AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ADT LIMITED,
LIMITED APACHE, INC.
and
TYCO INTERNATIONAL LTD
Dated as of March 17, 1997
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01. The Merger........................................... 2
SECTION 1.02. Effective Time. .................................... 2
SECTION 1.03. Effect of the Merger................................. 2
SECTION 1.04. Articles of Organization; By-Laws.................... 2
SECTION 1.05. Directors and Officers............................... 3
SECTION 1.06. Effect on Capital Stock.............................. 3
SECTION 1.07. Exchange of Certificates............................. 5
SECTION 1.08. Stock Transfer Books................................. 7
SECTION 1.09. No Further Ownership Rights in Company Common Stock.. 7
SECTION 1.10. Lost, Stolen or Destroyed Certificates............... 7
SECTION 1.11 Dissenting Shares.................................... 7
SECTION 1.12. Accounting Consequences.............................. 8
SECTION 1.13. Taking of Necessary Action; Further Action........... 8
SECTION 1.14. Material Adverse Effect.............................. 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 2.01. Organization and Qualification; Subsidiaries......... 8
SECTION 2.02. Certificate of Incorporation and By-Laws............. 9
SECTION 2.03. Capitalization....................................... 9
SECTION 2.04. Authority Relative to this Agreement; Takeover Laws.. 10
SECTION 2.05. No Conflict; Required Filings and Consents........... 11
SECTION 2.06. Compliance; Permits.................................. 12
SECTION 2.07. SEC Filings; Financial Statements.................... 13
SECTION 2.08. Absence of Certain Changes or Events................. 14
SECTION 2.09. No Undisclosed Liabilities........................... 14
SECTION 2.10. Absence of Litigation................................ 14
SECTION 2.11. Employee Benefit Plans; Employment Agreements........ 14
SECTION 2.12. Labor Matters........................................ 17
SECTION 2.13. Registration Statement; Joint Proxy
Statement/Prospectus............................... 17
SECTION 2.14. Restrictions on Business Activities.................. 18
SECTION 2.15. Title to Property.................................... 18
SECTION 2.16. Real Property........................................ 19
SECTION 2.17. Taxes................................................ 19
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SECTION 2.18. Environmental Matters................................. 20
SECTION 2.19. Intellectual Property................................. 21
SECTION 2.20. Interested Party Transactions......................... 22
SECTION 2.21. Insurance............................................. 22
SECTION 2.22. Product Liability and Recalls ....................... 22
SECTION 2.23. Opinion of Financial Advisor.......................... 22
SECTION 2.24. Pooling Matters....................................... 22
SECTION 2.25. Ownership of Merger Sub; No Prior Activities.......... 23
SECTION 2.26 Brokers............................................... 23
SECTION 2.27. Full Disclosure....................................... 23
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries.......... 23
SECTION 3.02. Articles of Organization and By-Laws.................. 24
SECTION 3.03. Capitalization........................................ 24
SECTION 3.04. Authority Relative to this Agreement; Takeover Laws... 25
SECTION 3.05. No Conflict; Required Filings and Consents............ 26
SECTION 3.06. Compliance; Permits................................... 27
SECTION 3.07. SEC Filings; Financial Statements..................... 27
SECTION 3.08. Absence of Certain Changes or Events.................. 28
SECTION 3.09. No Undisclosed Liabilities............................ 28
SECTION 3.10. Absence of Litigation................................. 28
SECTION 3.11. Employee Benefit Plans; Employment Agreements......... 29
SECTION 3.12. Labor Matters......................................... 31
SECTION 3.13. Registration Statement; Joint Proxy
Statement/Prospectus................................ 31
SECTION 3.14. Restrictions on Business Activities................... 32
SECTION 3.15. Title to Property..................................... 32
SECTION 3.16. Real Property......................................... 32
SECTION 3.17. Taxes................................................. 33
SECTION 3.18. Environmental Matters................................. 34
SECTION 3.19. Intellectual Property................................. 34
SECTION 3.20. Interested Party Transactions..........................35
SECTION 3.21. Insurance............................................. 35
SECTION 3.22. Product Liability and Recalls..........................35
SECTION 3.23. Opinion of Financial Advisor.......................... 36
SECTION 3.24. Pooling Matters........................................36
SECTION 3.25. Brokers............................................... 36
SECTION 3.26. Full Disclosure....................................... 36
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by Parent Pending the Merger...... 36
SECTION 4.02. No Solicitation by Parent............................. 39
SECTION 4.03. Conduct of Business by the Company Pending the Merger. 40
SECTION 4.04. No Solicitation by the Company........................ 41
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Joint Proxy Statement/Prospectus; Registration Statement..... 42
SECTION 5.02. Company Shareholders Meeting................................. 43
SECTION 5.03. Parent Shareholders Meeting.................................. 43
SECTION 5.04. Access to Information; Confidentiality....................... 44
SECTION 5.05. Consents; Approvals.......................................... 45
SECTION 5.06. Agreements with Respect to Affiliates........................ 45
SECTION 5.07. Indemnification and Insurance................................ 45
SECTION 5.08. Notification of Certain Matters.............................. 48
SECTION 5.09. Further Action............................................... 48
SECTION 5.10. Public Announcements......................................... 48
SECTION 5.11. Listing of Shares of Parent Common Stock..................... 48
SECTION 5.12. Conveyance Taxes............................................. 49
SECTION 5.13. Accountant's Letters......................................... 49
SECTION 5.14. Pooling Accounting Treatment................................. 49
SECTION 5.15 Company Stock Options........................................ 49
SECTION 5.16 Parent Stock Options and Severence Arrangements.............. 49
SECTION 5.17 Rights....................................................... 50
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligation of Each Party to Effect the Merger.. 51
SECTION 6.02. Additional Conditions to Obligations of Parent and
Merger Sub................................................. 52
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SECTION 6.03. Additional Conditions to Obligation of the Company........... 53
ARTICLE VII
TERMINATION
SECTION 7.01. Termination.................................................. 54
SECTION 7.02. Effect of Termination........................................ 57
SECTION 7.03. Fees and Expenses............................................ 57
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties and
Agreements; Knowledge, Etc............................ 59
SECTION 8.02. Notices...................................................... 59
SECTION 8.03. Certain Definitions.......................................... 60
SECTION 8.04. Amendment.................................................... 61
SECTION 8.05. Waiver....................................................... 61
SECTION 8.06. Headings..................................................... 61
SECTION 8.07. Severability................................................. 62
SECTION 8.08. Entire Agreement............................................. 62
SECTION 8.09. Assignment; Merger Sub....................................... 62
SECTION 8.10. Parties in Interest.......................................... 62
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative........ 62
SECTION 8.12. Governing Law; Jurisdiction.................................. 63
SECTION 8.13. Counterparts................................................. 63
SECTION 8.14. WAIVER OF JURY TRIAL......................................... 63
ANNEX A ................................................................... 66
ANNEX B ................................................................... 67
ANNEX C ................................................................... 68
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 17, 1997 (this
"Agreement"), among ADT LIMITED, a Bermuda company limited by shares ("Parent"),
LIMITED APACHE, INC., a Massachusetts corporation and a direct, wholly-owned
subsidiary of Parent ("Merger Sub"), and TYCO INTERNATIONAL LTD., a
Massachusetts corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each determined that it is advisable and in the best interests of their
respective stockholders for Parent to cause Merger Sub to merge with and into
the Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the merger (the "Merger")
of Merger Sub with and into the Company in accordance with the applicable
provisions of the Massachusetts Business Corporation Law (the "MBCL"), and upon
the terms and subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend that the Merger be
accounted for as a pooling-of-interests for financial reporting purposes;
WHEREAS, pursuant to the Merger, each outstanding share of the
Company's Common Stock, $.50 par value per share (the "Company Common Stock"),
shall be converted into the right to receive and exchanged for the Merger
Consideration (as defined in Section 1.07(b)), upon the terms and subject to the
conditions set forth herein;
WHEREAS, effective upon consummation of the Merger, the name of Parent
shall be changed to Tyco International Ltd. and the Board of Directors of Parent
shall be as set forth on or designated in accordance with Annex A to this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. (a) Effective Time. At the Effective Time (as
defined in Section 1.02 hereof), and subject to and upon the terms and
conditions of this Agreement and the MBCL, Merger Sub shall be merged with and
into the Company, the separate corporate existence of Merger Sub shall cease,
and the Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated pursuant
to Section 7.01 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the consummation of the Merger will take place as promptly
as practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VI, at the offices of Kramer,
Levin, Naftalis & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another
date, time or place is agreed to in writing by the parties hereto.
SECTION 1.02. Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing articles of merger as
contemplated by the MBCL (the "Articles of Merger"), together with any required
related certificates, with the Secretary of State of The Commonwealth of
Massachusetts, in such form as required by, and executed in accordance with the
relevant provisions of, the MBCL (the time of such filing being the "Effective
Time").
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in this Agreement, the Articles of Merger and
the applicable provisions of the MBCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all of the estate,
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall be transferred to and vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 1.04. Articles of Organization; By-Laws. (a) Articles of
Organization. Unless otherwise determined by the Company prior to the Effective
Time, at the Effective Time the Restated Articles of Organization of the
Company, as in effect immediately prior to the Effective Time, shall be the
Articles of Organization of the Surviving Corporation until thereafter amended
as provided by the MBCL and such Articles of Organization; provided, however,
that Articles 3 and 4 shall be amended and restated in their 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.
(b) By-Laws. The By-Laws of the Company, as in effect immediately prior
to the Effective Time, shall be the By-Laws of the Surviving Corporation until
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thereafter amended as provided by the MBCL, the Articles of Organization of the
Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors of the Company
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Organization and ByLaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.06. Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the Parent, Merger Sub, the
Company or the holders of any of the following securities:
(a) Conversion of Securities. Each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (excluding any shares to
be canceled pursuant to Section 1.06(b) and other than Dissenting Shares (as
defined in Section 1.11)) shall be converted, subject to the prior effectiveness
of the Reverse Stock Split (as defined in Section 5.03) and to Section 1.06(f)
and Section 7.01(n), into the right to receive and shall be exchanged for one
share (the "Exchange Ratio") of validly issued, fully paid and nonassessable
Parent Common Stock (as defined below). For purposes of this Agreement, Parent
Common Stock means (i) prior to the effectiveness of the Reserve Stock Split,
the common shares, par value $.10 per share, of Parent and (ii) from and after
the effectiveness of the Reverse Stock Split, the common shares of Parent as
adjusted by the Reserve Stock Split.
(b) Cancellation. Each share of Company Common Stock held in the
treasury of the Company and each share of Company Common Stock owned by Parent,
Merger Sub or any direct or indirect wholly owned subsidiary of the Company or
Parent immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, cease to be
outstanding, be canceled and retired without payment of any consideration
therefor and cease to exist.
(c) Assumption of Outstanding Stock Options. (i) Each option
outstanding at the Effective Time to purchase shares of Company Common Stock (a
"Stock Option") granted under (i) the Tyco International Ltd. 1995 Stock Option
Plan (the "Company Stock Option Plan"), or (ii) any other stock plan or
agreement of the Company, whether vested or unvested, shall be deemed assumed by
Parent and deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such Stock Option prior to the Effective
Time, the number of shares of Parent Common Stock as the holder of such Stock
Option would have been entitled to receive pursuant to the Merger had such
holder exercised such option in full immediately prior to the Effective Time, at
a price per share equal to (x) the aggregate exercise price for Company Common
Stock otherwise purchasable pursuant to such Stock Option divided by (y) the
number of shares of Parent Common Stock deemed purchasable pursuant to such
Stock Option; provided, however, that the number of shares of Parent Common
Stock that may be purchased upon exercise of any such Stock Option shall
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not include any fractional share and, upon exercise of the Stock Option, a cash
payment shall be made for any fractional share based upon the Closing Price (as
hereinafter defined) of a share of Parent Common Stock on the trading day
immediately preceding the date of exercise. "Closing Price" shall mean, on any
day, the last reported sale price of one share of Parent Common Stock on the New
York Stock Exchange (the "NYSE").
As soon as practicable after the Effective Time, Parent shall deliver
to each holder of an outstanding Stock Option an appropriate notice setting
forth such holder's rights pursuant thereto, and such Stock Option shall
continue in effect on the same terms and conditions, except as otherwise
provided herein.
(ii) At the Effective Time, each Warrant expiring July 7, 1999 to
purchase 2.5897 shares of Company Common Stock at a price of $15.46, subject to
adjustment (an "A Warrant"), and each Warrant expiring July 7, 1999 to purchase
2.5897 shares of Company Common Stock at a price of $20.62, subject to
adjustment (a "B Warrant" and, together with the A Warrants, the "Warrants"),
shall be assumed by Parent and deemed to constitute a warrant to acquire, on the
same terms and conditions as were applicable under such Warrant prior to the
Effective Time, the number (rounded to the nearest whole number) of shares of
Parent Common Stock as the holder of such Warrant would have been entitled to
receive pursuant to the Merger had such holder exercised such Warrant in full
immediately prior to the Effective Time, at a price per share equal to (x) the
aggregate exercise price for Company Common Stock otherwise purchasable pursuant
to such Warrant divided by (y) the number of shares of Parent Common Stock
deemed purchasable pursuant to such Warrant. This Agreement shall constitute
notice by Parent to the Company of its election to be governed by section 5.1(b)
(the "Section 5.1(b) Election") of each of the Warrant Agreement, dated as of
July 7, 1992, between the Company, as successor under such agreement to ▇▇▇▇▇▇▇
International, Inc. and ChaseMellon Shareholder Services L.L.C., as successor to
Norwest Bank Minnesota, N.A., as Warrant Agent, with respect to the A Warrants
and the Warrant Agreement, dated as of July 7, 1992, between the Company, as
successor under such agreement to ▇▇▇▇▇▇▇ International, Inc. and ChaseMellon
Shareholder Services L.L.C., and Norwest Bank Minnesota, N.A., as Warrant Agent,
with respect to the B Warrants (the "Warrant Agreements"). Prior to the date of
the Effective Time, Parent shall deliver to each holder of Warrants written
notice of the Section 5.1(b) Election and shall deliver to the Warrant Agent
under each of the Warrant Agreements an assumption of the obligations of the
Company and opinion of counsel, as required by Section 5.2 of the Warrant
Agreements. In no event shall Parent be required to make any payment pursuant to
Section 5.1(a)(2) of the Warrant Agreements.
