Subsidiaries.
2.18 DISCLOSURE DOCUMENTS. The Proxy Statement will comply in
all material respects with the applicable requirements of the Securities
Exchange Act except that no representation or warranty is being made by the
Company with respect to the Parent Information included in the Proxy Statement.
The Proxy Statement will not, at the time the Proxy Statement is filed with the
SEC or first sent to stockholders, at the time of the Company's stockholders'
meeting or at the Effective Time, 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 except that no representation or
warranty is being made by the Company with respect to the Parent Information
included in the Proxy Statement. The Schedule 14D-9 will comply in all material
respects with the Securities Exchange Act except that no representation or
warranty is being made by the Company with respect to the Parent Information
included in the Schedule 14D-9. Neither the Schedule 14D-9 nor any of the
information relating to the Company or its affiliates provided by or on behalf
of the Company specifically for inclusion in the Schedule 14D-1 or the Offer
Documents will, at the respective times the Schedule 14D-9, the Schedule 14D-1
and the Offer Documents are filed with the SEC and are first published, sent or
given to stockholders of the Company, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
2.19 LABOR MATTERS. Except as set forth in the Company
Securities Filings filed prior to the date of this Agreement, (i) there are no
controversies pending or, to the knowledge of the Company or any of the Company
Subsidiaries, threatened, between the Company or any of the Company Subsidiaries
and any of their respective employees, which controversies would reasonably be
expected to have a Material Adverse Effect; (ii) neither the Company nor any of
the Company Subsidiaries is a party to any material collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company or the Company Subsidiaries, nor, as of the date of this Agreement, does
the Company or any of the
24
Company Subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither the Company nor any of the
Company Subsidiaries 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 the Company Subsidiaries which would reasonably be
expected to have a Material Adverse Effect.
2.20 LIMITATION ON BUSINESS CONDUCT. Except as set forth in
the Company Securities Filings filed prior to the date of this Agreement,
neither the Company nor any of the Company Subsidiaries is a party to, or has
any obligation under, any contract or agreement, written or oral, which contains
any covenants currently or prospectively limiting in any material respect the
freedom of the Company or any of the Company Subsidiaries to engage in any line
of business or to compete with any entity.
2.21 TITLE TO PROPERTY. Except as set forth in the Company
Securities Filings filed prior to the date of this Agreement or Section 2.21 of
the Company Disclosure Letter, each of the Company and each of the Company
Subsidiaries owns the properties and assets that it purports to own free and
clear of all liens, charges, mortgages, security interests or encumbrances of
any kind ("LIENS"), except for Liens which arise in the ordinary course of
business and do not materially impair the Company's or the Company Subsidiaries'
ownership or use of such properties or assets, Liens for taxes not yet due and
Liens securing obligations under the Fourth Amended and Restated Term Loan and
Acquisition Credit Agreement, dated as of July 31, 1998, by and among
Alarmguard, Inc., as Borrower, the Company, as Guarantor, and BankBoston, N.A.
and the other banks parties thereto, as Lenders (the "CREDIT AGREEMENT"). With
respect to the property and assets it leases, the Company, the Company
Subsidiaries, and to the best of the Company's knowledge each of the other
parties thereto, is in material compliance with such leases, and the Company or
the Company Subsidiaries, as the case may be, hold a valid leasehold interest
free of any Liens, except those referred to above. The rights, properties and
assets presently owned, leased or licensed by the Company and the Company
Subsidiaries include all rights, properties and assets necessary to permit the
Company and the Company Subsidiaries to conduct their business in all material
respects in the same manner as their businesses have been conducted prior to the
date hereof.
2.22 LEASED PREMISES. Neither the Company nor any of the
Company Subsidiaries owns any real property. Each of the buildings, structures
and premises leased by the Company or any of the Company Subsidiaries is in
reasonably good repair and operating condition, except as would not reasonably
be expected to have a Material Adverse Effect.
2.23 ENVIRONMENTAL MATTERS. (a) Except as set forth in the
Company Securities Filings filed prior to the date of this Agreement or Section
2.23 of the Company Disclosure Letter, the Company and the Company Subsidiaries
are in material compliance with the Environmental Laws (as hereinafter defined),
which compliance includes the possession by the Company and the Company
Subsidiaries of all material permits and governmental authorizations required
under applicable Environmental Laws, and compliance in all material
25
respects with the terms and conditions thereof, except in each case where such
non-compliance would not reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any of the Company Subsidiaries has received any
communication (written or oral), whether from a governmental authority, citizens
group, employee or otherwise, that alleges that the Company or any of the
Company Subsidiaries is not in such material compliance, and there are no
circumstances that may prevent or interfere with such compliance in the future,
except where such non-compliance would not reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth in Section 2.23 of the Company
Disclosure Letter, there are no Environmental Claims (as hereinafter defined),
including claims based on "arranger liability," pending or, to the best
knowledge of the Company, threatened against the Company or any of the Company
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of the Company Subsidiaries has retained
or assumed either contractually or by operation of law, except for such
Environmental Claims that would not reasonably be expected to have a Material
Adverse Effect.
(c) Except as set forth in Section 2.23 of the Company
Disclosure Letter, to the best knowledge of the Company, there are no past or
present actions, inactions, activities, circumstances, conditions, events or
incidents, including the release, emission, discharge, presence or disposal of
any Material of Environmental Concern (as hereinafter defined), that would form
the basis of any Environmental Claim against the Company or any of the Company
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of the Company Subsidiaries have retained
or assumed either contractually or by operation of law, except for such
Environmental Claims that would not reasonably be expected to have a Material
Adverse Effect.
(d) Except as set forth in Section 2.23 of the Company
Disclosure Letter, the Company is in compliance in all material respects with
Environment Laws as they relate to (i) any on-site or off-site locations where
the Company or any of the Company Subsidiaries has stored, disposed or arranged
for the disposal of Materials of Environmental Concern for itself (but not on
behalf of others) or (ii) any underground storage tanks located on property
owned or leased by the Company or any of the Company Subsidiaries. To the
knowledge of Company, there is no asbestos contained in or forming part of any
building, building component, structure or office space owned or leased by the
Company or any of the Company Subsidiaries. To the knowledge of Company, no
polychlorinated biphenyls (PCB's) or PCB-containing items are used or stored at
any property owned or leased by the Company or any of the Company Subsidiaries.
(e) For purposes of this Agreement:
(i) "ENVIRONMENTAL CLAIM" means any written claim, action,
cause of action, investigation or notice by any person or entity
alleging potential liability (including
26
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 (x) the presence, or 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 the Company Subsidiaries, or
(y) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
(ii) "ENVIRONMENTAL LAWS" means all Federal, state, local and
foreign laws or regulations relating to pollution or protection of
human health 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 manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern.
(iii) "MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances and
hazardous wastes, toxic substances, petroleum and petroleum products
that are regulated under the Environmental Laws.
2.24 INSURANCE. The Company maintains insurance that provides
adequate coverage for normal risks incident to the business of the Company and
the Company Subsidiaries and their respective properties and assets and in
character and amount comparable to that carried by persons engaged in similar
businesses. The insurance polices maintained by the Company are with reputable
insurance carriers and have no premium delinquencies.
2.25 CUSTOMERS. No customer of the Company accounted for more
than 4.0% of the revenues of the Company and the Company Subsidiaries for the
fiscal year ended December 31, 1997.
2.26 INTERESTED PARTY TRANSACTIONS. Except as set forth in the
Company Securities Filings filed prior to the date of this Agreement, since the
date of the Company's proxy statement dated April 30, 1998, 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, except for contracts entered into in the ordinary course of business of the
Company, on an arms-length basis, with terms no less favorable to the Company
than would reasonably be expected in a similar transaction with an unaffiliated
third party.
2.27 ALARM CONTRACTS. The Chief Executive Officer and the
Chief Financial Officer of the Company believe, following reasonable inquiry,
that no more than 20% of accounts for alarm system monitoring and/or service
owned by the Company or any Company Subsidiary are not evidenced by a written
contract.
27
2.28 FINDERS AND INVESTMENT BANKERS. Neither the Company nor
any of its officers or directors has employed any broker, finder or financial
advisor or otherwise incurred any liability for any brokerage fees, commissions,
or financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to an agreement with Xxxxxxxxx, Xxxxxx
& Xxxxxxxx Securities Corporation, the terms of which are as set forth in
Section 2.10 of the Company Disclosure Letter.