(iii) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of Stock Options and Warrants in accordance with this Section 1.06(c).
As soon as practicable after the Effective Time, Parent shall cause the Parent
Common Stock subject to Stock Options and those Warrants originally issued under
the ▇▇▇▇▇▇▇ International, Inc. Management Incentive Plan (the "Management
Warrants") to be registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a registration statement or registration
statements on Form S-8 (or any successor or other appropriate forms), and shall
use its best
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efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as the Stock Options and Management
Warrants, as the case may be, remain outstanding.
(iv) Parent shall assume the Company's 1994 Restricted Stock Plan and
shall reserve for issuance thereunder such number of shares of Parent Common
Stock equal to the number of shares of Company Common Stock reserved for
issuance thereunder immediately prior to the Effective Time multiplied by the
Exchange Ratio.
(d) Capital Stock of Merger Sub. Each share of common stock, $.01 par
value, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, $0.01 par value, of the Surviving
Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted
to reflect fully the effect of any subdivision, consolidation, stock dividend
(including any dividend or distribution of securities convertible into Parent
Common Stock), reorganization, recapitalization or other like change with
respect to Parent Common Stock occurring after the date hereof and prior to the
Effective Time, except that no adjustment shall be made to reflect the Reverse
Stock Split or the Share Amendment.
(f) Fractional Shares. No certificates or scrip representing less than
one share of Parent Common Stock shall be issued upon the surrender for exchange
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates"). In
lieu of any such fractional share, each holder of shares of Company Common Stock
who would otherwise have been entitled to a fraction of a share of Parent Common
Stock upon surrender of Certificates for exchange shall be paid upon such
surrender cash (without interest) in an amount equal to such fraction multiplied
by the closing price per share of Parent Common Stock on the NYSE on the date of
the Effective Time.
SECTION 1.07. Exchange of Certificates. (a) Exchange Agent. Parent
shall supply, or shall cause to be supplied, to or for the account of such bank
or trust company as shall be mutually designated by the Company and Parent (the
"Exchange Agent"), in trust for the benefit of the holders of Company Common
Stock, for exchange in accordance with this Section 1.07, through the Exchange
Agent, certificates evidencing the shares of Parent Common Stock, and cash in
lieu of fractional shares, issuable or payable pursuant to Section 1.06 in
exchange for the outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of Certificates (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper 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 to effect the surrender of the Certificates
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in exchange for the certificates evidencing shares of Parent Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, and such other customary documents as
may be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor (A) certificates evidencing
that number of whole shares of Parent Common Stock which such holder has the
right to receive in accordance with the Exchange Ratio in respect of the shares
of Company Common Stock formerly evidenced by such Certificate, (B) any
dividends or other distributions to which such holder is entitled pursuant to
Section 1.07(c), and (C) cash in respect of fractional shares as provided in
Section 1.06(f) (the shares of Parent Common Stock and cash being, collectively,
the "Merger Consideration"), and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of shares of Company Common
Stock which is not registered in the transfer records of the Company as of the
Effective Time, shares of Parent Common Stock, dividends, distributions, and
cash in respect of fractional shares, may be issued and paid in accordance with
this Article I to a transferee if the Certificate evidencing such shares of
Parent Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer pursuant to this Section
1.07(b) and by evidence that any applicable stock transfer taxes have been paid.
Until so surrendered, each outstanding Certificate that, prior to the Effective
Time, represented shares of Company Common Stock will be deemed from and after
the Effective Time, for all corporate purposes, other than the payment of
dividends or other distributions as provided in Section 1.07(c) and subject to
Section 1.06(f), to evidence the ownership of the number of full shares of
Parent Common Stock, and cash in respect of fractional shares, into which such
shares of the Company Common Stock shall have been so converted.
(c) Distributions With Respect to Unexchanged Shares of Parent Common
Stock. No dividends or other distributions declared or made after the Effective
Time with respect to shares of Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock they are entitled to receive until
the holder of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be paid
to the record holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
Parent Common Stock.
(d) Transfers of Ownership. If any certificate for shares of Parent
Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Parent Common Stock in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
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(e) No Liability. Neither Parent, Merger Sub nor the Company shall be
liable to any holder of Company Common Stock for any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(f) Withholding Rights. Parent or the Exchange Agent shall be entitled
to deduct and withhold from the Merger Consideration otherwise payable pursuant
to this Agreement to any holder of Company Common Stock such amounts as Parent
or the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by Parent or
the Exchange Agent.
SECTION 1.08. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of the Company Common Stock thereafter on the records
of the Company.
SECTION 1.09. No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article I.
SECTION 1.10. Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of Parent
Common Stock as may be required pursuant to Section 1.06; 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.
SECTION 1.11 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding shares of Company Common
Stock held by a shareholder who objects to the Merger (a "Dissenting
Shareholder") and complies with the provisions of the MBCL concerning rights of
holders of shares of Company Common Stock to dissent from the Merger and require
appraisal of such shares ("Dissenting Shares") shall not be converted as
described in Section 1.06 but shall become the right to receive such
consideration as may be determined to be due to such Dissenting Shareholder
pursuant to the MBCL. If, after the Effective Time, such Dissenting Shareholder
withdraws
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its demand for appraisal or fails to perfect or otherwise loses its right of
appraisal, in any such case pursuant to the MBCL, or if Parent otherwise
consents thereto, each of such shareholder's Dissenting Shares shall be deemed
converted as of the Effective Time into the right to receive the Merger
Consideration in accordance with Section 1.06.
SECTION 1.12. Accounting Consequences. It is intended by the parties
hereto that the Merger shall, subject to applicable accounting standards,
qualify for accounting treatment as a pooling of interests.
SECTION 1.13. Taking of Necessary Action; Further Action. Each of
Parent, Merger Sub and the Company will take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the Merger in
accordance with this Agreement as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Merger Sub, the officers and directors
of the Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
SECTION 1.14. Material Adverse Effect. When used in connection
with the Company or any of its 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 such changes, effects or circumstances that have occurred prior to the
date of determination of the occurrence of the 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 its subsidiaries or Parent and its subsidiaries, as the case may be, in each
case taken as a whole.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub, jointly and severally, hereby represent and
warrant to the Company that, except as set forth in the written disclosure
schedule previously delivered by Parent to the Company (the "Parent Disclosure
Schedule"):
SECTION 2.01. Organization and Qualification; Subsidiaries. Each of
Parent and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("Approvals") necessary
to own, lease and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, except where the
failure to be so
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organized, existing and in good standing or to have such power, authority and
Approvals would not reasonably be expected to have a Material Adverse Effect.
Each of Parent and its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would not
reasonably be expected to have a Material Adverse Effect. A true and complete
list of all of Parent's subsidiaries, together with the jurisdiction of
incorporation of each subsidiary and the percentage of each subsidiary's
outstanding capital stock owned by Parent or another subsidiary, is set forth in
Section 2.01 of Parent Disclosure Schedule (which Section may be provided to the
Company no later than five (5) business days after the date hereof). Except as
set forth in Section 2.01 of Parent Disclosure Schedule or the Parent SEC
Reports (as defined below), Parent 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 Parent has invested or is required to invest $3,000,000 or
more, excluding securities in any publicly traded company held for investment by
Parent and comprising less than five percent of the outstanding stock of such
company.
SECTION 2.02. Certificate of Incorporation and By-Laws. Parent has
heretofore furnished to the Company a complete and correct copy of its
Memorandum of Association, as altered, and Bye-Laws as most recently altered or
amended to date and has furnished, made available or will promptly make
available to the Company the certificate of incorporation and by-laws (or
equivalent organizational documents) of each of its subsidiaries listed on Annex
B hereto (such subsidiaries, collectively, the "Principal Parent Subsidiaries",
and their respective organizational documents, the "Principal Parent Subsidiary
Documents") and each of its other subsidiaries (such other subsidiaries,
collectively, the "Other Parent Subsidiaries", and their respective
organizational documents, the "Other Parent Subsidiary Documents"). Such
Memorandum of Association, as altered, Bye-Laws, Principal Parent Subsidiary
Documents and Other Parent Subsidiary Documents are in full force and effect.
Neither Parent nor any of its Principal Parent Subsidiaries is in violation of
any of the provisions of its Memorandum of Association, as altered, or Bye-Laws
or Principal Parent Subsidiary Documents (other than immaterial violations, in
the case of non-U.S. Principal Parent Subsidiaries), and none of the Other
Parent Subsidiaries are in violation of any of the provisions of its Other
Parent Subsidiary Documents, except for such violations of the Other Parent
Subsidiary Documents which would not reasonably be expected to have a Material
Adverse Effect.
SECTION 2.03. Capitalization. (a) The authorized capital stock of
Parent consists of 220,000,000 shares of Parent Common Stock, 125,725,000
convertible cumulative redeemable preference shares, $1.00 par value per share,
divided into three classes (the "Parent Convertible Preference Stock"), and
25,000 exchangeable cumulative redeemable preference shares, $1.00 par value per
share (the "Parent Exchangeable Preference Stock"). As of March 14, 1997, (i)
141,693,947 shares of Parent Common Stock were issued and outstanding, of which
3,182,787 are held by a subsidiary of Parent, (ii) 53,840,036 shares of Parent
Common Stock were reserved for issuance upon the exercise
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or conversion of outstanding options, warrants or convertible securities granted
or issued by Parent, (iii) no shares of Parent Convertible Preference Stock were
issued and outstanding, and 2,500,000 of such shares were classified as Series A
First Preference Shares and reserved for issuance upon exercise of the share
purchase rights (the "Rights") issued pursuant to Parent's Shareholders Rights
Plan, dated November 6, 1996, as amended, and (iv) no shares of Parent
Exchangeable Preference Stock were issued and outstanding. No material change in
such capitalization has occurred between March 14, 1997 and the date hereof.
Except as set forth in Section 2.01, this Section 2.03 or Section 2.11 or in
Section 2.03 or Section 2.11 of the Parent Disclosure Schedule or the Parent SEC
Reports, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Parent or any of its subsidiaries or obligating Parent or any
of its subsidiaries to issue or sell any shares of capital stock of, or other
equity interests in, Parent or any of its subsidiaries. All shares of Parent
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and nonassessable. Except
as disclosed in Section 2.03 of Parent Disclosure Schedule or the Parent SEC
Reports, there are no obligations, contingent or otherwise, of Parent or any of
its subsidiaries to repurchase, redeem or otherwise acquire any shares of Parent
Common Stock or the capital stock of any subsidiary or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any subsidiary that is not a wholly owned subsidiary of Parent or any other
entity other than guarantees of bank obligations of subsidiaries entered into in
the ordinary course of business. Except as set forth in Sections 2.01 and 2.03
of Parent Disclosure Schedule, all of the outstanding shares of capital stock
(other than directors' qualifying shares) of each of the Parent's subsidiaries
is duly authorized, validly issued, fully paid and nonassessable, and all such
shares (other than directors' qualifying shares) are owned by Parent or another
subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations in Parent's voting rights, charges or other encumbrances
of any nature whatsoever.
(b) The shares of Parent Common Stock to be issued pursuant to the
Merger will be duly authorized, validly issued, fully paid and nonassessable and
listed, upon official notice of issuance, for trading on the NYSE.
SECTION 2.04. Authority Relative to this Agreement; Takeover Laws. (a)
Each of Parent and Merger Sub has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of Parent and Merger Sub are necessary to authorize this Agreement
or to consummate the transactions so contemplated, subject to authorization of
this Agreement and the transactions contemplated hereby, including the approval
of the issuance of shares of Parent Common Stock in the Merger by a majority of
the votes cast, provided that the total votes cast represent over 50% in
interest of all securities entitled to vote on the proposals, and the approval
of the Reverse Stock Split, the Share Amendment, the Parent Name Change and the
New Parent Director Election (all as
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defined in Section 5.03) by a majority of the holders of Parent Common Stock
(hereafter in this Agreement referred to as shareholders) voting at a quorate
meeting. Under the Bermuda Companies Act of 1981, as amended, and Parent's
Memorandum of Association, as altered, and Bye-Laws, the quorum required to
approve each of the Reverse Stock Split, the Share Amendment, the issuance of
Parent Common Stock in the Merger, the Parent Name Change and the New Parent
Director Election is two or more holders of Parent Common Stock. None of the
Reverse Stock Split, the Share Amendment, the issuance of Parent Common Stock in
the Merger, the Parent Name Change or the New Parent Director Election require
the approval of any holder of capital stock of Parent other than the holders of
Parent Common Stock. The Board of Directors of Parent has determined that it is
advisable and in the best interest of Parent's shareholders for Parent to enter
into this Agreement and to consummate the Merger upon the terms and subject to
the conditions of this Agreement. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of Parent and Merger Sub.