2.29 FAIRNESS OPINION. The Company's Board of Directors has
received from its financial advisor, Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation, a written opinion addressed to it for inclusion in the Schedule
14D-9 and the Proxy Statement to the effect that the consideration to be
received by the stockholders of the Company pursuant to each of the Offer and
the Merger is fair to the Company's stockholders from a financial point of view.
2.30 TAKEOVER STATUTES. Assuming Parent and its "associates"
and "affiliates" (as defined in Section 203 of the Delaware Code) collectively
beneficially own and have beneficially owned at all times during the three-year
period prior to the date hereof less than fifteen percent (15%) of the Company
Stock outstanding, Section 203 of the Delaware Code is, and shall be,
inapplicable to the acquisition of Shares pursuant to the Offer and the Merger.
2.31 FULL DISCLOSURE. No statement contained in any
certificate or schedule, including, without limitation, the Company Disclosure
Letter, furnished or to be furnished by the Company or the Company Subsidiaries
to Parent or Purchaser in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
2.32 YEAR 2000. Except as would not reasonably be expected to
have a Material Adverse Effect on the Company:
(a) None of the computer software, computer firmware,
computer hardware (whether general or special purpose) or other similar or
related items of automated, computerized or software systems that are used or
relied on by Company or by any of the Company Subsidiaries in the conduct of
their respective businesses will malfunction, will cease to function, will
generate incorrect data or will produce incorrect results when processing,
providing or receiving (i) date-related data from, into and between the
twentieth and twenty-first centuries or (ii) date-related data in connection
with any valid date in the twentieth and twenty-first centuries.
(b) None of the products and services sold, licensed,
rendered, or otherwise provided by the Company or by any of the Company
Subsidiaries in the conduct of their respective businesses will malfunction,
will cease to function, will generate incorrect data or will produce incorrect
results when processing, providing or receiving (i) date-related data
28
from, into and between the twentieth and twenty-first centuries or (ii)
date-related data in connection with any valid date in the twentieth and
twenty-first centuries; and, accordingly, neither the Company nor any of the
Company Subsidiaries is or will be subject to any claim, demand, action, suit,
liability, damage, material loss, or material expense arising from, or related
to, circumstances where such products and services malfunction, cease to
function, generate incorrect data, or produce incorrect results when processing,
providing or receiving (i) date-related data from, into and between the
twentieth and twenty- first centuries or (ii) date-related data in connection
with any valid date in the twentieth and twenty-first centuries.
(c) Neither the Company nor any of the Company Subsidiaries
has made any other representations or warranties regarding the ability of any
product or service sold, licensed, rendered, or otherwise provided by the
Company or by any of the Company Subsidiaries in the conduct of their respective
businesses to operate without malfunction, to operate without ceasing to
function, to generate correct data or to produce correct results when
processing, providing or receiving (i) date-related data from, into and between
the twentieth and twenty-first centuries and (ii) date-related data in
connection with any valid date in the twentieth and twenty-first centuries.
2.33 RIGHTS AGREEMENT. The Board of Directors of the Company
has authorized and approved an amendment to the Rights Agreement to the effect
that (i) none of Parent, Purchaser or their affiliates, either individually or
as a group, shall become an "ACQUIRING PERSON" (as defined in the Rights
Agreement), and (ii) no Distribution Date, Share Acquisition Date or Trigger
Event (as each such term is defined in the Rights Agreement) shall occur, with
respect to each of clauses (i) and (ii), by reason of the approval, execution or
delivery of this Agreement, the consummation of the transactions contemplated
hereby or any announcement of the same. The Company and the Rights Agent (as
defined in the Rights Agreement) shall execute such amendment to the Rights
Agreement no later than the second business day following the date hereof.
2.34 STANDARD FORM CONTRACTS (a) The term "STANDARD FORM
SERVICE CONTRACT" shall mean any written contract between the Company or any
Company Subsidiary and its respective customers which contains a clause that
either limits the liability of the Company or such Company Subsidiary to a sum
not in excess of the lesser of (A) $500, or (B) six times the monthly service
charge pursuant to any such agreement, for losses from whatever cause (including
the negligence of the Company or such Company Subsidiary) or that exculpates the
Company or such Company Subsidiary from all liability and such clause has not
been modified in any material respect, either as a result of any other document
or as a result of a course of dealing between the Company or such Company
Subsidiary and its customers. To the best of the Company's knowledge, none of
the Company or any Company Subsidiary has entered into any service contract or
agreement with any of its customers other than pursuant to a Standard Form
Service Contract. Each Standard Form Service Contract which the Company or any
Company Subsidiary has with its customers and each of the terms, provisions and
conditions thereof are valid, binding and in full force and effect, subject to
the Enforceability
29
Exceptions.
(b) Since January 1, 1996, the Company has not materially
increased the service charges payable by its customers.
(c) The Company and the Company Subsidiaries have no material
free, bartered or discounted service liability to customers existing with
respect to its business. The Company and the Company Subsidiaries have no
obligation or liability for the refund of any material monies to its customers
other than obligations to refund deposits made by customers in the ordinary
course of business.
(d) To the best of the Company's knowledge, all service
contracts or agreements negotiated with residential customers have provided the
3-day right of recision in compliance in all material respects with the
provisions of 16 C.F.R. Part 429 (Cooling-Off Period for Door-to-Door Sales) and
any applicable state laws.
2.35 CENTRAL STATION/INSPECTION. The Company's central station
located at 000 Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000, has been approved
and/or listed by Underwriters' Laboratory and by the other insurance rating
organizations indicated in Section 2.35 of the Company Disclosure Letter; is
operated in conformity in all material respects with current Underwriters'
Laboratory and such other applicable insurance rating organization's standards;
and no such approval and/or listings are suspended or, to the best of the
Company's knowledge, threatened to be suspended. Except as set forth in Section
2.35 of the Company Disclosure Letter, no material deficiency reports have been
issued by Underwriters' Laboratory or by any other applicable insurance rating
organizations relating to the operations of such facility and, as to any such
reports which have been issued, all material deficiencies noted therein have
been remedied to the satisfaction of the issuer of such report. Section 2.35 of
the Company Disclosure Letter also sets forth, as of the date of this Agreement,
a listing of the dates upon which the last inspection of the central station
location was conducted by Underwriters' Laboratory and the other appropriate
insurance rating organizations. All required fire inspections with respect to
each fire alarm system installed at the premises of customers of the Company
have been performed as required in accordance with the obligations and
commitments of the Company to its customers, to Underwriters' Laboratory and to
any other applicable insurance rating organizations, other than any such
inspections the absence of which would not reasonably be expected to have a
Material Adverse Effect. All Underwriters' Laboratory or other applicable
insurance rating organization's certificates issued for alarm systems installed
at the premises of the Company's customers have been properly issued and the
systems for which such certificates have been issued comply in all respects with
all of the Underwriters' Laboratory or other applicable insurance rating
organization's specifications and standards for such systems, other than any
such matters that would not reasonably be expected to have a Material Adverse
Effect.
30
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and
warrant to the Company that:
3.1 ORGANIZATION AND GOOD STANDING. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
3.2 AUTHORIZATION; BINDING AGREEMENT. Parent and Purchaser
have all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, including, but not limited to, the Merger, have been duly
and validly authorized by the respective Boards of Directors of Parent and
Purchaser, as appropriate, and no other corporate proceedings on the part of
Parent, Purchaser or any other subsidiary of Parent are necessary to authorize
the execution and delivery of this Agreement or to consummate the transactions
contemplated hereby (other than the requisite approval by the sole stockholder
of Purchaser of this Agreement and the Merger). This Agreement has been duly and
validly executed and delivered by each of Parent and Purchaser and constitutes
the legal, valid and binding agreement of Parent and Purchaser, enforceable
against each of Parent and Purchaser in accordance with its terms, subject to
the Enforceability Exceptions.
3.3 GOVERNMENTAL APPROVALS. No Consent from or with any
Governmental Authority on the part of Parent or Purchaser is required in
connection with the execution or delivery by Parent and Purchaser of this
Agreement or the consummation by Parent and Purchaser of the transactions
contemplated hereby other than (i) filings with the SEC and (ii) filings under
the HSR Act.