(b) Prior to the date hereof, the Board of Directors of Parent has
taken all action necessary to exempt under or make not subject to any "fair
price," "moratorium," "control share acquisition" or similar anti-takeover
statute or regulation enacted under any Bermuda law or any other law, or any
provision of Parent's Memorandum of Association, as altered, or Bye-Laws, that
purports to limit or restrict business combinations or the ability to acquire or
vote shares that would otherwise be applicable to this Agreement and the
transactions contemplated hereby, including the consummation of the Merger and
the issuance of Parent Common Stock pursuant thereto.
SECTION 2.05. No Conflict; Required Filings and Consents. (a) Section
2.05(a) of the Parent Disclosure Schedule includes a list of (i) all loan
agreements, indentures, mortgages, pledges, conditional sale or title retention
agreements, security agreements, capital leases, guaranties, standby letters of
credit, or lease purchase agreements, to which Parent or any of its subsidiaries
is a party or by which any of them is bound, each in an amount equal to or
exceeding $10,000,000, but excluding any such agreement between Parent and its
wholly-owned subsidiaries or between two or more wholly-owned subsidiaries of
the Parent; (ii) all contracts, agreements, commitments or other understandings
or arrangements to which Parent or any of its subsidiaries is a party or by
which any of them or any of their respective properties or assets are bound or
affected, but excluding contracts, agreements, commitments or other
understandings or arrangements entered into in the ordinary course of business
and involving, in each case, payments by Parent or any of its subsidiaries of
less than $5,000,000 per annum; and (iii) all agreements which, as of the date
hereof, would be required to be filed as "material contracts" with the
Securities and Exchange Commission ("SEC") pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, and the SEC's rules thereunder (the
"Exchange Act"), other than those agreements actually filed heretofore by Parent
with the SEC. Except as set forth on Section 2.05(a) of the Parent Disclosure
Schedule, no single customer or affiliated group of customers (excluding U.S.
governmental agencies or authorities), accounted for more than 3% of Parent's
electronic security services business net sales during the year ended December
31, 1996 or is currently expected by Parent to account for more than 3% of
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Parent's net sales for the year ended December 31, 1997 (without regards to any
effects of the Merger).
(b) Except as set forth in Section 2.05(b) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent and Merger Sub
do not, and the performance of this Agreement by Parent and Merger Sub will not,
(i) conflict with or violate the Memorandum of Association, as altered (or
Articles of Organization) or Bye-Laws (or By-laws) of Parent and Merger Sub,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Parent or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default), or impair Parent's or any of its subsidiaries'
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets of Parent or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their
respective properties is bound or affected, except in any such case for any such
conflicts, violations, breaches, defaults or other occurrences that would not
reasonably be expected to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance of this Agreement by Parent and Merger Sub will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, and any applicable state securities laws ("Blue Sky Laws"),
(ii) the pre-merger notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act") and filings and consents under any applicable non-United States
laws intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade ("Competition Laws"), (iii)
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by this
Agreement, (iv) the filing and recordation of appropriate merger or other
documents as required by the MBCL, (v) the approval of the issuance of the
Parent Common Stock in the Merger by the Bermuda Monetary Authority, and (vi)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent or delay Parent from performing
its obligations under this Agreement, or would not otherwise reasonably be
expected to have a Material Adverse Effect.
SECTION 2.06. Compliance; Permits. (a) Except as disclosed in Section
2.06(a) of the Parent Disclosure Schedule, neither Parent nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected or (ii) any note, bond, mortgage, indenture,
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contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
is bound or affected, except for any such conflicts, defaults or violations
which would not reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.06(b) of the Parent Disclosure
Schedule, Parent and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities which are material to the operation of the business of
Parent and its subsidiaries taken as a whole as it is now being conducted
(collectively, the "Parent Permits"). Parent and its subsidiaries are in
compliance with the terms of the Parent Permits, except where the failure to so
comply would not reasonably be expected to have a Material Adverse Effect.
SECTION 2.07. SEC Filings; Financial Statements. (a) Parent has filed
all forms, reports and documents required to be filed with the SEC since
December 31, 1993, including (i) its Annual Reports on Form 10-K for the fiscal
years ended December 31, 1993, December 31, 1994 and ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) its
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 1996,
June 30, 1996 and September 30, 1996, (iii) all proxy statements relating to
Parent's meetings of shareholders (whether annual or special) held since
December 31, 1993, (iv) all other reports or registration statements (other than
Reports on Form 10-Q not referred to in clause (ii) above) filed by Parent with
the SEC since December 31, 1993, and (v) all amendments and supplements to all
such reports and registration statements filed by Parent with the SEC
(collectively, the "Parent SEC Reports"). Except as disclosed in Section 2.07 of
the Parent Disclosure Schedule, the Parent SEC Reports (i) were prepared in all
material respects in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of the Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports, Parent's
1995 Annual Report to Shareholders and in the March 6, 1997 draft of Parent's
Annual Report on Form 10-K for the year ended December 31, 1996, except as
necessary to give effect to the accounting for Parent's vehicle auction business
and this Agreement (the "1996 Financial Statements"), was prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly in all material respects presents the consolidated
financial position of Parent and its subsidiaries as at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
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SECTION 2.08. Absence of Certain Changes or Events. Except as set forth
in Section 2.08 of the Parent Disclosure Schedule or the Parent SEC Reports,
since September 30, 1996, Parent has conducted its business in the ordinary
course and there has not occurred: (i) any Material Adverse Effect; (ii) any
amendments or changes in the Memorandum of Association, as altered, or Bye-laws
of Parent; (iii) any damage to, destruction or loss of any asset of Parent
(whether or not covered by insurance) that could reasonably be expected to have
a Material Adverse Effect; (iv) any material change by Parent in its accounting
methods, principles or practices; (v) any material revaluation by Parent of any
of its assets, including, without limitation, 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 Parent,
except in the ordinary course of business; or (vii) any other action or event
that would have required the consent of the Company pursuant to Section 4.01 had
such action or event occurred after the date of this Agreement.
SECTION 2.09. No Undisclosed Liabilities. Except as set forth in
Section 2.09 of the Parent Disclosure Schedule or the Parent SEC Reports,
neither Parent nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (a) in the aggregate
adequately provided for in Parent's audited balance sheet (including any related
notes thereto) for the fiscal year ended December 31, 1995 included in Parent's
1995 Annual Report to Shareholders (the "1995 Balance Sheet"), (b) incurred in
the ordinary course of business and not required under GAAP to be reflected on
the 1995 Balance Sheet, (c) incurred since December 31, 1995 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.
SECTION 2.10. Absence of Litigation. Except as set forth in Section
2.10 of the Parent Disclosure Schedule or the Parent SEC Reports, there are no
claims, actions, suits, proceedings or investigations pending or, to the
knowledge of Parent, overtly threatened against Parent or any of its
subsidiaries, or any properties or rights of Parent or any of its subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that would reasonably be expected to
have a Material Adverse Effect.
SECTION 2.11. Employee Benefit Plans; Employment Agreements. (a)
Section 2.11(a) of the Parent Disclosure Schedule lists all employee pension
plans (as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), all employee welfare 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, written or
otherwise, as amended, modified or supplemented, for the benefit of, or relating
to, any current employee, officer or consultant (or any of their beneficiaries)
of Parent or any other entity (whether or not incorporated) which is a member of
a controlled group including Parent or which is under common control with Parent
(an "ERISA Affiliate") within the meaning of Section 414 of the Code or Section
4001 of ERISA, or any subsidiary of Parent, as well as each plan with respect to
which Parent or an ERISA Affiliate
-14-
could incur liability under Section 4069 (if such plan has been or were
terminated) or Section 4212(c) of ERISA or Section 412 of the Code (together,
the "Employee Plans"). There have been made available or will be made available
as promptly as practicable, but in any event no later than 20 business days
after the date hereof to the Company copies of (i) each such written Employee
Plan and all related trust agreements, insurance and other contracts (including
policies), the most recent summary plan descriptions, summaries of material
modifications and communications distributed to plan participants since the date
of the most recent summary plan descriptions, (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
most recent actuarial valuation for each Employee Plan subject to Title IV of
ERISA, (iv) the latest reports which have been filed with the Department of
Labor with respect to each Employee Plan required to make such filing and (v)
favorable determination letters issued for each Employee Plan and related trust
that are intended to satisfy the qualification requirements of Section 401(a)
and Section 501(a) of the Code (or, if pending, a copy of the application for
such determination). For purposes of this Section 2.11, the term "material,"
when used with respect to (i) any Employee Plan, shall mean that Parent or an
ERISA Affiliate has incurred or may incur obligations in an amount exceeding
$5,000,000 with respect to such Employee Plan, and (ii) any liability,
obligation, breach or non-compliance, shall mean that the Parent or an ERISA
Affiliate has incurred or may incur obligations in an amount exceeding
$1,000,000, with respect to any one such or series of related liabilities,
obligations, breaches, defaults, violations or instances of non-compliance.
(b) Except as set forth in Section 2.11(b) of the Parent Disclosure
Schedule, (i) none of the Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person, and none of the Employee Plans is
a "multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii)
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 Parent or any ERISA
Affiliate, directly or indirectly, to a tax, penalty or other material liability
for prohibited transactions under ERISA or Section 4975 of the Code; (iii) no
fiduciary of any Employee Plan has breached any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA, which breach could
result in any material liability to Parent or any ERISA Affiliate; (iv) all
Employee Plans have been established and maintained substantially in accordance
with their terms and have operated in compliance in all material respects 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 Department of Labor, Internal Revenue Service (the "IRS") or
Secretary of the Treasury), and may by their terms be amended and/or terminated
at any time subject to applicable law, and Parent and each of its subsidiaries
have performed all material obligations required to be performed by them under,
are not in any material respect in default under or violation of, and have no
knowledge of any default or violation by any other party to, any of the Employee
Plans; (v) each Employee Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code is the
subject of a favorable determination letter from the IRS, and nothing has
occurred which may reasonably
-15-
be expected to impair such determination; (vi) all contributions required to be
made with respect to any Employee Plan pursuant to Section 412 of the Code, or
the terms of the Employee Plan or any collective bargaining agreement, have been
made on or before their due dates; (vii) with respect to each Employee Plan, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding any
such event for which the 30 day notice requirement has been waived under the
regulations to Section 4043 of ERISA) has occurred for which there is any
material outstanding liability to the Company nor any ERISA Affiliate; and
(viii) neither Parent nor any ERISA Affiliate has incurred or reasonably expects
to incur any liability under Title IV of ERISA (other than liability for premium
payments to the Pension Benefit Guaranty Corporation (the PBGC") arising in the
ordinary course).
(c) Section 2.11(c) of the Parent Disclosure Schedule sets forth a true
and complete list of options or other rights, direct or indirect to purchase
Parent Common Stock held by any current or former employee, officer or director
of Parent or any of its subsidiaries as of the date hereof, together with the
number of shares of Parent Common Stock subject to such options, and the
exercise price of such options or rights (to the extent determined as of the
date hereof), and no such option is intended to qualify as an incentive stock
option within the meaning of Section 422(b) of the Code (an "ISO"), provided
that no later than 20 business days after the date hereof, Parent will provide
the Company with a list of current or former employees, officers and directors
of Parent or any of its subsidiaries who hold any options or rights listed on
Section 2.11(c) of the Parent Disclosure Schedule and the expiration dates of
such options.
(d) Section 2.11(d) of the Parent Disclosure Schedule sets forth a true
and complete list of (i) all employment agreements with executive officers of
Parent or any of its subsidiaries; (ii) all agreements with consultants who are
individuals obligating Parent or any of its subsidiaries to make annual cash
payments in an amount exceeding $500,000; (iii) all current executive officers
of Parent or any of its subsidiaries who have executed a non-competition
agreement with Parent or any of its subsidiaries; (iv) all severance agreements,
programs and policies of Parent or any of its subsidiaries with or relating to
its employees, in each case with outstanding commitments with respect to any one
individual exceeding $250,000 per year or providing for payments over a period
in excess of two years, excluding programs and policies required to be
maintained by law; and (v) all Employee Plans which contain change in control
provisions. Other than as disclosed in Parent's Statement on Schedule 14D-9
filed prior to the date hereof with the SEC in respect of an exchange offer of
Western Resources, Inc. (the "Schedule 14D-9"), there have been no material
changes to the compensation of Parent's executive officers since September 30,
1996. All related payroll expenses and any accelerated pension benefits of
Parent and any of its subsidiaries under severance agreements with former
employees, directors and officers of Parent or any of its subsidiaries have been
fully accrued in the 1996 Financial Statements.