3.4 NO VIOLATIONS. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent or Purchaser with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Memorandum of
Association or Bye-laws or other governing instruments of Parent or any
subsidiary of Parent, (ii) require any Consent under or result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of, any material note, bond,
mortgage, indenture, contract, lease, license, agreement or instrument to which
Parent is a party or by which Parent or any of its assets or property is
subject, (iii) result in the creation or imposition of any material lien or
encumbrance of any kind upon any of the assets of Parent or any subsidiary of
Parent or (iv)
31
subject to obtaining the Consents from Governmental Authorities referred to in
SECTION 3.3 hereof, violate any Law to which Parent or any subsidiary of Parent
or its assets or properties are subject, except in any such case for any such
conflicts, violations, breaches, defaults or other occurrences that would not
prevent or delay consummation of the Offer or the Merger, or otherwise
materially and adversely affect the ability of Parent or Purchaser to perform
their respective obligations under this Agreement.
3.5 DISCLOSURE DOCUMENTS. None of the information supplied by
Parent, its officers, directors, representatives, agents or employees (the
"PARENT INFORMATION") for inclusion in the Proxy Statement will, at the time the
Proxy Statement is filed with the SEC or first mailed to the Company's
stockholders, at the time of the Company's stockholders' meeting or at the
Effective Time, contain any untrue statement of a material fact, or will omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances in which they were made not misleading or necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for such stockholders' meeting which has become false or
misleading. Neither the Schedule 14D-1 or the Offer Documents or any amendments
thereof or supplements thereto nor any of the Parent Information provided
specifically for inclusion in the Schedule 14D-9 will, at the respective times
the Schedule 14D-1, the Offer Documents or the Schedule 14D-9 are filed with the
SEC or first published, sent or given to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing, neither
Parent nor Purchaser makes any representation or warranty with respect to any
information that has been supplied by the Company or its accountants, counsel or
other authorized representatives for use in any of the foregoing documents. The
Schedule 14D-1 and the Offer Documents will comply as to form in all material
respects with the provisions of the Securities Exchange Act.
3.6 FINDERS AND INVESTMENT BANKERS. Neither Parent, Purchaser
nor any of their respective officers or directors has employed any broker,
finder or financial advisor or otherwise incurred any liability for any
brokerage fees, commissions or financial advisors' or finders' fees in
connection with the transactions contemplated hereby.
3.7 FINANCING ARRANGEMENTS. Parent (including for this purpose
one or more of its wholly-owned subsidiaries) has funds available to it
sufficient to enable the Purchaser to purchase the Shares in accordance with the
terms of this Agreement and to pay all amounts due (or which will, as a result
of the transactions contemplated hereby, become due) in respect of any
indebtedness of the Company for money borrowed.
3.8 NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing in connection therewith), Purchaser has not incurred
any obligations or liabilities and has not engaged in any
32
business or activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person or entity.
ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
4.1 CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY
SUBSIDIARIES. (a) Unless Parent shall otherwise consent in writing (which
consent shall not be unreasonably withheld) and except as expressly contemplated
by this Agreement or in the Company Disclosure Letter, during the period from
the date of this Agreement to the Effective Time, (i) the Company shall conduct,
and it shall cause the Company Subsidiaries to conduct, its or their businesses
in the ordinary course and consistent with past practice, and the Company shall,
and it shall cause the Company Subsidiaries to, use its or their reasonable best
efforts to preserve substantially intact its business organization, to keep
available the services of its present officers and employees and to preserve the
present commercial relationships of the Company and the Company Subsidiaries
with persons with whom the Company or the Company Subsidiaries do significant
business and (ii) without limiting the generality of the foregoing, neither the
Company nor any of the Company Subsidiaries will:
(A) amend or propose to amend its Certificate of
Incorporation or Bylaws in any material respect;
(B) authorize for issuance, issue, grant, sell, pledge,
dispose of or propose to issue, grant, sell, pledge or dispose of any shares of,
or any options, warrants, commitments, subscriptions or rights of any kind to
acquire or sell any shares of, the capital stock or other securities of the
Company or any of the Company Subsidiaries, including, but not limited to, any
securities convertible into or exchangeable for shares of stock of any class of
the Company or any of the Company Subsidiaries, except for (a) the issuance of
shares pursuant to the exercise of Company Options outstanding on the date of
this Agreement in accordance with their present terms, (b) the issuance of
shares upon the exercise of Company Warrants outstanding on the date of this
Agreement in accordance with their present terms and (c) the issuance of shares
upon the conversion of Preferred Shares outstanding on the date of this
Agreement in accordance with the present terms of the Company Preferred Stock;
(C) split, combine or reclassify any shares of its
capital stock or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, other than dividends to the holders of Preferred Shares in
accordance with the present terms of the Company Preferred Stock and dividends
or distributions to the Company or a Company Subsidiary, or directly or
indirectly redeem, purchase or otherwise acquire or offer to acquire any shares
of its capital stock or other securities;
33
(D) create, incur or assume any indebtedness for borrowed
money or issue any debt securities, except pursuant to the Credit Agreement, or
make any loans (except as provided in clause (b) of paragraph (E) below);
(E) other than in the ordinary course of business
consistent with past practice, (a) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, indirectly, contingently or
otherwise) for the obligations of any person (other than the Company or a
Company Subsidiary); (b) make any capital expenditures or make any advances or
capital contributions to, or investments in, any other person (other than to a
Company Subsidiary); (c) voluntarily incur any material liability or obligation
(absolute, accrued, contingent or otherwise); or (d) sell, transfer, mortgage,
pledge or otherwise dispose of, or encumber, or agree to sell, transfer,
mortgage, pledge or otherwise dispose of or encumber, any assets or properties,
real, personal or mixed, material to the Company and the Company Subsidiaries
taken as a whole other than to secure debt permitted under paragraph (D);
(F) increase in any manner the compensation of any of its
officers or employees (other than, except with respect to employees who are
executive officers or directors, in the ordinary course of business reasonably
consistent with past practice) or enter into, establish, amend or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other welfare,
stock option or other equity, pension, retirement, vacation, severance, deferred
compensation or other compensation or benefit plan, policy, agreement, trust,
fund or arrangement with, for or in respect of, any stockholder, officer,
director, employee, consultant or affiliate other than, in any such case
referred to above, as may be required by Law or as required pursuant to the
terms of agreements in effect on the date of this Agreement or in the ordinary
course of business reasonably consistent with past practice and other than
arrangements with new employees (other than employees who will be officers of
the Company) hired in the ordinary course of business reasonably consistent with
past practice and providing for compensation (other than equity-based
compensation) and other benefits reasonably consistent with those provided for
similarly situated employees of the Company as of the date hereof;
(G) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
any subsidiary or the Company;
(H) except as may be required as a result of a change in
law or as required by the SEC, change any of the accounting principles or
practices used by it;
(I) make any tax election or settle or compromise any
material income tax liability;
(J) pay, discharge or satisfy any material claims,
liabilities or obligations
34
(absolute, accrued, asserted or unasserted, contingent or otherwise), 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, or contemplated by, the financial statements (or the
notes thereto) of the Company or incurred in the ordinary course of business
consistent with past practice;
(K) except to the extent necessary for the exercise of
its fiduciary duties by the Board of Directors of the Company as set forth in,
and consistent with the provisions of, SECTION 4.8 hereof, waive, amend or allow
to lapse any term or condition of any confidentiality or "standstill" agreement
to which the Company or any subsidiary is a party; or
(L) take, or agree in writing or otherwise to take, any
of the foregoing actions or any action which would make any of the
representations or warranties of the Company contained in this Agreement untrue
or incorrect in any material respect at or prior to the Effective Time.
(b) The Company shall, and the Company shall cause each of the
Company Subsidiaries, to comply with all Laws applicable to it or any of its
properties, assets or business and to maintain in full force and effect all the
Company Permits necessary for such business, except in any such case for any
failure so to comply or maintain that would not reasonably be expected to result
in a Material Adverse Effect.