(e) Except as set forth in Section 2.11(e) of the Parent Disclosure
Schedule, no employee of Parent or any of its subsidiaries has participated in
any employee pension benefit plans (as defined in Section 3(2) of ERISA)
maintained by or on behalf of Parent. The PBGC has not instituted proceedings to
terminate any defined benefit plan listed in Section 2.11(e) of the Parent
Disclosure Schedule (each, a "Defined Benefit Plan"). The
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Defined Benefit Plans have no accumulated or waived funding deficiencies within
the meaning of Section 412 of the Code nor have any extensions of any
amortization period within the meaning of Section 412 of the Code or 302 of
ERISA been applied for with respect thereto. The present value of the benefit
liabilities (within the meaning of Section 4041 of ERISA) of the Defined Benefit
Plans, determined on a termination basis using actuarial assumptions that would
be used by the PBGC does not exceed by more than $1,000,000 the value of the
Plans' assets. No facts exist with respect to the Defined Benefit Plans which
would give rise to a lien on the assets of Parent under Section 4068 of ERISA.
All the assets of the Defined Benefit Plans are cash, readily marketable
securities or insurance contracts.
(f) Parent has fiduciary liability insurance in effect covering the
fiduciaries of the Employee Plans (including Parent) with respect to whom Parent
may have liability, and within 20 business days of the date hereof, Parent will
provide the Company with a statement of the amount of such insurance.
SECTION 2.12. Labor Matters. Except as set forth in Section 2.12 of the
Parent Disclosure Schedule (which with respect to clause (ii) shall be furnished
by Parent to the Company no later than 20 business days of the date hereof) or
the Parent SEC Reports, (i) there are no controversies pending or, to the
knowledge of Parent or any of its subsidiaries, threatened, between Parent or
any of its subsidiaries and any of their respective employees, which
controversies have had, or would reasonably be expected to have, a Material
Adverse Effect; (ii) neither Parent nor any of its subsidiaries is a party to
any material collective bargaining agreement or other labor union contract
applicable to persons employed by Parent or its subsidiaries; (iii) neither
Parent nor any of its subsidiaries knows of any activities or proceedings of any
labor union to organize 50 or more employees of Parent or any of its
subsidiaries in any office; and (iv) neither Parent nor any of its subsidiaries
has any knowledge of any strikes, slowdowns, work stoppages, lockouts, or
threats thereof, by or with respect to any employees of Parent or any of its
subsidiaries which would reasonably be expected to have a Material Adverse
Effect. Schedule 2.12 shall set forth, with respect to any collective bargaining
agreement or labor union contract identified in accordance with clause (ii) of
this Section 2.12, the name of the union that is a party to such agreement or
contract, the expiration date thereof, and the number of the employees of Parent
and its subsidiaries who are party thereto.
SECTION 2.13. Registration Statement; Joint Proxy Statement/Prospectus.
Subject to the accuracy of the representations of the Company in Section 3.13,
the registration statement (the "Registration Statement") pursuant to which
Parent Common Stock to be issued in the Merger will be registered with the SEC
shall not at the time the Registration Statement is declared effective by the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The information supplied by Parent for inclusion in the
joint proxy statement/prospectus to be sent to the shareholders of Parent in
connection with the general meeting of the shareholders of Parent to consider
the Reverse Stock Split, the Share Amendment, the issuance of Parent Common
Stock in the Merger, the Parent Name Change
-17-
and the New Parent Director Election (the "Parent Shareholders Meeting"), and to
the shareholders of the Company in connection with the meeting of the
shareholders of the Company to consider the Merger (the "Company Shareholders
Meeting" and, together with the Parent Shareholders Meeting, the "Shareholders
Meetings") (such proxy statement/prospectus as amended or supplemented is
referred to herein as the "Joint Proxy Statement/Prospectus") will not, on the
date the Joint Proxy Statement/Prospectus (or any amendment thereof or
supplement thereto) is first mailed to shareholders, at the time of the
Shareholders Meetings, or at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or shall omit to state
any material fact necessary in order to make the statements made therein not
false or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Shareholders Meetings which has become false or misleading. If
at any time prior to the Effective Time any event relating to Parent or any of
its respective affiliates, officers or directors should be discovered by Parent
which should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, Parent shall promptly inform
the Company. The Joint Proxy Statement/Prospectus shall comply in all material
respects with the requirements of the Securities Act, the Exchange Act and the
rules and regulations thereunder. Notwithstanding the foregoing, Parent makes no
representation or warranty with respect to any information supplied by the
Company which is contained or incorporated by reference in, or furnished in
connection with the preparation of, the Registration Statement or the Joint
Proxy Statement/Prospectus.
SECTION 2.14. Restrictions on Business Activities. Except for this
Agreement, or as set forth in Section 2.14 of the Parent Disclosure Schedule or
the Parent SEC Reports, to the best of Parent's knowledge, there is no
agreement, judgment, injunction, order or decree binding upon Parent or any of
its subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or impairing any business practice of Parent or any of its
subsidiaries, acquisition of property by Parent or any of its subsidiaries or
the conduct of business by Parent or any of its subsidiaries as currently
conducted or as proposed to be conducted by Parent, except for any prohibition
or impairment as would not reasonably be expected to have a Material Adverse
Effect.
SECTION 2.15. Title to Property. Except as set forth in Section 2.15 of
the Parent Disclosure Schedule, Parent and each of its subsidiaries have good
and defensible title to all of their properties and assets, free and clear of
all liens, charges and encumbrances, except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which would not reasonably be expected to have a
Material Adverse Effect; and, to the knowledge of Parent, all leases pursuant to
which Parent or any of its subsidiaries lease from others material amounts of
real or personal property, are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
Parent, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would constitute
a material default), except where the lack of such good standing, validity and
effectiveness or the
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existence of such default or event of default would not reasonably be expected
to have a Material Adverse Effect.
SECTION 2.16. Real Property. (a) Except as set forth in Section 2.16(a)
of the Parent Disclosure Schedule, each of the buildings, improvements and
structures located upon any real property and land owned by Parent or any of its
subsidiaries (collectively, the "Owned Property"), and each of the buildings,
structures and premises leased by the Company or any of its subsidiaries (the
"Leased Premises"), is in reasonably good repair and operating condition, and
Parent has not received any notice of or writing referring to any requirements
by any insurance company that has issued a policy covering any part of any Owned
Property or Leased Premises or by any board of fire underwriters or other body
exercising similar functions, requiring any repairs or work to be done on any
part of any Owned Property or Leased Premises, except as would not reasonably be
expected to have a Material Adverse Effect.
(b) Except as set forth in Section 2.16(b) of the Parent Disclosure
Schedule, all structural or material mechanical systems in the buildings upon
the Owned Property and Leased Properties are in good working order and working
condition, and adequate for the operation of the business of Parent and its
subsidiaries as heretofore conducted, except as would not reasonably be expected
to have a Material Adverse Effect.
SECTION 2.17. Taxes. (a) For purposes of this Agreement, "Tax" or
"Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts, and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority,
including (without limitation) (i) income, franchise, profits, gross receipts,
ad valorem, net worth, value added, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll, withholding,
employment, social security, workers' compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, and (ii) interest, penalties, additional
taxes and additions to tax imposed with respect thereto; and "Tax Returns" shall
mean returns, reports, and information statements with respect to Taxes required
to be filed with the IRS or any other taxing authority, domestic or foreign,
including, without limitation, consolidated, combined and unitary tax returns
(including returns required in connection with any Employee Plan).
(b) Other than as disclosed in Section 2.17(b) of the Parent Disclosure
Schedule or the Parent SEC Reports: Parent and its subsidiaries have timely
filed all United States federal, state and local income Tax Returns and all
foreign Tax Returns required to be filed by them, and Parent and its
subsidiaries have timely paid and discharged all Taxes due in connection with or
with respect to the periods or transactions covered by such Tax Returns and have
paid all other Taxes as are due, except such as are being contested in good
faith by appropriate proceedings (to the extent that any such proceedings are
required), and there are no other taxes that would be due if asserted by a
taxing authority, except with respect to which Parent is maintaining reserves to
the extent currently required unless the failure to do so would not reasonably
be expected to have a Material Adverse Effect. Except as does not involve or
would not result in liability to Parent or any of its subsidiaries that would
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reasonably be expected to have a Material Adverse Effect, (i) there are no tax
liens on any assets of Parent or any subsidiary thereof; and (ii) neither Parent
nor any of its subsidiaries has granted any waiver of any statute of limitations
with respect to, or any extension of a period for the assessment of, any Tax.
The accruals and reserves (including deferred taxes) reflected in the 1995
Balance Sheet are in all material respects adequate to cover all Taxes accruable
through the date thereof (including interest and penalties, if any, thereon and
Taxes being contested) in accordance with GAAP.
(c) Parent on behalf of itself and all its subsidiaries hereby
represents that, other than as disclosed in Section 2.17(c) of the Parent
Disclosure Schedule or the Parent SEC Reports, and other than with respect to
items the inaccuracy of which would not reasonably be expected to have a
Material Adverse Effect: (i) neither Parent nor any of its subsidiaries is
obligated under any agreement with respect to industrial development bonds or
other obligations with respect to which the excludability from gross income of
the holder for federal or state income tax purposes could be affected by the
transactions contemplated hereunder and (ii) neither Parent nor any of its
subsidiaries is, or has been, a United States real property holding corporation
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. To the best knowledge of
Parent, neither Parent nor any of its subsidiaries owns any property of a
character, the indirect transfer of which, pursuant to this Agreement, would
give rise to any material documentary, stamp or other transfer tax.
(d) Parent will make available as reasonably as is practicable to the
Company all tax rulings, agreements, or arrangements issued to, or entered into
by, any of its Principal Parent Subsidiaries by or with the tax authorities of
any jurisdiction.
SECTION 2.18. Environmental Matters. Except as set forth in Section
2.18 of the Parent Disclosure Schedule or the Parent SEC Reports, and except in
all cases as, in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect, to the best of Parent's knowledge,
Parent and each of its subsidiaries (i) have obtained all applicable permits,
licenses and other authorization which are required to be obtained under all
applicable federal, state or local laws or any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic materials or wastes
into ambient air, surface water, ground water, or land or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("Environmental Laws") by Parent or its subsidiaries (or
their respective agents); (ii) are in compliance with all terms and conditions
of such required permits, licenses and authorization, and also are in compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in applicable
Environmental Laws; (iii) as of the date hereof, are not aware of nor have
received notice of any past or present violations of Environmental Laws or any
event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to interfere with or prevent continued compliance
with or which would give rise to any
-20-
common law or statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, against Parent or any of its subsidiaries based on
or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge or release
into the environment, of any pollutant, contaminant or hazardous or toxic
material or waste; and (iv) have taken all actions necessary under applicable
Environmental Laws to register any products or materials required to be
registered by Parent or its subsidiaries (or any of their respective agents)
thereunder.
SECTION 2.19. Intellectual Property. (a) Parent and/or each of its
subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use all patents, trademarks, trade names, service marks, copyrights,
and any applications therefor, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary information or material
that are used in the business of Parent and its subsidiaries as currently
conducted, except as would not reasonably be expected to have a Material Adverse
Effect.
(b) Except as disclosed in Section 2.19(b) of the Parent Disclosure
Schedule or the Parent SEC Reports or as would not reasonably be expected to
have a Material Adverse Effect (i) Parent is not, nor will it be as a result of
the execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and other
agreements as to which Parent is a party and pursuant to which Parent is
authorized to use any third-party patents, trademarks, service marks and
copyrights ("Third-Party Intellectual Property Rights"); (ii) no claims with
respect to the patents, registered and material unregistered trademarks and
service marks, registered copyrights, trade names and any applications therefor
owned by Parent or any of its subsidiaries (the "Parent Intellectual Property
Rights"), any trade secret material to Parent, or Third Party Intellectual
Property Rights to the extent arising out of any use, reproduction or
distribution of such Third Party Intellectual Property Rights by or through
Parent or any of its subsidiaries, are currently pending or, to the knowledge of
Parent, are overtly threatened by any person; and (iii) Parent does not know of
any valid grounds for any bona fide claims (A) to the effect that the
manufacture, sale, licensing or use of any product as now used, sold or licensed
or proposed for use, sale or license by Parent or any of its subsidiaries,
infringes on any copyright, patent, trademark, service ▇▇▇▇ or trade secret; (B)
against the use by Parent or any of its subsidiaries, of any trademarks, trade
names, trade secrets, copyrights, patents, technology, know-how or computer
software programs and applications used in the business of Parent or any of its
subsidiaries as currently conducted or as proposed to be conducted; (C)
challenging the ownership, validity or effectiveness of any of the Parent
Intellectual Property Rights or other trade secret material to Parent; or (D)
challenging the license or legally enforceable right to use of the Third Party
Intellectual Rights by Parent or any of its subsidiaries.
(c) To Parent's knowledge, all material patents, registered trademarks,
service marks and copyrights held by Parent are valid and subsisting. Except as
set forth in Section 2.19(c) of the Parent Disclosure Schedule or the Parent SEC
Reports, to Parent's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of
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the Parent Intellectual Property by any third party, including any employee or
former employee of Parent or any of its subsidiaries.
SECTION 2.20. Interested Party Transactions. Except as set forth in
Section 2.20 of the Parent Disclosure Schedule or the Parent SEC Reports or for
events as to which the amounts involved do not, in the aggregate, exceed
$100,000, since the date of Parent's proxy statement dated March 12, 1996 (the
"1996 Parent Proxy Statement"), no event has occurred that would be required to
be reported as a Certain Relationship or Related Transaction, pursuant to Item
404 of Regulation S-K promulgated by the SEC.