4.2 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent if any of the following occur after the date of this
Agreement: (i) receipt of any notice or other communication in writing from any
third party alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement, provided
that such Consent would have otherwise been required to have been disclosed in
this Agreement; (ii) receipt of any material notice or other communication from
any Governmental Authority (including, but not limited to, the National
Association of Securities Dealers ("NASD"), the AMEX or any other securities
exchange) in connection with the transactions contemplated by this Agreement;
(iii) the occurrence of an event which would be reasonably likely (A) to have a
Material Adverse Effect or (B) to cause any condition set forth in ANNEX I
hereto to be unsatisfied in any material respect at any time prior to the
consummation of the Offer; or (iv) the commencement or threat of any Litigation
involving or affecting the Company or any of the Company Subsidiaries, or any of
their respective properties or assets, or, to the Company's knowledge, any
employee, agent, director or officer, in his or her capacity as such, of the
Company or any of the Company Subsidiaries which, if pending on the date hereof,
would have been required to have been disclosed in this Agreement or which
relates to the consummation of the Offer or the Merger.
4.3 ACCESS AND INFORMATION. Between the date of this Agreement
and the Effective Time, and without intending by this SECTION 4.3 to limit any
of the other obligations of the parties under this Agreement, the Company will
give, and shall direct its accountants
35
and legal counsel to give, Parent and its authorized representatives (including,
without limitation, its financial advisors, accountants and legal counsel), at
reasonable times and without undue disruption to or interference with the normal
conduct of the business and affairs of the Company, access as reasonably
required in connection with the transactions provided for in this Agreement to
all offices and other facilities and to all contracts, agreements, commitments,
books and records of or pertaining to the Company and the Company Subsidiaries
and will furnish Parent with (a) such financial and operating data and other
information with respect to the business and properties of the Company and the
Company Subsidiaries as Parent may from time to time reasonably request in
connection with such transactions and (b) a copy of each material report,
schedule and other document filed or received by the Company or any of the
Company Subsidiaries pursuant to the requirements of applicable securities laws,
the NASD or the AMEX.
4.4 STOCKHOLDER APPROVAL. As soon as practicable following the
consummation of the Offer, the Company will take all steps necessary to duly
call, give notice of, convene and hold a meeting of its stockholders for the
purpose of voting upon the Company Proposals and for such other purposes as may
be necessary or desirable in connection with effectuating the transactions
contemplated hereby, if such meeting is required. Except as otherwise
contemplated by this Agreement, the Board of Directors of the Company will
recommend to the stockholders of the Company that they approve the Company
Proposals.
4.5 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein provided, the Company agrees to use reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, but not limited to, (i) obtaining all Consents from Governmental
Authorities and other third parties required for the consummation of the Offer
and the Merger and the transactions contemplated thereby and (ii) timely making
all necessary filings under the HSR Act. Upon the terms and subject to the
conditions hereof, the Company agrees to use reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy the other conditions of the Closing set forth herein.
4.6 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
effect, the Company shall not, and shall use reasonable best efforts to cause
its affiliates not to, issue or cause the publication of any press release or
any other announcement with respect to the Offer or the Merger or the
transactions contemplated hereby without the consent of Parent (such consent not
to be unreasonably withheld or delayed), except where such release or
announcement is required by applicable Law or pursuant to any applicable listing
agreement with, or rules or regulations of, the NASD or the AMEX, in which case
the Company, prior to making such announcement, will consult with Parent
regarding the same.
4.7 COMPLIANCE. In consummating the transactions contemplated
hereby, the Company shall comply in all material respects with the provisions of
the Securities Exchange
36
Act and the Securities Act and shall comply, and cause the Company Subsidiaries
to comply or to be in compliance, in all material respects, with all other
applicable Laws.
4.8 NO SOLICITATION. (a) The Company shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company or any of the Company Subsidiaries, solicit or 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 Company Subsidiaries that if consummated would
constitute an Alternative Transaction (as defined below) (any of the foregoing
inquiries or proposals being referred to herein as a "COMPANY TAKEOVER
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 Company Takeover Proposal that is 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 Parent or
(ii) subject to compliance with the other terms of this SECTION 4.8, considering
and negotiating a bona fide Company Takeover Proposal that is a Superior
Proposal not solicited in violation of this Agreement; provided 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 Xxxxxx & Xxxxxxx) 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, 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 equity securities of the Company 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) to be more favorable from a financial point of view to its
stockholders than the Offer and the Merger taking into account at the time of
determination all factors relating to such proposed transaction deemed relevant
by the Board of Directors of the Company, including, without limitation, the
financing thereof, the proposed timing thereof and all other conditions thereto
and any changes to the financial terms of this Agreement proposed by Parent and
Purchaser. "ALTERNATIVE TRANSACTION" means any of (i) a transaction pursuant to
which any person (or group of persons) other than Parent or its affiliates (a
"THIRD PARTY") acquires or would acquire more than 20% 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 more than 20% 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
Company Subsidiaries and securities of the entity surviving any merger or
business combination including any of the Company Subsidiaries) of the Company
or any Company Subsidiaries having a fair market value (as determined by the
Board of Directors of the Company in good faith) equal to more
37
than 20% of the fair market value of all the assets of the Company and the
Company 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 of the Company Subsidiaries,
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. Notwithstanding anything to the contrary contained in this
SECTION 4.8 or elsewhere in this Agreement, prior to the Effective Time, the
Company may, in connection with a possible Company Takeover Proposal, refer any
third party to this SECTION 4.8 and SECTION 8.7 and make a copy of this SECTION
4.8 and SECTION 8.7 available to a third party.
(b) The Company shall immediately notify Parent and Purchaser
after receipt of any Company Takeover Proposal, or any modification of or
amendment to any Company Takeover Proposal, or any request for nonpublic
information relating to the Company or any of the Company Subsidiaries in
connection with a Company Takeover 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 such subsidiary that it is
considering making, or has made, a Company Takeover Proposal. Such notice to
Parent and Purchaser shall be made orally and in writing, and shall indicate the
identity of the person making the Company Takeover Proposal or intending to make
the Company Takeover Proposal or requesting non-public information or access to
the books and records of the Company, the terms of any such Company Takeover
Proposal or modification or amendment to a Company Takeover Proposal, and
whether the Company is providing or intends to provide the person making the
Company Takeover Proposal with access to information concerning the Company as
provided in SECTION 4.8(a). The Company shall also immediately notify Parent and
Purchaser, orally and in writing, if it enters into negotiations concerning any
Company Takeover Proposal.
(c) Except as set forth in this SECTION 4.8, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or indicate publicly its intention to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of Directors or
such committee of the Offer or the Company Proposals, (ii) approve or recommend,
or indicate publicly its intention to approve or recommend, any Company Takeover
Proposal or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
a "COMPANY ACQUISITION AGREEMENT") related to any Company Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the Effective Time the
Board of Directors of the Company determines in good faith, with the advice of
outside counsel, that the failure to do so could reasonably be determined to be
a breach of its fiduciary duties to the Company's stockholders under applicable
law, the Board of Directors of the Company may (subject to this and the
following sentences) approve or recommend a Superior Proposal and, in connection
therewith, withdraw or modify its approval or recommendation of the Offer or the
Company Proposals and/or terminate this Agreement (and concurrently with or
after such
38
termination, if it so chooses, cause the Company to enter into any Company
Acquisition Agreement with respect to any Superior Proposal), but only at a time
that is after the third business day following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company has received a
Superior Proposal and, in the case of any previously received Superior Proposal
that has been materially modified or amended, such modification or amendment and
specifying the material terms and conditions of such Superior Proposal,
modification or amendment.
(d) Nothing contained in this SECTION 4.8 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Securities Exchange Act or from making
any disclosure to the Company's stockholders if, in the good faith judgment of
the Board of Directors of the Company, with the advice of outside counsel,
failure so to disclose could be determined to be a breach of its fiduciary
duties to the Company's stockholders under applicable law; PROVIDED, HOWEVER,
that neither the Company nor its Board of Directors nor any committee thereof
shall, except as permitted by SECTION 4.8(c), withdraw or modify, or indicate
publicly its intention to withdraw or modify, its position with respect to the
Offer or the Company Proposals or approve or recommend, or indicate publicly its
intention to approve or recommend, a Company Takeover Proposal.
(e) The Company shall advise its officers and directors and
any investment banker or attorney retained by the Company in connection with the
transactions contemplated by this Agreement of the restrictions set forth in
this SECTION 4.8.
(f) For so long as the this Agreement shall not have been
terminated in accordance with its terms, the Board of Directors of the Company
shall not redeem the Rights or waive or amend any provision of the Rights
Agreement, in any such case to permit or facilitate the consummation of any
Company Takeover Proposal or Alternative Transaction.
4.9 SEC AND STOCKHOLDER FILINGS. The Company shall send to
Parent a copy of all material public reports and materials as and when it sends
the same to its stockholders, the SEC or any state or foreign securities
commission.
4.10 TAKEOVER STATUTES. If any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
enacted under state or federal laws in the United States (each a "TAKEOVER
STATUTE"), including, without limitation, Section 203 of the Delaware Code, is
or may become applicable to the Offer or the Merger, the Company will use
reasonable best efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated by this Agreement and the
Company Proposals may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act so as to eliminate or minimize the effects
of any Takeover Statute on any of the transactions contemplated hereby.
39
4.11 RIGHTS AGREEMENT. The Board of Directors of the Company
shall take all further action (in addition to that referred to in SECTION 2.33),
if any, necessary in order to render the Rights inapplicable to the Offer, the
Merger and the other transactions contemplated by this Agreement.
ARTICLE V
ADDITIONAL COVENANTS OF PURCHASER AND PARENT
Parent and Purchaser covenant and agree as follows:
5.1 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein provided, Parent and Purchaser agree to use reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement,
including, but not limited to, (i) obtaining all Consents from Governmental
Authorities and other third parties required for the consummation of the Offer
and the Merger and the transactions contemplated thereby and (ii) timely making
all necessary filings under the HSR Act. Upon the terms and subject to the
conditions hereof, Parent and Purchaser agree to use reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary to satisfy the other conditions of the Closing set forth
herein.
5.2 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
effect, Parent and Purchaser shall not, and shall use reasonable best efforts to
cause their affiliates not to, issue or cause the publication of any press
release or any other announcement with respect to the Offer or the Merger or the
transactions contemplated hereby without the consent of the Company (such
consent not to be unreasonably withheld or delayed), except where such release
or announcement is required by applicable Law or pursuant to any applicable
listing agreement with, or rules or regulations of, any stock exchange on which
shares of Parent's capital stock are listed or the NASD, or other applicable
securities exchange, in which case Parent, prior to making such announcement,
will consult with the Company regarding the same.
5.3 COMPLIANCE. In consummating the transactions contemplated
hereby, Parent and Purchaser shall comply in all material respects with the
provisions of the Securities Exchange Act and the Securities Act and shall
comply, and cause their subsidiaries to comply or to be in compliance, in all
material respects, with all other applicable Laws.
5.4 EMPLOYEE BENEFIT PLANS. (a) As of the Effective Time,
Parent shall cause the Surviving Corporation to honor and satisfy all
obligations and liabilities with respect to the Employee Plans. Notwithstanding
the foregoing, the Surviving Corporation shall not be required to continue any
particular Employee Plan after the Effective Time, and any Employee Plan may be
amended or terminated in accordance with its terms and applicable Law. To the
40
extent that any Employee Plan is terminated or amended after the Effective Time
so as to reduce the benefits that are then being provided with respect to
participants thereunder, Parent shall arrange for each individual who is then a
participant in such terminated or amended plan to participate in a comparable
Parent Benefit Plan ("PARENT BENEFIT PLAN") in accordance with the eligibility
criteria thereof, provided that (i) such participant shall receive full credit
for years of service with the Company or any of the Company Subsidiaries prior
to the Effective Time for all purposes for which such service was recognized
under the applicable Employee Plan, including, but not limited to, recognition
of service for eligibility, vesting (including acceleration thereof pursuant to
the terms of the applicable Employee Plan), entitlement to commence benefits
and, to the extent not duplicative of benefits received under such Employee
Plan, the amount of benefits, (ii) such participant shall participate in the
Parent Benefit Plans on terms no less favorable than those offered by Parent to
similarly situated employees of Parent, (iii) Parent shall cause any and all
pre-existing condition limitations (to the extent such limitations did not apply
to a pre-existing condition under the Employee Plans) and eligibility waiting
periods under any group health plans to be waived with respect to such
participant and his or her eligible dependents and (iv) Parent shall cause the
Parent Benefit Plans that are group welfare plans to provide such participant
with credit towards any applicable deductibles, co-payments and similar
exclusions for expenses incurred prior to the Effective Time.
(b) Parent and the Company hereby acknowledge that the
consummation of the Offer and the transactions contemplated under this Agreement
will be treated as a "Change in Control" for purposes of each of the applicable
Employee Plans, and each applicable employment, severance or similar agreement
applicable to any employee of the Company or any of the Company Subsidiaries,
listed in Section 5.4(b) of the Company Disclosure Letter (such Employee Plans
and agreements collectively, "CHANGE IN CONTROL AGREEMENTS") and agree to abide
by the provisions of any Change in Control Agreements which relate to a Change
in Control, including, but not limited to, the accelerated vesting and/or
payment of equity-based awards.
(c) The provisions of this SECTION 5.4 are not intended to and
do not create rights of third party beneficiaries.
5.5 INDEMNIFICATION. (a) From and after the Effective Time,
the Surviving Corporation shall indemnify and hold harmless all past and present
officers and directors (the "INDEMNIFIED PARTIES") of the Company and of the
Company Subsidiaries to the full extent such persons may be indemnified by the
Company pursuant to Delaware law, the Company's Certificate of Incorporation and
Bylaws, as each is in effect on the date of this Agreement, for acts and
omissions (x) arising out of or pertaining to the transactions contemplated by
this Agreement or arising out of the Offer Documents or (y) otherwise with
respect to any acts or omissions occurring or arising at or prior to the
Effective Time and shall advance reasonable litigation expenses incurred by such
persons in connection with defending any action arising out of such acts or
omissions, PROVIDED that such persons provide the requisite affirmations and
undertaking, as set forth in Section 145(e) of the Delaware Code.
41
(b) In addition, Parent will 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 an insurance and
indemnification policy that provides coverage for events occurring or arising 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 Parent and the
Surviving Corporation shall not be required to pay an annual premium for the D&O
Insurance in excess of 300% 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.
(c) This SECTION 5.5 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of Parent, Purchaser,
the Company and the Surviving Corporation. Parent hereby guarantees the
performance by the Surviving Corporation of the indemnified obligations pursuant
to this SECTION 5.5, which guaranty is absolute and unconditional and shall not
be affected by any circumstance whatsoever, including the bankruptcy or
insolvency of the Surviving Corporation or any other person. The Indemnified
Parties shall be intended third-party beneficiaries of this SECTION 5.5.
5.6 VOTING OF SHARES. At any meeting of the Company's
stockholders held for the purpose of voting upon the Company Proposals, all of
the Shares then owned by Parent, Purchaser or any other subsidiaries of Parent
shall be voted in favor of the Company Proposals.
5.7 GUARANTEE OF PARENT. Parent hereby guarantees the payment
by Purchaser of the Common Per Share Amount, the Preferred Per Share Amount and
any other amounts payable by Purchaser pursuant to this Agreement and will cause
Purchaser to perform all of its other obligations under this Agreement in
accordance with their terms.
ARTICLE VI
MERGER CONDITIONS
The respective obligations of each party to effect the Merger
shall be subject to the fulfillment or waiver at or prior to the Effective Time
of the following conditions:
6.1 OFFER. The Offer shall have been consummated; provided
that this condition shall be deemed to have been satisfied with respect to the
obligation of Parent and Purchaser to effect the Merger if Parent fails to
accept for payment or pay for Common Shares pursuant to the Offer in violation
of the terms of the Offer or of this Agreement.
6.2 STOCKHOLDER APPROVAL. If required, the Company Proposals
shall have been
42
approved at or prior to the Effective Time by the requisite vote
of the stockholders of the Company in accordance with the Delaware Code.
6.3 NO INJUNCTION OR ACTION. No order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction shall have
been enacted, entered, promulgated or enforced by any court or other
Governmental Authority which prohibits or prevents the consummation of the
Merger which has not been vacated, dismissed or withdrawn prior to the Effective
Time. The Company and Parent shall use all reasonable best efforts to have any
of the foregoing vacated, dismissed or withdrawn by the Effective Time.