SECTION 2.21. Insurance. Except as set forth in Section 2.21 of the
Parent Disclosure Schedule, all material fire and casualty, general liability,
business interruption, product liability and sprinkler and water damage
insurance policies maintained by Parent or any of its subsidiaries are with
reputable insurance carriers, provide adequate coverage for all normal risks
incident to the business of Parent and its subsidiaries and their respective
properties and assets and are in character and amount at least equivalent to
that carried by persons engaged in similar businesses and subject to the same or
similar perils or hazards, except as would not reasonably be expected to have a
Material Adverse Effect.
SECTION 2.22. Product Liability and Recalls. (a) Except as disclosed in
Section 2.22(a) of the Parent Disclosure Schedule or the Parent SEC Reports,
Parent is not aware of any claim, or the basis of any claim, against Parent or
any of its subsidiaries for injury to person or property of employees or any
third parties suffered as a result of the sale of any product or performance of
any service by Parent or any of its subsidiaries, including claims arising out
of the defective or unsafe nature of its products or services, which would
reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.22(b) of the Parent Disclosure
Schedule or the Parent SEC Reports, there is no pending or, to the knowledge of
the Company, threatened recall or investigation of any product sold by Parent,
which recall or investigation would reasonably be expected to have a Material
Adverse Effect.
SECTION 2.23. Opinion of Financial Advisor. Parent has been advised by
its financial advisor, ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, to
the effect that, in its opinion dated March 17, 1997, as of such date the
Exchange Ratio was fair from a financial point of view to Parent's shareholders.
SECTION 2.24. Pooling Matters. (a) Parent has provided to the Company
and its independent accountants all information concerning actions taken or
agreed to be taken by Parent or any of its affiliates on or before the date of
this Agreement that would reasonably be expected to adversely affect the ability
of Parent to account for the business combination to be effected by the Merger
as a pooling of interests. The failure of this representation to be true and
correct shall, if the Merger is not able to be accounted for as a pooling of
interests, constitute a breach of this Agreement by Parent for the purposes of
Section 7.01(i).
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(b) Western Resources, Inc. is not an affiliate of Parent for purposes
of Accounting Standards Release 135 or Staff Accounting Bulletin 65 regarding
pooling of interests accounting treatment of merger transactions.
SECTION 2.25. Ownership of Merger Sub; No Prior Activities. (a) Merger
Sub is a direct, wholly-owned subsidiary of Parent and was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
SECTION 2.26. Brokers. No broker, finder or investment banker (other
▇▇▇▇ ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, the fees and expenses
of whom will be paid by Parent) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or Merger Sub.
Parent has heretofore furnished to the Company a complete and correct copy of
all agreements between the Company and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated pursuant to which such firms would be entitled to any payment
relating to the transactions contemplated hereunder.
SECTION 2.27. Full Disclosure. No statement contained in any
certificate or schedule furnished or to be furnished by Parent or Merger Sub or
its subsidiaries to the Company 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 statements herein or
therein not misleading, except where the material fact so misstated or omitted
to be stated would not reasonably be expected to have a Material Adverse Effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent that, except as
set forth in the written disclosure schedule previously delivered by the Company
to Parent (the "Company Disclosure Schedule"):
SECTION 3.01. Organization and Qualification; Subsidiaries. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate
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power and authority and is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and Approvals would not reasonably be expected to have a Material Adverse
Effect. Each of the Company and its subsidiaries is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not reasonably be expected to have a Material Adverse
Effect. A true and complete list of all of the Company's subsidiaries, together
with the jurisdiction of incorporation of each subsidiary and the percentage of
each subsidiary's outstanding capital stock owned by the Company or another
subsidiary, is set forth in Section 3.01 of the Company Disclosure Schedule.
Except as set forth in Section 3.01 of the Company Disclosure Schedule or the
Company SEC Reports (as defined below), 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 the Company has invested or is required to invest
$5,000,000 or more, excluding securities in any publicly traded company held for
investment by the Company and comprising less than five percent of the
outstanding capital stock of such company.
SECTION 3.02. Articles of Organization and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of its Restated
Articles of Organization and By-Laws, as amended to date and has furnished or
made available to Parent the certificate of incorporation and by-laws (or
equivalent organizational documents) of each of its subsidiaries listed on Annex
C hereto (such subsidiaries, collectively, the "Principal Company Subsidiaries",
and their respective organizational documents, the "Principal Company Subsidiary
Documents") and each of its other subsidiaries (such other subsidiaries,
collectively, the "Other Company Subsidiaries", and their respective
organizational documents, the "Other Company Subsidiary Documents"). Such
Restated Articles of Organization and By-Laws, Principal Company Subsidiary
Documents and Other Company Subsidiary Documents are in full force and effect.
Neither the Company nor any of its Principal Company Subsidiaries is in
violation of any of the provisions of its Restated Articles of Organization or
By-Laws or Principal Company Subsidiary Documents, and none of the Other Company
Subsidiaries are in violation of any of the provisions of its Other Company
Subsidiary Documents, except for such violation of the Other Company Subsidiary
Documents which would not reasonably be expected to have a Material Adverse
Effect.
SECTION 3.03. Capitalization. The authorized capital stock of the
Company consists of 500,000,000 shares of Company Common Stock and 2,000,000
shares of Preferred Stock, $1 par value ("Company Preferred Stock"). As of March
15, 1997, (i) 166,817,355 shares of Parent Common Stock were issued and
outstanding, all of which are validly issued, fully paid and non-assessable, and
13,007,202 shares were held in treasury, (ii) no shares of Company Preferred
Stock were outstanding or held in treasury, (iii) no shares of Company Common
Stock or Company Preferred Stock were held by subsidiaries of
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the Company, (iv) 1,606,065 shares of Company Common Stock were reserved for
future issuance under the Company's 1994 Restricted Stock Ownership Plan, (v)
210,849 shares of Company Common Stock were reserved for issuance upon exercise
of the Warrants, (vi) 7,992,724 shares of Company Common Stock were reserved for
issuance upon exercise of stock options issued under the ABC Company 1995 Stock
Option Plan, and (vii) 26,084 shares of Company Common Stock were reserved for
issuance upon exercise of stock options issued under the stock incentive plans
maintained by ▇▇▇▇▇▇▇ International, Inc. No material change in such
capitalization has occurred between March 15, 1997 and the date hereof. Except
as set forth in Section 3.03 of the Company Disclosure Schedule or the Company
SEC Reports, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue or sell any shares of capital stock
of, or other equity interests in, the Company or any of its subsidiaries. Except
as set forth in Section 3.03 of the Company Disclosure Schedule or the Company
SEC Reports, there are no obligations, contingent or otherwise, of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or the capital stock of any subsidiary or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. Except as set
forth in Section 3.01 or 3.03 of the Company Disclosure Schedule, all of the
outstanding shares of capital stock (other than directors' qualifying shares) of
each of the Company's subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and all such shares (other than directors' qualifying
shares) are owned by the Company or another subsidiary free and clear of all
security interests, liens, claims, pledges, agreements, limitations in the
Company's voting rights, charges or other encumbrances of any nature whatsoever.
SECTION 3.04. Authority Relative to this Agreement; Takeover Laws. (a)
The Company has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated thereby, other than the approval
of this Agreement and the Merger by the holders of at least two-thirds of the
outstanding shares of Company Common Stock entitled to vote in accordance with
the MBCL and the Company's Restated Articles of Organization and By-Laws. The
Board of Directors of the Company has determined that it is advisable and in the
best interest of the Company's shareholders for the Company to enter into this
Agreement and to consummate the Merger upon the terms and subject to the
conditions of this Agreement. This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Merger Sub, constitutes a legal, valid and binding
obligation of the Company.
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(b) Prior to the date hereof, the Board of Directors of the Company has
taken all action necessary to exempt under or make not subject to any "fair
price," "moratorium," "control share acquisition" or similar anti-takeover
statute or regulation enacted under any Massachusetts law or any other law, or
any provision of the Company's Restated Articles of Organization or By-Laws,
that purports to limit or restrict business combinations or the ability to
acquire or vote shares that would otherwise be applicable to this Agreement and
the transactions contemplated hereby, including the consummation of the Merger
and the issuance of Parent Common Stock pursuant thereto.
SECTION 3.05. No Conflict; Required Filings and Consents. (a) Section
3.05(a) of the Company Disclosure Schedule includes a list of (i) all loan
agreements, indentures, mortgages, pledges, conditional sale or title retention
agreements, security agreements, capital leases, guaranties, standby letters of
credit, equipment leases or lease purchase agreements to which the Company or
any of its subsidiaries is a party or by which any of them is bound, each in an
amount equal to or exceeding $25,000,000, but excluding any such agreement
between the Company and its wholly-owned subsidiaries or between two or more
wholly-owned subsidiaries of the Company; (ii) all contracts, agreements,
commitments or other understandings or arrangements to which the Company or any
of its subsidiaries is a party or by which any of them or any of their
respective property or assets are bound or affected, but excluding contracts,
agreements, commitments or other understandings or arrangements entered into in
the ordinary course of business and involving, in each case, payments or
receipts by the Company or any of its subsidiaries of less than $10,000,000 in
any single instance; and (iii) all agreements which, as of the date hereof,
would be required to be filed with the SEC pursuant to the requirements of the
Exchange Act as "material contracts", other than those agreements which have
been filed heretofore by the Company with the SEC .
(b) Except as set forth in Section 3.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Restated Articles of Organization or By-Laws of the Company, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which its or their
respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties are bound or affected,
except in any such case for any such conflicts, violations, breaches, defaults
or other occurrences that would not reasonably be expected to have a Material
Adverse Effect.
-26-
(c) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Securities Act, the Exchange Act and
any applicable Blue Sky Laws, (ii) the pre-merger notification requirements of
the HSR Act and filings and consents under any applicable Competition Laws,
(iii) filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by this
Agreement, (iv) the filing and recordation of appropriate merger or other
documents as required by the MBCL, and (v) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger, or
otherwise prevent the Company from performing its obligations under this
Agreement, and would not otherwise be reasonably expected to have a Material
Adverse Effect.
SECTION 3.06. Compliance; Permits. (a) Except as disclosed in Section
3.06(a) of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties is bound or
affected, except for any such conflicts, defaults or violations which would not
reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 3.06(b) of the Company Disclosure
Schedule, the Company and its subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities which are material to the operation of the
business of the Company and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "Company Permits"). The Company and its
subsidiaries are in compliance with the terms of Company Permits, except where
the failure to so comply would not reasonably be expected to have a Material
Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed with the SEC since
June 30, 1994, including (i) its Annual Reports on Form 10-K for the fiscal
years ended June 30, 1994, 1995 and 1996, (ii) its Quarterly Reports on Form
10-Q for the quarterly periods ending September 30, 1996 and December 31, 1996,
(iii) all proxy statements relating to the Company's meetings of shareholders
(whether annual or special) held since June 30, 1994, (iv) all other reports or
registration statements (other than Reports on Form 10-Q not referred to in
clause (ii) above) filed by Parent with the SEC since June 30, 1992, and (v) all
amendments and supplements to all such reports and registration statements filed
by the Company with the SEC (collectively, the "Company SEC Reports"). The
Company SEC Reports (i) were prepared in all material respects in accordance
with the requirements of the
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Securities Act or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports has been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and each
fairly presents the consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
SECTION 3.08. Absence of Certain Changes or Events. Except as set forth
in Section 3.08 of the Company Disclosure Schedule or the Company SEC Reports,
since June 30, 1996, the Company has conducted its business in the ordinary
course and there has not occurred: (i) any Material Adverse Effect; (ii) any
amendments or changes in the Articles of Organization or By-Laws of the Company;
(iii) any damage to, destruction or loss of any assets of the Company (whether
or not covered by insurance) that would reasonably be expected to have a
Material Adverse Effect; (iv) any material change the Company in its accounting
methods; (v) any material revaluation by Parent of any of its assets, including
without limitation, 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 assets of the Company, except in the ordinary course of
business; or (vii) any other action or event that would have required the
consent of Parent pursuant to Section 4.03 had such action or event occurred
after the date of this Agreement.
SECTION 3.09. No Undisclosed Liabilities. Except as is disclosed in
Section 3.09 of the Company Disclosure Schedule and the Company SEC Reports,
neither the Company nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (a) adequately provided
for in the Company's balance sheet (including any related notes thereto) as of
June 30, 1996 included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1996 (the "June 1996 Balance Sheet"), (b) incurred in
the ordinary course of business and not required under GAAP to be reflected on
the June 1996 Balance Sheet, (c) incurred since June 30, 1996 in the ordinary
course of business and 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.
SECTION 3.10. Absence of Litigation. Except as set forth in Section
3.10 of the Company Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company
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or any of its subsidiaries, or any properties or rights of the Company or any of
its subsidiaries, before any court, arbitrator or administrative, governmental
or regulatory authority or body, domestic or foreign, that would reasonably be
expected to have a Material Adverse Effect.
SECTION 3.11. Employee Benefit Plans; Employment Agreements. (a)
Section 3.11(a) of the Company Disclosure Schedule lists all employee pension
plans (as defined in Section 3(2) of ERISA), all employee welfare 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,
written or otherwise, as amended, modified or supplemented, for the benefit of,
or relating to, current employee, officer or consultant (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 of the Code or Section 4001 of ERISA, or any subsidiary of the
Company, as well as each plan with respect to which the Company or an ERISA
Affiliate could incur liability under Section 4069 (if such plan has been or
were terminated) or Section 4212(c) of ERISA or Section 412 of the Code
(together, the "Employee Plans"). There have been made available or will be made
available no later than 20 business days after the date hereof to Parent copies
of (i) each such written Employee Plan and all related trust agreements,
insurance and other contracts (including policies), the most recent summary plan
descriptions, and summaries of material modifications and communications
distributed to plan participants, since the most recent summary plan
descriptions, (ii) the most recent three annual reports on Form 5500 series,
with accompanying schedules and attachments, filed with respect to each Employee
Plan required to make such a filing, and (iii) the most recent actuarial
valuation for each Employee Plan subject to Title IV of ERISA. For purposes of
this Section 3.11, the term "material," when used with respect to (i) any
Employee Plan, shall mean that the Company or an ERISA Affiliate has incurred or
may incur obligations in an amount exceeding $5,000,000 with respect to such
Employee Plan, and (ii) any liability, obligation, breach or non-compliance,
shall mean that the Company or an ERISA Affiliate has incurred or may incur
obligations in an amount exceeding $1,000,000 with respect to any one such or
series of related liabilities, obligations, breaches, defaults, violations or
instances of non-compliance.
(b) (i) Except as set forth in Section 3.11(b) of the Company
Disclosure Schedule, none of the Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, and none of the
Employee Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA; (ii) 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
material liability for prohibited transactions under ERISA or Section 4975 of
the Code; (iii) no fiduciary of any Employee Plan has breached any of the
responsibilities or obligations imposed upon fiduciaries under Title I of ERISA,
which breach could result in any material liability to the Company or any ERISA
Affiliate; (iv) all Employee Plans have been
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established and maintained substantially in accordance with their terms and have
operated in compliance in all material respects 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 Department of
Labor, IRS or Secretary of the Treasury), and the Company and each of its
subsidiaries have performed all material obligations required to be performed by
them under, are not in any material respect in default under or violation of,
and have no knowledge of any default or violation by any other party to, any of
the Employee Plans; (iv) each Employee Plan intended to qualify under Section
401(a) of the Code and each trust intended to qualify under Section 501(a) of
the Code is the subject of a favorable determination letter from the IRS, and
nothing has occurred which may reasonably be expected to impair such
determination; (v) all contributions required to be made with respect to any
Employee Plan pursuant to Section 412 of the Code, or the terms of the Employee
Plan or any collective bargaining agreement, have been made on or before their
due dates; (vi) with respect to each Employee Plan, no "reportable event" within
the meaning of Section 4043 of ERISA (excluding any such event for which the 30
day notice requirement has been waived under the regulations to Section 4043 of
ERISA) nor any event described in Section 4062, 4063 or 4041 of ERISA has
occurred; and (vii) neither the Company nor any ERISA Affiliate has incurred,
nor reasonably expects to incur, any liability under Title IV of ERISA (other
than liability for premium payments to the PBGC arising in the ordinary course).
(c) Section 3.11(c) of the Company Disclosure Schedule sets forth a
true and complete list of each current employee, officer or director of Company
or any of its subsidiaries who holds (i) options 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; and (ii) other rights,
directly or indirectly, to acquire Company Common Stock, together with the
number of shares of Company Common Stock subject to such right. Section 3.11(c)
of the Company Disclosure Schedule also sets forth the total number of such
ISOs, such nonqualified options and such other rights.
(d) Section 3.11(d) of the Company Disclosure Schedule sets forth a
true and complete list of (i) all employment agreements with officers of the
Company or any of its subsidiaries; (ii) all agreements with consultants who are
individuals obligating the Company or any of its subsidiaries to make annual
cash payments in an amount exceeding $500,000; (iii) all officers of Parent or
any of its subsidiaries who have executed a non-competition agreement with the
Company; (iv) all severance agreements, programs and policies of the Company or
any of its subsidiaries with or relating to its employees in each case with
outstanding commitments exceeding $1,000,000, except programs and policies
required to be maintained by law; and (v) all plans, programs, agreements and
other arrangements of the Company or any of its subsidiaries with or relating to
its employees which contain change in control provisions.
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(e) Except as set forth in Section 3.11(e) of the Company Disclosure
Schedule, no employee of the Company or any of its subsidiaries has participated
in any employee pension benefit plans (as defined in Section 3(2) of ERISA)
maintained by or on behalf of the Company. The PBGC has not instituted
proceedings to terminate any defined benefit plan listed in Section 3.11(e) of
the Company Disclosure Schedule (each, a "Defined Benefit Plan"). The Defined
Benefit Plans have no accumulated or waived funding deficiencies within the
meaning of Section 412 of the Code nor have any extensions of any amortization
period within the meaning of Section 412 of the Code or 302 of ERISA been
applied for with respect thereto. The present value of the benefit liabilities
(within the meaning of Section 4041 of ERISA) of the Defined Benefit Plans,
determined on a termination basis using actuarial assumptions that would be used
by the PBGC does not exceed by more than $1,000,000 the value of the Plans'
assets. All applicable premiums required to be paid to the PBGC with respect to
the Defined Benefit Plans have been paid. No facts or circumstances exist with
respect to the Defined Benefit Plans which would give rise to a lien on the
assets of the Company under Section 4068 of ERISA. All the assets of the Defined
Benefit Plans are readily marketable securities or insurance contracts.
(f) The Company has fiduciary liability insurance of at least
$15,000,000 in effect covering the fiduciaries of the Employee Plans (including
the Company) with respect to whom the Company may have liability.
SECTION 3.12. Labor Matters. Except as set forth in Section 3.12 of the
Company Disclosure Schedule or the Company SEC Reports, (i) there are no
controversies pending or, to the knowledge of the Company or any of its
subsidiaries, threatened, between the Company or any of its subsidiaries and any
of their respective employees, which controversies have or would reasonably be
expected to have a Material Adverse Effect; (ii) neither the Company nor any of
its subsidiaries is a party to any material collective bargaining agreement or
other labor union contract applicable to persons employed by the Company or its
subsidiaries, nor does the Company or any of its subsidiaries know of any
activities or proceedings of any labor union to organize 50 or more employees in
any office; and (iii) neither the Company nor any of its 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 its
subsidiaries which would reasonably be expected to have a Material Adverse
Effect.
SECTION 3.13. Registration Statement; Joint Proxy Statement/Prospectus.
Subject to the accuracy of the representations of Parent in Section 2.13, the
information supplied by the Company for inclusion in the Registration Statement
shall not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements included therein, in light of the circumstances
under which they were made, not misleading. The information supplied by the
Company for inclusion in the Joint Proxy Statement/Prospectus will not, on the
date the Joint Proxy Statement/Prospectus is first mailed to shareholders, at
the time of the Shareholders Meetings and at the Effective Time, contain any
statement which, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to
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any material fact, or will omit to state any material fact necessary in order to
make the statements therein not false or misleading; or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Shareholders Meetings which
has become false or misleading. If at any time prior to the Effective Time any
event relating to the Company or any of its affiliates, officers or directors
should be discovered by the Company which should be set forth in an amendment to
the Registration Statement or a supplement to the Joint Proxy
Statement/Prospectus, the Company will promptly inform Parent. The Joint Proxy
Statement/Prospectus shall comply in all material respects with the requirements
of the Securities Act, the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by Parent or Merger Sub
which is contained or incorporated by reference in, or furnished in connection
with the preparation of, the Joint Proxy Statement/Prospectus.
SECTION 3.14. Restrictions on Business Activities. Except for this
Agreement, to the best of the Company's knowledge, there is no agreement,
judgment, injunction, order or decree binding upon the Company or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of the Company or any
of its subsidiaries, any acquisition of property by the Company or any of its
subsidiaries or the conduct of business by the Company or any of its
subsidiaries as currently conducted or as proposed to be conducted by the
Company, except for any prohibition or impairment as would not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.15. Title to Property. The Company and each of its
subsidiaries have good and defensible title to all of their properties and
assets, free and clear of all liens, charges and encumbrances, except liens for
taxes not yet due and payable and such liens or other imperfections of title, if
any, as do not materially detract from the value of or interfere with the
present use of the property affected thereby or which would not reasonably be
expected to have a Material Adverse Effect; and, to the Company's knowledge, all
leases pursuant to which the Company or any of its subsidiaries lease from other
material amounts of real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of the Company, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a material default) except where the lack of such good
standing, validity and effectiveness, or the existence of such default or event
of default would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.16. Real Property. (a) Except as set forth in Section 3.16(a)
of the Company Disclosure Schedule, each of the buildings, improvements and
structures located upon any real property and land owned by Parent or any of its
subsidiaries (collectively, the "Owned Property"), and each of the buildings,
structures and premises leased by the Company or any of its subsidiaries (the
"Leased Premises"), is in reasonably good repair and operating condition, and
the Company has not received any notice of or writing referring to any
requirements by any insurance company that has issued a policy covering any part
of any Owned Property or Leased Premises or by any board of fire
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underwriters or other body exercising similar functions, requiring any repairs
or work to be done on any part of any Owned Property or Leased Premises, except
as would not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth in Section 3.16(b) of the Company Disclosure
Schedule, all structural or material mechanical systems in the buildings upon
the Owned Property and Leased Properties are in good working order and working
condition, and adequate for the operation of the business of the Company and its
subsidiaries as heretofore conducted, except as would not reasonably be expected
to have a Material Adverse Effect.
SECTION 3.17. Taxes. (a) The Company on behalf of itself and all its
subsidiaries hereby represents that, other than as disclosed in Section 3.17(a)
of the Company Disclosure Schedule or the Company SEC Reports: the Company and
its subsidiaries have timely filed all United States federal, state and local
income Tax Returns and all foreign Tax Returns required to be filed by them, and
the Company and its subsidiaries have timely paid and discharged all Taxes due
in connection with or with respect to the periods or transactions covered by
such Tax Returns and have paid all other Taxes as are due, except such as are
being contested in good faith by appropriate proceedings (to the extent that any
such proceedings are required) and there are no other taxes that would be due if
asserted by a taxing authority, except with respect to which the Company is
maintaining reserves to the extent currently required unless the failure to do
so would not reasonably be expected to have a Material Adverse Effect. Except as
does not involve or would not result in liability to the Company that would
reasonably be expected to have a Material Adverse Effect, (i) there are no tax
liens on any assets of the Company or any subsidiary thereof; and (ii) neither
the Company nor any of its subsidiaries has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. The accruals and reserves (including deferred taxes) reflected in the
June 1996 Balance Sheet are in all material respects adequate to cover all Taxes
accruable through the date thereof (including interest and penalties, if any,
thereon and Taxes being contested) in accordance with GAAP.
(b) The Company on behalf of itself and all its subsidiaries hereby
represents that, other than as disclosed on Section 3.17(b) of the Company
Disclosure Schedule or the Company SEC Reports, and other than with respect to
items the inaccuracy of which would not reasonably be expected to have a
Material Adverse Effect: Neither the Company nor any of its subsidiaries is
obligated under any agreement with respect to industrial development bonds or
other obligations with respect to which the excludability from gross income of
the holder for federal or state income tax purposes could be affected by the
transactions contemplated hereunder. Neither the Company nor any of its
subsidiaries is, or has been, a United States real property holding corporation
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. To the best knowledge of the
Company, neither the Company nor any of its subsidiaries owns any property of a
character, the indirect transfer of which, pursuant to this Agreement, would
give rise to any material documentary, stamp or other transfer tax.
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SECTION 3.18. Environmental Matters. Except as set forth in Section
3.18 of the Company Disclosure Schedule, and except in all cases as, in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect, the Company and each of its subsidiaries to the best of the
Company's knowledge (i) have obtained all applicable permits, licenses and other
authorization which are required to be obtained under all applicable
Environmental Laws by the Company or its subsidiaries (or their respective
agents); (ii) are in compliance with all terms and conditions of such required
permits, licenses and authorization, and also are in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in applicable Environmental
Laws; (iii) as of the date hereof, are not aware of nor have received notice of
any past or present violations of Environmental Laws, or any event, condition,
circumstance, activity, practice, incident, action or plan which is reasonably
likely to interfere with or prevent continued compliance with or which would
give rise to any common law or statutory liability, or otherwise form the basis
of any claim, action, suit or proceeding, against the Company or any of its
subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable Environmental Laws to register any products
or materials required to be registered by the Company or its subsidiaries (or
any of their respective agents) thereunder.
SECTION 3.19. Intellectual Property. (a) the Company and/or each of its
subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use all patents, trademarks, trade names, service marks, copyrights,
and any applications therefor, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary information or material
that are used in the business of the Company and its subsidiaries as currently
conducted, except as would not reasonably be expected to have a Material Adverse
Effect.