6.4 GOVERNMENTAL APPROVALS. All Consents of any Governmental
Authority required for the consummation of the Merger and the transactions
contemplated by this Agreement shall have been obtained, except for those
Consents the failure to obtain which will not have a material adverse effect on
the business, assets, condition (financial or other), liabilities or results of
operations of the Surviving Corporation and its subsidiaries taken as a whole.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
stockholders of the Company described herein:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if any Governmental
Authority shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement and such order, decree or ruling or other action shall have
become final and nonappealable;
(c) by Parent if
(i) the Company shall have breached or failed to perform in
any material respect any of its covenants or other agreements contained
in this Agreement, which breach or failure to perform is incapable of
being cured or has not been cured within five (5) days after the giving
of written notice thereof to the Company (but not later than the
expiration of the twenty (20) business day period provided for the
Offer under SECTION 1.1(b) hereof);
(ii) any representation or warranty of the Company shall not
have been true and
43
correct in all material respects when made;
(iii) any representation or warranty of the Company shall
cease to be true and correct in all material respects at any later date
as if made on such date (other than representations and warranties made
as of a specified date) other than as a result of a breach or failure
to perform by the Company of any of its covenants or agreements under
this Agreement; PROVIDED, HOWEVER, that such representation or warranty
is incapable of being cured or has not been cured within five (5) days
after the giving of written notice thereof to the Company (but not
later than the expiration of the twenty (20) business day period
provided for the Offer under SECTION 1.1(b) hereof);
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant
to this SECTION 7.1(c) shall not be available to Parent if Purchaser or
any other affiliate of Parent shall acquire shares of Company Common
Stock pursuant to the Offer;
(d) by Parent if, whether or not permitted to do so by this
Agreement, (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Purchaser its approval or recommendation of the Offer or any of the
Company Proposals; (ii) the Board of Directors of the Company or any
committee thereof shall have approved or recommended to the
stockholders of the Company any Company Takeover Proposal or
Alternative Transaction; (iii) the Board of Directors of the Company or
any committee thereof shall have approved or recommended that the
stockholders of the Company tender their Shares in any tender or
exchange offer that is an Alternative Transaction; (iv) the Board of
Directors of the Company or any committee thereof shall have taken any
position or make any disclosures to the Company's stockholders
permitted pursuant to SECTION 4.8(e) which has the effect of any of the
foregoing; (v) the Board of Directors of the Company or any committee
thereof shall have resolved to take any of the foregoing actions or
(vi) the Board of Directors of the Company or any committee thereof
shall have redeemed the Rights, or waived or amended any provision of
the Rights Agreement, in any such case to permit or facilitate the
consummation of any Company Takeover Proposal or Alternative
Transaction;
(e) by either Parent or the Company if, as the result of the
failure of the Minimum Condition or any of the other conditions set
forth in Annex I hereto, the Offer shall have terminated or expired in
accordance with its terms without Purchaser having purchased any Shares
pursuant to the Offer, provided that if the failure to satisfy any
conditions set forth in Annex I shall be a basis for termination of
this Agreement under any other clause of this Section 7.1, a
termination pursuant to this clause (e) shall be deemed a termination
under such other clause;
(f) by either Parent or the Company if the Offer shall not
have been consummated on or before March 31, 1999, PROVIDED that the
right to terminate this
44
Agreement pursuant to this SECTION 7.1(f) shall not be available to any
party whose failure to perform any of its obligations under this
Agreement results in the failure of the Offer to be consummated by such
time;
(g) by the Company if Parent or Purchaser shall have breached
or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in
this Agreement, which breach or failure to perform is incapable of
being cured or has not been cured within 5 days after the giving of
written notice thereof to Parent; or
(h) by the Company in accordance with SECTION 4.8(c) hereof;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant
to this SECTION 7.1(h) shall not be available (x) if the Company has
breached in any material respect its obligations under SECTION 4.8
hereof, or (y) if the Company shall fail to pay when due the fees and
expenses contemplated by SECTION 8.7 hereof.
The party desiring to terminate this Agreement pursuant to the preceding
paragraphs shall give written notice of such termination to the other party in
accordance with SECTION 8.5 hereof.
7.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Offer or the Merger
pursuant to this ARTICLE VII, this Agreement (other than SECTIONS 7.2, 8.1, 8.3,
8.5, 8.6, 8.7, 8.8, 8.10, 8.11, 8.12, 8.14 and 8.15 hereof) shall become void
and of no effect with no liability on the part of any party hereto (or of any of
its directors, officers, employees, agents, legal or financial advisors or other
representatives); PROVIDED, HOWEVER, that no such termination shall relieve any
party hereto from any liability for any willful breach of this Agreement prior
to termination. If this Agreement is terminated as provided herein, each party
shall use all reasonable best efforts to redeliver all documents, work papers
and other material (including any copies thereof) of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same.
ARTICLE VIII
MISCELLANEOUS
8.1 CONFIDENTIALITY. (a) Unless (i) otherwise expressly
provided in this Agreement, (ii) required by applicable Law or any listing
agreement with, or the rules and regulations of, the AMEX or any other
applicable securities exchange or the NASD, (iii) necessary to secure any
required Consents as to which the other party has been advised or (iv) consented
to in writing by Parent and the Company, all information (whether oral or
written) and documents furnished in connection herewith together with analyses,
compilations, studies or other documents prepared by such party which contain or
otherwise reflect such information
45
shall be kept strictly confidential by the Company, Parent, Purchaser and their
respective officers, directors, employees and agents. Prior to any disclosure
permitted pursuant to the preceding sentence, the party intending to make such
disclosure shall consult with the other party regarding the nature and extent of
the disclosure. Nothing contained herein shall preclude disclosures to the
extent necessary to comply with accounting, SEC and other disclosure obligations
imposed by applicable Law. In the event the transactions contemplated by this
Agreement are not consummated, each party shall return to the other any
documents furnished by the other and all copies thereof that any of them may
have made and will hold in confidence any information obtained from the other
party except to the extent (a) such party is required to disclose such
information by Law or such disclosure is necessary or desirable in connection
with the pursuit or defense of a claim, (b) such information was known by such
party prior to such disclosure (and PROVIDED that, except with respect to
information referred to in the following clause (c), such party shall have
advised the other party of such knowledge upon or promptly after its receipt of
such information) or was thereafter developed or obtained by such party
independent of such disclosure or (c) such information is or becomes generally
available to the public other than by breach of this SECTION 8.1 (or, to such
party's knowledge, breach of a confidentiality agreement with the other party).
Prior to any disclosure of information pursuant to the exception in clause (a)
of the preceding sentence, the party intending to disclose the same shall so
notify the party which provided the same in order that such party may seek a
protective order or other appropriate remedy should it choose to do so.
(b) The Parent and the Company further acknowledge that
certain of the business and activities of each of them is competitive with
business and activities of the other party, and each of them therefore agrees
that it will not use, or seek to obtain any competitive or other business
advantage as a result of, the information or documents so received by it in
connection herewith, such party acknowledging that such use would be unfair and
materially detrimental to the other party, PROVIDED that the provisions of this
SECTION 8.1(b) shall not apply to information referred to in clause (c) of
SECTION 8.1(a) hereof.
8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement among the Company, Parent
and Purchaser.
8.3 WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company
on the one hand, or Parent and Purchaser on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent on
the one hand, or the Company on the other hand, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
SECTION 8.3.
8.4 SURVIVAL. The respective representations, warranties,
covenants and
46
agreements of the Company and Parent contained herein or in any certificates or
other documents delivered prior to or at the Closing shall survive the execution
and delivery of this Agreement, notwithstanding any investigation made or
information obtained by the other party, but shall terminate at the Effective
Time, except for those contained in SECTIONS 1.7, 1.8, 1.9, 1.14, 5.4, 5.5, 5.7
and 8.8 hereof and this SECTION 8.4, which shall survive beyond the Effective
Time.
8.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by facsimile, receipt confirmed, or on the next business day when
sent by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to the Company, to:
Alarmguard Holdings, Inc.
000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. XxxXxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
47
(ii) if to Parent or Purchaser, to:
Tyco International Ltd.
The Xxxxxxx Building
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx XX00 Xxxxxxx
Xxxxxxxxx: Secretary
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
with a copy to:
Tyco International (US) Inc.