(b) Except as disclosed in Section 3.19(b) of the Company Disclosure
Schedule or the Company SEC Reports or as would not reasonably be expected to
have a Material Adverse Effect: (i) the Company is not, nor will it be as a
result of the execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the Company
is authorized to use any third-party patents, trademarks, service marks and
copyrights ("Third-Party Intellectual Property Rights"); (ii) no claims with
respect to the patents, registered and material unregistered trademarks and
service marks, registered copyrights, trade names and any applications therefor
owned by the Company or any of its subsidiaries (the "Company Intellectual
Property Rights"), any trade secret material to the Company, or Third Party
Intellectual Property Rights to the extent arising out of any use, reproduction
or distribution of such Third Party Intellectual Property Rights by or through
the Company or any of its subsidiaries, are currently pending or, to the
knowledge of the Company, are overtly threatened by any person; and (iii) the
Company does not know of any valid grounds for any bona fide claims (A) to the
effect that the manufacture, sale, licensing or use of any product as now used,
sold or licensed or proposed for use, sale or
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license by the Company or any of its subsidiaries infringes on any copyright,
patent, trademark, service ▇▇▇▇ or trade secret; (B) against the use by the
Company or any of its 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 its subsidiaries
as currently conducted or as proposed to be conducted; (C) challenging the
ownership, validity or effectiveness of any part of the Company Intellectual
Property Rights or other trade secret material to the Company; or (D)
challenging the license or legally enforceable right to use of the Third Party
Intellectual Rights by the Company or any of its subsidiaries.
(c) To the Company's knowledge, all patents, registered trademarks and
copyrights held by the Company are valid and subsisting. Except as set forth in
Section 3.19(c) of the Company Disclosure Schedule or the Company SEC Reports,
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 its
subsidiaries.
SECTION 3.20. Interested Party Transactions. Except as set forth in
Section 3.20 of the Company Disclosure Schedule or the Company SEC Reports,
since the date of the Company's proxy statement dated September 20, 1996, no
event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
SECTION 3.21. Insurance. Except as disclosed in Section 3.21 of the
Company Disclosure Schedule, all material fire and casualty, general liability,
business interruption, product liability and sprinkler and water damage
insurance policies maintained by the Company or any of its subsidiaries are with
reputable insurance carriers, provide adequate coverage for all normal risks
incident to the business of the Company and its subsidiaries and their
respective properties and assets and are in character and amount at least
equivalent to that carried by entities engaged in similar businesses and subject
to the same or similar perils or hazards, except as would not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.22. Product Liability and Recalls. (a) Except as disclosed in
Section 3.22(a) of the Company Disclosure Schedule or the Company SEC Reports,
the Company is not aware of any claim, or the basis of any claim, against the
Company or any of its subsidiaries for injury to person or property of employees
or any third parties suffered as a result of the sale of any product or
performance of any service by the Company or any of its subsidiaries, including
claims arising out of the defective or unsafe nature of its products or
services, which would reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 3.22(b) of the Company Disclosure
Schedule or the Company SEC Reports, there is no pending or, to the knowledge of
the Company, threatened, recall or investigation of any product sold by the
Company, which recall or investigation would reasonably be expected to have a
Material Adverse Effect.
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SECTION 3.23. Opinion of Financial Advisor. The Company has received an
opinion dated March 16, 1997 of its financial advisor, Credit Suisse First
Boston Corporation, that, as of such date, the Exchange Ratio was fair from a
financial point of view to the shareholders of the Company.
SECTION 3.24. Pooling Matters. The Company has provided to Parent and
its independent accountants all information concerning actions taken or agreed
to be taken by the Company or any of its affiliates on or before the date of
this Agreement that would reasonably be expected to adversely affect the ability
of Parent to account for the business combination to be effected by the Merger
as a pooling of interests. The failure of this representation to be true and
correct shall, if the Merger is not able to be accounted for as a pooling of
interests, constitute a breach of this Agreement by the Company for the purposes
of Section 7.01(i).
SECTION 3.25. Brokers. No broker, finder or investment banker (other
than Credit Suisse First Boston Corporation, the fees and expenses of which will
be paid by the Company) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
SECTION 3.26. Full Disclosure. No statement contained in any
certificate or schedule furnished or to be furnished by the Company to Parent
in, or pursuant to the provisions of, this Agreement contains or will contain
any untrue statement of a material fact or omits or shall 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, except
where the material fact so misstated or omitted to be stated would not
reasonably be expected to have a Material Adverse Effect.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by Parent Pending the Merger. During
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, Parent covenants and
agrees that, unless the Company shall otherwise agree in writing, and except as
set forth in Section 4.01 of the Parent Disclosure Schedule, Parent shall
conduct its business and shall cause the businesses of its subsidiaries to be
conducted only in, and Parent and its subsidiaries shall not take any action
except in, the ordinary course of business and in a manner consistent with past
practice; and Parent shall use reasonable commercial efforts to preserve
substantially intact the business organization of Parent and its subsidiaries,
to keep available the services of the present officers, employees and
consultants of Parent and its subsidiaries and to preserve the present
relationships of Parent and its subsidiaries with customers, suppliers and other
persons with which Parent or any of its subsidiaries has significant business
relations. By
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way of amplification and not limitation, except as contemplated by this
Agreement, neither Parent nor any of its subsidiaries shall, during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, and except as set forth in
Section 4.01 of the Parent Disclosure Schedule, directly or indirectly do, or
propose to do, any of the following without the prior written consent of the
Company:
(a) amend or otherwise change Parent's Memorandum of Association,
as altered, or Bye-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of
capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest (including, without
limitation, any phantom interest) in Parent, any of its subsidiaries
or affiliates (except for the issuance of shares of Parent Common
Stock issuable pursuant to stock options outstanding on the date
hereof and except for the issuance of options ("New Parent Options"),
in the ordinary course of business and consistent with past practice,
to purchase up to 1,000,000 shares in the aggregate of Parent Common
Stock (other than to the Chief Executive Officer or the Chief
Financial Officer of Parent); provided that such New Parent Options
shall be issued to employees of Parent and its subsidiaries, shall
have an exercise price that is not less than the market price of
Parent Common Stock on the date of grant, shall terminate on the
employee's termination of employment with Parent and shall vest in
accordance with Parent's customary vesting schedule for employee
options; and provided further that the issuance of such options would
not reasonably be expected to adversely affect the ability of Parent
to account for the business combination to be effected by the Merger
as a pooling of interests;
(c) sell, pledge, dispose of or encumber any assets of Parent or
any of its subsidiaries (except for (i) sales of assets in the
ordinary course of business and in a manner consistent with past
practice, (ii) dispositions of obsolete or worthless assets, (iii)
sales of immaterial assets not in excess of $5,000,000 and (iv) sales
pursuant to sale-leasebacks not in excess of $10,000,000 in any
individual case or $35,000,000 in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly
owned subsidiary of Parent may declare and pay a dividend to its
parent, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock, or (iii) amend the terms or change the period of exercisability
of, purchase, repurchase, redeem or otherwise acquire, or permit any
subsidiary to purchase, repurchase, redeem or otherwise acquire, any
of its securities or any securities of its subsidiaries, including,
without limitation, shares of Parent Common Stock or any option,
warrant or right, directly or indirectly, to acquire shares of Parent
Common Stock, or propose to do any of the foregoing;
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(e) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof other than those listed on Section
4.01(e) of the Parent Disclosure Schedule and other than any
acquisitions in which the consideration payable by Parent does not
exceed $10,000,000 for any individual acquisition or $35,000,000 in
the aggregate for all such acquisitions; (ii) incur any indebtedness
for borrowed money or issue any debt securities or assume, guarantee
(other than guarantees of bank debt of the Parent's subsidiaries
entered into in the ordinary course of business) or endorse or
otherwise as an accommodation become responsible for the obligations
of any person, or make any loans or advances, except in the ordinary
course of business consistent with past practice; (iii) authorize any
capital expenditures other than (x) as described on Section 4.01 of
the Parent Disclosure Schedule, (y) any capital expenditures not in
excess of $5,000,000 in any individual case, or $70,000,000 for all
such capital expenditures in the aggregate, and (z) any capital
expenditures incurred in connection with the installation of
subscriber systems in the ordinary course of business; or (iv) enter
into or amend any contract, agreement, commitment or arrangement to
effect any of the matters prohibited by this Section 4.01(e);
(f) increase the compensation payable or to become payable to its
officers or employees, or grant any severance or termination pay to,
or enter into any employment or severance agreement with any director,
officer or other employee of Parent or any of its subsidiaries, or
establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any current or former directors,
officers or employees, except for (w) increases in salary or wages of
employees of Parent or its subsidiaries in accordance with past
practices; (x) entering into any employment agreement with any
officers or employees of Parent or any of its subsidiaries in
accordance with past practices providing for annual compensation of
not more than $200,000, (y) entering into any severance or termination
agreements or the grant of any severance or termination payment to any
employee or officer in accordance with past practices in an amount not
in excess of $200,000, or (z) as may be required by law;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable), except as required by GAAP;
(h) make any material tax election inconsistent with past
practice or settle or compromise any material federal, state, local or
foreign tax liability, except to the extent the amount of any such
settlement has been reserved for in the financial statements contained
in the Parent SEC Reports filed prior to the date of this Agreement;
(i) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the
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payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of liabilities reflected or reserved
against in the financial statements contained in the Parent SEC Reports
filed prior to the date of this Agreement or incurred in the ordinary
course of business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.01(a) through (i) above, or any action
which would make any of the representations or warranties of Parent
contained in this Agreement untrue or incorrect or prevent Parent or
Merger Sub from performing or cause Parent or Merger Sub not to
perform its covenants hereunder.
SECTION 4.02. No Solicitation by Parent. (a) Parent shall not, directly
or indirectly, through any officer, director, employee, representative or agent
of Parent or any of its subsidiaries, solicit or encourage the initiation of any
inquiries or proposals regarding any merger, or any acquisition of any capital
stock or any material portion of the assets of Parent (including without
limitation by way of a tender offer) or similar transactions involving Parent or
any subsidiaries of Parent (any of the foregoing inquiries or proposals being
referred to herein as an "Acquisition Proposal"). Nothing contained in this
Section 4.02(a) shall prevent the Board of Directors of Parent from (i)
considering, negotiating, approving and recommending to the shareholders of
Parent a bona fide Acquisition Proposal not solicited in violation of this
Agreement, (ii) taking and disclosing to its shareholders a position
contemplated by Exchange Act Rule 14e-2 or (iii) making any disclosure to its
shareholders; provided that, as to each of clauses (i), (ii) and (iii), the
Board of Directors of Parent determines in good faith (upon advice of
independent counsel) such action is necessary for it to act in a manner
consistent with its fiduciary duties under applicable law.
(b) Parent shall promptly notify the Company after receipt of any
Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to Parent or any of
its subsidiaries in connection with an Acquisition Proposal or for access to the
properties, books or records of Parent or any subsidiary by any person or entity
that informs the Board of Directors of Parent or such subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice to the
Company shall be made orally and in writing, and shall indicate the identity of
the person making the Acquisition Proposal or intending to make an Acquisition
Proposal or requesting non-public information or access to the books and records
of Parent, the terms of any such Acquisition Proposal or modification or
amendment to an Acquisition Proposal, and whether Parent is providing or intends
to provide the person making the Acquisition Proposal with access to information
concerning Parent as provided in Section 4.02(c).
(c) If the Board of Directors of Parent receives a request for material
nonpublic information by a person who makes a bona fide Acquisition Proposal,
and the Board of Directors determines in good faith and upon the advice of
independent counsel that it is required to cause Parent to act as provided in
this Section 4.02(c) in order for the Board of Directors to act in a manner
consistent with its fiduciary duties, then, provided the person making the
Acquisition Proposal has executed a confidentiality agreement substantially
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similar to the one then in effect between the Company and Parent, Parent may
provide such person with access to information regarding Parent.
(d) Anything to the contrary in this Section or elsewhere in this
Agreement notwithstanding, the Board of Directors of Parent shall not (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to the
Company, the approval or recommendation by such Board of Directors of the
matters set forth in Section 5.03(b), (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) cause Parent to enter
into any agreement with respect to any Acquisition Proposal, except (x) upon the
advice of independent counsel that it is required to cause Parent to act as
provided in this Section 4.02(d) in order for the Board of Directors to act in a
manner consistent with its fiduciary duties and (y) with respect to the approval
or recommendation of any Acquisition Proposal or entering into any agreement
with respect to any Acquisition Proposal, after the third business day following
the Company's receipt of written notice of the information with respect to such
Acquisition Proposal, and, if applicable, the second business day after the
Company's receipt of written notice of the information with respect to all
material amendments or modifications thereto, in each case as contemplated by
Section 4.02(b) above.
(e) Parent shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than the Company)
conducted heretofore with respect to any of the foregoing. Parent shall not
release any third party from the confidentiality provisions of any
confidentiality agreement to which Parent is a party in respect of any
information delivered by Parent in connection with any Acquisition Proposal.
(f) Parent shall ensure that the officers, directors and employees of
the Company and its subsidiaries and any investment banker or other advisor or
representative retained by the Company are aware of the restrictions described
in this Section 4.02.
SECTION 4.03. Conduct of Business by the Company Pending the Merger.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, the Company
covenants and agrees that, except as set forth in Section 4.03 of the Company's
Disclosure Schedule or unless Parent shall otherwise agree in writing, the
Company shall conduct its business, and cause the businesses of its subsidiaries
to be conducted, in the ordinary course of business and consistent with past
practice, other than actions taken by the Company or its subsidiaries in
contemplation of the Merger and acquisitions not prohibited by clause (b) below,
and shall not directly or indirectly do, or propose to do, any of the following
without the prior written consent of Parent:
(a) amend or otherwise change the Company's Articles of
Organization or By-Laws;
(b) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organiza-
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tion or division thereof, or otherwise acquire or agree to acquire any
assets of any other person which, in any such case, would materially
delay or prevent the consummation of the transactions contemplated by
this Agreement;
(c) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly
owned subsidiary of the Company may declare and pay a dividend to its
parent, and except that the Company may declare and pay cash dividends
of $0.05 per quarter consistent with past practice; or
(d) take or agree in writing or otherwise to take any action
which would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect or prevent the
Company from performing or cause the Company not to perform its
covenants hereunder.