Xxx Xxxx Xxxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxx X Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
and to
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
8.6 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the Company, in the case of a proposed assignment by
Parent or Purchaser, or by Parent, in the case of a proposed assignment by the
Company, except that Purchaser may assign its rights, interest and obligations
hereunder to any other wholly-owned direct or indirect subsidiary of Parent,
provided that the provisions of SECTION 5.7 hereof shall apply to such other
subsidiary.
8.7 EXPENSES. (a) Except as provided in SECTION 8.7(b) or
8.7(C) hereof, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs or expenses.
(b) The Company agrees that if this Agreement is terminated
pursuant to
48
(i) SECTION 7.1(d);
(ii) SECTION 7.1(h); or
(iii) SECTION 7.1(e) OR 7.1(f) and, with respect to this
clause (iii), at the time of such termination any person, entity or
group (as defined in Section 13(d)(3) of the Securities Exchange Act)
(other than Parent or any of its affiliates or any person identified in
the Company's Proxy Statement dated April 30, 1998 and who has executed
the Preferred Stock Purchase Agreement, provided that such person has
not breached the terms of such Preferred Stock Purchase Agreement)
shall have become the beneficial owner of more than 15% of the
outstanding shares of Company Stock and such person, entity or group
(or any affiliate of such person, entity or group) thereafter (x) shall
make a Company Takeover Proposal and, in the case of a consensual
transaction with the Company, shall substantially have negotiated the
terms thereof, at any time on or prior to the date which is six months
after such termination of this Agreement, and (y) shall consummate such
Company Takeover Proposal at any time on or prior to the date which is
one year after termination of this Agreement, in the case of a
consensual transaction, or six months after termination of this
Agreement, in the case of a non-consensual transaction, in each case
with a value per share of Company Common Stock of at least $9.25 (with
appropriate adjustments for reclassifications of capital stock, stock
dividends, stock splits, reverse stock splits and similar events);
then the Company shall pay to Parent the sum of (a) $4.5 million. Any payment
required by this SECTION 8.7(b) shall be made as promptly as practicable but in
no event later than two business days following termination of this Agreement
pursuant to SECTION 7.1(d) OR 7.1(h) hereof, or, in the case of clause (iii) of
this SECTION 8.7(b), upon consummation of such Company Takeover Proposal, and
shall be made by wire transfer of immediately available funds to an account
designated by Parent.
(c) The Company further agrees that if this Agreement is
terminated pursuant to SECTION 7.1(c)(i) hereof,
(i) the Company will pay to Parent, as promptly as practicable
but in no event later than two business days following termination of
this Agreement, the amount of all documented and reasonable costs and
expenses incurred by Parent, Purchaser and their affiliates (including
but not limited to fees and expenses of counsel and accountants and
out-of-pocket expenses (but not fees) of financial advisors) in an
aggregate amount not to exceed $450,000 in connection with this
Agreement or the transactions contemplated hereby ("PARENT EXPENSES");
and
(ii) in the event that the Company consummates a Company
Takeover Proposal (whether or not solicited in violation of this
Agreement) which is publicly
49
announced within one year from the date of termination of this
Agreement, the sum of $4.5 million, less the amount of any payment made
pursuant to clause (i) of this SECTION 8.7(c), which payment shall be
made not later than two business days following consummation of such
Company Takeover Proposal.
(d) The Company further agrees that if this Agreement is
terminated pursuant to SECTION 7.1(c)(ii) hereof, the Company will pay to
Parent, as promptly as practicable but in no event later than two business days
following termination of this Agreement, the Parent Expenses.
(e) The Company shall not be obligated to make any payments to
Parent pursuant to SECTION 8.7(b)(iii) or SECTION 8.7(c)(ii) if the Company
Takeover Proposal referenced therein is a transaction ("PERMITTED FINANCING") in
which the Company sells equity securities for gross proceeds not in excess of
$25,000,000; PROVIDED THAT the securities issued, or issuable upon exercise,
conversion or exchange of the securities issued, in such Permitted Financing
constitute or upon issuance would constitute less than forty (40%) percent of
the outstanding voting power of the Company after such issuance, exercise,
conversion or exchange.
8.8 GOVERNING LAW. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed and governed by and in
accordance with the laws of, the State of New York.
8.9 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 INTERPRETATION. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. As used in this Agreement, (i) the term
"PERSON" shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity, (ii)
unless otherwise specified herein, the term "AFFILIATE," with respect to any
person, shall mean and include any person controlling, controlled by or under
common control with such person and (iii) the term "SUBSIDIARY" of any specified
person shall mean any corporation 50 percent or more of the outstanding voting
power of which, or any partnership, joint venture, limited liability company or
other entity 50 percent or more of the total equity interest of which, is
directly or indirectly owned by such specified person.
8.11 ENTIRE AGREEMENT. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Annex(es)
attached hereto and the Company Disclosure Letter referred to herein, which
Annex(es) and Company Disclosure
50
Letter are incorporated herein by reference, embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants, or undertakings other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties with respect to such subject matter. Notwithstanding the foregoing
provisions of this SECTION 8.11, the provisions of the letter agreement dated
November 2, 1998 between Tyco International (US) Inc. and Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation, as agent for the Company, shall remain in
effect in accordance with its terms.
8.12 SEVERABILITY. (a) In case any provision in this Agreement
shall be held invalid, illegal or unenforceable in a jurisdiction, such
provision shall be modified or deleted, as to the jurisdiction involved, only to
the extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
(b) Parent and the Company agree that the payments to Parent
provided in SECTION 8.7 are fair and reasonable in the circumstances,
considering not only the consideration payable to the holders of Shares in the
Offer and the Merger but also the outstanding funded indebtedness (including
capital leases) of the Company and the Company Subsidiaries and Parent's
anticipated costs, including lost opportunity costs, if the Offer and Merger are
not consummated. If a court of competent jurisdiction shall nonetheless, by a
final, non-appealable judgment, determine that the amount of such payments
exceed the maximum amount permitted by law, then the amount of such payments
shall be reduced to the maximum amount permitted by law in the circumstances, as
determined by such court of competent jurisdiction.
8.13 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
8.14 THIRD PARTIES. Nothing contained in this Agreement or in
any instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not a party hereto or
thereto or a successor or permitted assign of such a party; PROVIDED HOWEVER,
that the parties hereto specifically acknowledge that the provisions of SECTION
5.5 hereof are intended to be for the benefit of, and shall be enforceable by,
the Indemnified Parties.
51
8.15 DISCLOSURE LETTER. Parent acknowledges that the Company
Disclosure Letter (i) relates to certain matters concerning the disclosures
required and transactions contemplated by this Agreement, (ii) is qualified in
its entirety by reference to specific provisions of this Agreement, (iii) is not
intended to constitute and shall not be construed as indicating that any such
matter is required to be disclosed, nor shall such disclosure be construed as an
admission that such information is material with respect to the Company, except
to the extent required by this Agreement.
[SIGNATURE PAGE FOLLOWS]
52
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed and delivered by their respective duly
authorized officers as of the date first above written.
TYCO INTERNATIONAL LTD.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President, Chief
Corporate Counsel
T16 ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
ALARMGUARD HOLDINGS, INC.
By: /s/ Xxxxxxx X. XxxXxxxxxx
---------------------------------------------
Name: Xxxxxxx X. XxxXxxxxxx
Title: Chairman, CEO
53
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision
of the Offer, Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Securities Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in this Agreement) amend or terminate the Offer as to any
Shares not then paid for if (i) the conditions that (1) there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Common Shares which represents at least 51% of the total number of issued and
outstanding Common Shares and (2) the number of Common Shares tendered pursuant
to the Offer together with the Preferred Shares subject to the Preferred Stock
Purchase Agreement constitute at least 51% of the total voting power of the
Company on a fully diluted basis, shall not each have been satisfied (the
"MINIMUM CONDITION") or (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer
or (iii) at any time after the date of this Agreement and before the time of
payment for any such Common Shares (whether or not any Common Shares have
theretofore been accepted for payment or paid for pursuant to the Offer), any of
the following conditions exists:
(a) there shall be in effect an injunction or other order,
decree, judgment or ruling by a Governmental Authority of competent jurisdiction
or a Law 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 or the
consummation of the purchase of the Company Preferred Stock pursuant to the
Preferred Stock Purchase Agreement, (ii) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or subsidiaries) of any portion of
the Company's business or assets, or Parent's business or assets relating to the
security services business, which is material to the security services business
of all such entities taken as a whole or which would substantially deprive
Parent and/or its affiliates or subsidiaries of the benefit of ownership of the
Company's business or assets, or compels Parent (or any of its affiliates or
subsidiaries) to dispose of or hold separate any portion of the Company's
business or assets, or Parent's business or assets relating to the security
services business, which is material to the security services business of all
such entities taken as a whole or which would substantially deprive Parent
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 Purchaser effectively to acquire or to hold or to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote Shares
purchased by Purchaser pursuant to the Offer, the Merger or the Preferred Stock
Purchase Agreement on all matters properly presented to the stockholders of the
Company, or (iv) imposes any material limitations on the ability of Parent
and/or its affiliates or subsidiaries effectively to control in any material
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respect the business and operations of the Company, or (v) seeks to restrict any
future business activity by Parent (or any of its affiliates) relating to the
security services business, including, without limitation, by requiring the
prior consent of any person or entity (including any Governmental Authority) to
future transactions by Parent (or any of its affiliates); 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 the purchase of
Preferred Shares pursuant to the Preferred Stock Purchase Agreement or to impose
any other restriction, prohibition or limitation referred to in the foregoing
paragraph (a); or
(c) this Agreement shall have been terminated by the Company
or Parent in accordance with its terms; or
(d) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in the Common Shares on the AMEX, (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) Parent and the Company shall have agreed that Purchaser
shall amend the Offer to terminate the Offer or postpone the payment for Common
Shares pursuant thereto; or
(f) any of the representations and warranties made by the
Company in the Merger Agreement shall not have been true and correct in all
material respects when made, or shall thereafter have ceased to be true and
correct in all material respects as if made as of such later date (other than
representations and warranties made as of a specified date), or the Company
shall not in all material respects have performed each obligation and agreement
and complied with each covenant to be performed and complied with by it under
this Agreement, PROVIDED, however, that such breach or failure to perform is
incapable of being cured or has not been cured within 5 days after the giving of
written notice thereof to the Company, PROVIDED, however, that no such 5-day
cure period shall require extension of the Offer beyond the twenty (20) business
days provided under SECTION 1.1(b) of the Agreement; or
(g) the Company's Board of Directors shall have modified or
amended its recommendation of the Offer in any manner adverse to Parent or shall
have withdrawn its recommendation of the Offer, or shall have recommended
acceptance of any Company Takeover Proposal or shall have resolved to do any of
the foregoing; or
(h) (i) any corporation, entity or "group" (as defined in
Section 13(d)(3) of the Securities Exchange Act) ("PERSON/GROUP"), other than
Parent and Purchaser and any person/group identified in the Company's Proxy
Statement dated April 30, 1998 and who has executed the Preferred Stock Purchase
Agreement, provided that such person/group has not
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breached the terms of such Preferred Stock Purchase Agreement, shall have
acquired beneficial ownership of more than 15% of the outstanding Shares, or
shall have been granted any options or rights, conditional or otherwise, to
acquire a total of more than 15% of the outstanding Shares and which, in each
case, does not tender the Common Shares beneficially owned by it in the Offer;
(ii) any new group shall have been formed which beneficially owns more than 15%
of the outstanding Shares and which does not tender the Common Shares
beneficially owned by it in the Offer; or (iii) any person/group (other than
Parent 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
(i) any change, development, effect or circumstance shall have
occurred or be threatened that would reasonably be expected to have a Material
Adverse Effect with respect to the Company; or
(j) 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 2
business days; or
(k) a Distribution Date shall have occurred under the Rights
Agreement.
The foregoing conditions are for the sole benefit of Parent
and Purchaser and may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to any such condition and may be waived by Parent or
Purchaser, in whole or in part, at any time and from time to time, in the sole
discretion of Parent. The failure by Parent or Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any right, the
waiver of such right with respect to any particular facts or circumstances shall
not be deemed a waiver with respect to any other facts or circumstances, and
each right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
Should the Offer be terminated pursuant to the foregoing
provisions, all tendered Common Shares not theretofore accepted for payment
shall forthwith be returned to the tendering stockholders.
A-3
GLOSSARY OF DEFINED TERMS
Section
TERM WHERE DEFINED
----- -------------
"1997 Balance Sheet" 2.10
"Acquiring Person" 2.33
"Advance" 1.3
"Advance Director" 1.3
"affiliate" 8.10
"Agreement" the recitals
"Alternative Transaction" 4.8(a)
"AMEX" 2.5
"arranger liability" 2.23(b)
"Certificate of Merger" 1.4
"Change in Control Agreements" 5.4(b)
"Closing" 1.5
"Closing Date" 1.5
"Code" 2.15(a)
"Common Per Share Amount" the recitals
"Common Shares" the recitals
"Company" the recitals
"Company Acquisition Agreement" 4.8(c)
"Company Common Stock" the recitals
"Company Disclosure Letter" Article II
"Company Financial Statements" 2.8
"Company Intellectual Property Rights" 2.17
"Company Material Contracts" 2.14
"Company Options" 1.9(a)
"Company Permits" 2.12
"Company Preferred Stock" the recitals
"Company Proposals" 1.13(a)
"Company Securities Filings" 2.7
"Company Stock" the recitals
"Company Subsidiary" 2.1
"Company Takeover Proposal" 4.8(a)
"Company Warrants" 1.9(b)
"Consent" 2.5
"consenting corporation" 2.16(c)
"Credit Agreement" 2.21
G1
Section
TERM WHERE DEFINED
---- -------------
"Current Preferred Director Condition" 1.3
"Current Preferred Holders" 1.3
"D&O Insurance" 5.5(b)
"Delaware Code" 1.4
"disqualified person" 5.4(a)
"Dissenting Shares" 1.7(a)
"Effective Time" 1.5
"Employee Plans" 2.15(a)
"Enforceability Exceptions" 2.4
"Environmental Claim" 2.23(e)(i)
"Environmental Laws" 2.23(e)(i)
"ERISA" 2.15(a)
"ERISA Affiliate" 2.15(a)
"excess parachute payments" 2.16(c)
"Exchange Agent" 1.8(a)
"Fairness Advisor" 1.2(a)
"Fairness Opinion" 1.2(a)
"Governmental Authority" 2.5
"group" paragraph (h) of Annex I
"HSR Act" 2.5
"Indemnified Parties" 5.5(a)
"Independent Directors" 1.3
"IRS" 2.15(b)
"ISO" 2.15(c)
"Law" 2.6
"leased employees" 2.15(b)
"Xxxxxx Warrants" 1.9(b)
"Liens" 2.21
"Litigation" 2.13
"Majority of Current Preferred" 1.3
"Material Adverse Effect" 1.17
"Materials of Environmental Concern" 2.23(e)(iii)
"Merger" the recitals
"Minimum Condition" the introductory paragraph
of Annex I
"multiemployer plan" 2.15(b)
"NASD" 4.2
"Offer" the recitals
"Offer Documents" 1.1(c)
G2
Section
TERM WHERE DEFINED
---- -------------
"Offer to Purchase" 1.1(c)
"Parent" the recitals
"Parent Benefit Plan" 5.4(a)
"Parent Expenses" 8.7(c)(i)
"Parent Information" 3.5
"party in interest" 2.15(b)
"Patricof Warrants" 1.9(b)
"Permitted Financing" 8.7(e)
"Per Share Amount" the recitals
"person" 8.10
"person/group" paragraph (h) of Annex I
"Preferred Per Share Amount" the recitals
"Preferred Shares" the recitals
"Preferred Stock Purchase Agreement" the recitals
"Proxy Statement" 1.13(a)
"Purchaser" the recitals
"Rights" the recitals
"Rights Agreement" the recitals
"SEC" 1.1(b)
"Securities Act" 2.7
"Securities Exchange Act" 1.1(a)
"Shares" the recitals
"Schedule 14D-1" 1.1(c)
"Schedule 14D-9" 1.2(b)
"Standard Form Service Contract" 2.34
"Subordinated Debt Warrants" 1.9(b)
"subsidiary" 8.10
"Superior Proposal" 4.8(a)
"Surviving Corporation" 1.4
"Surviving Corporation Common Stock" 1.6(d)
"Takeover Statute" 4.10
"Tax" 2.16(b)
"Tax-exempt use property" 2.16(c)
"Tax Return" 2.16(b)
G3