SECTION 4.04. No Solicitation by the Company. (a) The Company shall
not, directly or indirectly, through any officer, director, employee,
representative or agent of the Company or any of its subsidiaries, solicit or
encourage the initiation of any inquiries or proposals regarding any Change of
Control Proposal. "Change of Control Proposal" means (i) any merger or any
acquisition of any capital stock of the Company (including without limitation by
way of a tender offer) or similar transactions involving the Company as a result
of which the shareholders of the Company immediately prior to the consummation
of such transaction would own less than 50% of the voting stock of the Company
or, if the Company is not the surviving corporation, the surviving corporation
immediately following the consummation of such transaction or (ii) the sale of
all or substantially all of the assets of the Company. Nothing contained in this
Section 4.04(a) shall prevent the Board of Directors of the Company from (i)
considering, negotiating, approving and recommending to the shareholders of the
Company a bona fide Change of Control Proposal not solicited in violation of
this Agreement, (ii) taking and disclosing to its shareholders a position
contemplated by Exchange Act Rule 14e-2 or (iii) making any disclosure to its
shareholders; provided that, as to each of clauses (i), (ii) and (iii), the
Board of Directors of the Company determines in good faith (upon advice of
independent counsel) such action is necessary for it to act in a manner
consistent with its fiduciary duties under applicable law.
(b) The Company shall promptly notify Parent after receipt of any
Change of Control Proposal, or any modification of or amendment to any Change of
Control Proposal, or any request for nonpublic information relating to the
Company or any of its subsidiaries in connection with a Change of Control
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 Change
of Control Proposal. Such notice to the Company shall be made orally and in
writing, and shall indicate the identity of the person making the Change of
Control Proposal or intending to make a Change of Control Proposal or requesting
non-public information or access to the books and records of the Company, the
terms of any such Change of Control Proposal or modification or amendment to a
Change of Control Proposal, and whether the Company is providing or intends to
provide the person making the Change
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of Control Proposal with access to information concerning the Company as
provided in Section 4.04(c).
(c) If the Board of Directors of the Company receives a request for
material nonpublic information by a person who makes a bona fide Change of
Control Proposal, and the Board of Directors determines in good faith and upon
the advice of independent counsel that it is required to cause the Company to
act as provided in this Section 4.04(c) in order for the Board of Directors to
act in a manner consistent with its fiduciary duties, then, provided the person
making the Change of Control Proposal has executed a confidentiality agreement
substantially similar to the one then in effect between the Company and Parent,
the Company may provide such person with access to information regarding the
Company.
(d) Anything to the contrary in this Section or elsewhere in this
Agreement notwithstanding, the Board of Directors of the Company shall not (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to the
Company, the approval or recommendation by such Board of Directors of this
Agreement, the Merger or any of the other transactions contemplated hereby, (ii)
approve or recommend, or propose to approve or recommend, any Change of Control
Proposal or (iii) cause the Company to enter into any agreement with respect to
any Change of Control Proposal, except (x) upon the advice of independent
counsel that it is required to cause the Company to act as provided in this
Section 4.04(d) in order for the Board of Directors to act in a manner
consistent with its fiduciary duties and (y) with respect to the approval or
recommendation of any Change of Control Proposal or entering into any agreement
with respect to any Change of Control Proposal, after the third business day
following Parent's receipt of written notice of the information with respect to
such Change of Control Proposal, and, if applicable, the second business day
after Parent's receipt of written notice of the information with respect to all
material amendments or modifications thereto, in each case as contemplated by
Section 4.04(b) above.
(e) The Company shall ensure that the officers, directors and employees
of the Company and its subsidiaries and any investment banker or other advisor
or representative retained by the Company are aware of the restrictions
described in this Section 4.04.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Joint Proxy Statement/Prospectus; Registration Statement.
As promptly as practicable after the execution of this Agreement, the Company
and Parent shall prepare and file with the SEC preliminary proxy materials which
shall constitute the Joint Proxy Statement/Prospectus and the Registration
Statement. As promptly as practicable after comments are received from the SEC
thereon and after the furnishing by the Company and Parent of all information
required to be contained therein, the Company and Parent shall
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file with the SEC a combined proxy and Registration Statement on Form S-4 (or on
such other form as shall be appropriate) relating to the adoption of this
Agreement and approval of the transactions contemplated hereby by the
shareholders of the Company pursuant to this Agreement, and the approval by the
shareholders of Parent of the Reverse Stock Split, the Share Amendment, the
issuance of Parent Common Stock in the Merger, the Parent Name Change and the
New Parent Director Election, and shall use all reasonable efforts to cause the
Registration Statement to become effective as soon thereafter as practicable.
The Joint Proxy Statement/Prospectus shall include the recommendation of the
Boards of Directors of the Company and Parent in favor of the Merger and the
other transactions contemplated hereby, as applicable, subject to the last
sentence of Section 5.02 and Section 5.03(d).
SECTION 5.02. Company Shareholders Meeting. The Company shall call the
Company Shareholders Meeting as promptly as practicable for the purpose of
voting upon the approval of the Merger, and the Company shall use its reasonable
best efforts to hold the Company Shareholders Meeting as soon as practicable
after the date on which the Registration Statement becomes effective. Unless
otherwise required under the applicable fiduciary duties of the directors of the
Company, as determined by such directors in good faith after consultation with
and based upon the advice of independent legal counsel, the Company shall
solicit from its shareholders proxies in favor of adoption of this Agreement and
approval of the transactions contemplated thereby, and shall take all other
action necessary or advisable to secure the vote or consent of stockholders to
obtain such approvals.
SECTION 5.03. Parent Shareholders Meeting. (a) Parent shall call the
Parent Shareholders Meeting as promptly as practicable, and Parent shall use its
reasonable best efforts to hold the Parent Shareholders Meeting as soon as
practicable after the date on which the Registration Statement becomes
effective.
(b) The Parent Shareholders Meeting shall be called for the following
purposes:
(i) to approve a consolidation of the Parent Common Stock (the
"Reverse Stock Split") such that, immediately prior to (but
conditioned upon the occurrence of) the Effective Time, each share of
Parent Common Stock, par value $.10 per share, shall be consolidated
in the ratio (the "Reverse Stock Split Ratio") equal to (subject to
Section 7.01(n)) one share of Parent Common Stock, par value $.20 per
share, for each 2.0776 shares of Parent Common Stock, par value $.10
per share (with the resulting number of shares of each registered
holder being rounded down to the nearest whole number and with each
registered holder being entitled to receive from Parent in respect of
any fractional shares of Parent Common Stock an amount in cash
(without interest) equal to such fraction multiplied by the closing
price per share of Parent Common Stock on the NYSE on the date of the
Effective Time);
(ii) to approve (A) an increase in or reorganization of the
authorized number of shares of Parent Common Stock (the "Share
Amendment"), immediately following the Reverse Stock Split and prior
to (but conditioned
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upon the occurrence of) the Effective Time, in an amount not less than
is required to issue the Parent Common Stock, par value $.20 per
share, in the Merger, as contemplated by this Agreement, either by (x)
the creation of additional authorized shares of Parent Common Stock,
par value $.20 per share, or (y) the sub-division and consolidation of
Parent Convertible Preference Stock and/or Parent Exchangeable
Preference Stock into shares of Parent Common Stock, par value $.20
per share, and (B) any changes to Parent's Bye-Laws necessary to
reflect such increase;
(iii) to authorize and approve the issuance by Parent of the
Parent Common Stock in the Merger, as contemplated by this Agreement;
(iv) to approve a change in the name of Parent to Tyco
International Ltd., effective upon the Effective Time of the Merger or
as soon thereafter as practicable (the "Parent Name Change"); and
(v) to remove all of the directors of Parent in office
immediately prior to the Effective Time and to elect as directors of
Parent, to take office as of the Effective Time, the persons set forth
on or designated in accordance with Annex A to this Agreement to serve
until the next annual shareholders meeting of Parent (the "New Parent
Director Election");
provided, that none of the matters set forth in the foregoing clauses (i)
through (v) shall be deemed approved by the shareholders of the Parent unless
all of them are so approved.
(c) Parent shall take all action required for the nomination of the
persons set forth on or designated in accordance with Annex A for election as
directors of Parent at the Parent Shareholders Meeting.
(d) Unless otherwise required under the applicable fiduciary duties of
the directors of Parent, as determined by such directors in good faith after
consultation with and based upon the advice of independent legal counsel, Parent
shall solicit from its shareholders proxies in favor of the Reverse Stock Split,
the Share Amendment, the issuance of Parent Common Stock in the Merger, the
Parent Name Change and the New Parent Director Election, and shall take all
other action necessary or advisable to secure the vote or consent of
shareholders to obtain such approvals.
SECTION 5.04. Access to Information; Confidentiality. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject (from which such party shall use reasonable efforts
to be released), the Company and Parent shall each (and shall cause each of
their subsidiaries to) afford to the officers, employees, accountants, counsel
and other representatives of the other, reasonable access, during the period
prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company and Parent each
shall (and shall cause each of their subsidiaries to) furnish promptly to the
other all information concerning its business, properties and personnel as such
other party may reasonably request, and each
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shall make available to the other the appropriate individuals (including
attorneys, accountants and other professionals) for discussion of the other's
business, properties and personnel as either Parent or the Company may
reasonably request. Each party shall keep such information confidential in
accordance with the terms of the respective confidentiality letters, dated March
5, 1997 (the "Confidentiality Letter"), between Parent and the Company.
SECTION 5.05. Consents; Approvals. The Company and Parent shall each
use their best efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and
foreign governmental and regulatory rulings and approvals), and the Company and
Parent shall make all filings (including, without limitation, all filings with
United States and foreign governmental or regulatory agencies) required in
connection with the authorization, execution and delivery of this Agreement by
the Company and Parent and the consummation by them of the transactions
contemplated hereby. The Company and Parent shall furnish all information
required to be included in the Joint Proxy Statement/Prospectus and the
Registration Statement, or for any application or other filing to be made
pursuant to the rules and regulations of any United States or foreign
governmental body in connection with the transactions contemplated by this
Agreement.
SECTION 5.06. Agreements with Respect to Affiliates. (a) The Company
shall deliver to Parent, as soon as practicable, a letter (the "Company
Affiliate Letter") identifying all persons who are anticipated to be, at the
time of the Company Shareholders Meeting, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act ("Rule 145") or the rules and
regulations of the SEC relating to pooling of interests accounting treatment for
merger transactions (the "Pooling Rules"). The Company shall use its best
efforts to cause each person who is identified as an "affiliate" in the Company
Affiliate Letter to deliver to Parent, no less than 35 days prior to the date of
the Company Shareholders Meeting, a written agreement (a "Company Affiliate
Agreement") in connection with restrictions on affiliates under Rule 145 and
pooling of interests accounting treatment, in form mutually agreeable to the
Company and Parent.
(b) Parent shall deliver to the Company, as soon as practicable, a
letter (the "Parent Affiliate Letter") identifying all persons who are
anticipated to be, at the time of the Parent Shareholders Meeting, "affiliates"
of Parent for purposes of the Pooling Rules. Parent shall use its best efforts
to cause each person who is identified as an "affiliate" in the Parent Affiliate
Letter to deliver to the Company, no less than 35 days prior to the date of the
Parent Shareholders Meeting, a written agreement (a "Parent Affiliate
Agreement") in connection with restrictions on affiliates under pooling of
interests accounting treatment, in form mutually agreeable to the Company and
Parent.
SECTION 5.07. Indemnification and Insurance.
(a) Company Indemnification and Insurance. (i) The By-Laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the By-Laws of the Company, which provisions shall
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would
-45-
adversely affect the rights thereunder of individuals who at the Effective Time
were directors, officers, employees or agents of the Company or any of its
subsidiaries, unless such modification is required by law.
(ii) The Surviving Corporation shall, to the fullest extent permitted
under applicable law or under the Surviving Corporation's Articles of
Organization or ByLaws, indemnify and hold harmless, each present and former
director or officer of the Company or any of its subsidiaries (collectively, the
"Indemnified Parties") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, (x)
arising out of or pertaining to the transactions contemplated by this Agreement
or (y) otherwise with respect to any acts or omissions occurring at or prior to
the Effective Time, to the same extent as provided in the Company's Restated
Articles of Organization or By-Laws or any applicable contract or agreement as
in effect on the date hereof, in each case for a period of six years after the
date hereof. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (A) any
counsel retained by the Indemnified Parties shall be reasonably satisfactory to
the Surviving Corporation, (B) after the Effective Time, the Surviving
Corporation shall pay the reasonable fees and expenses of such counsel, promptly
after statements therefor are received, and (C) the Surviving Corporation will
cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld); and
provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the
disposition of any and all such claims. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties, in which case each Indemnified Person with respect to whom such a
conflict exists (or group of Indemnified Persons who among them have no such
conflict) may retain one separate law firm.
(iii) For a period of six years after the Effective Time, Parent shall
cause the Surviving Corporation to maintain in effect, if available, directors'
and officers' liability insurance covering those persons who are currently
covered by the Company's directors' and officers' liability insurance policy (a
copy of which has been made available to Parent) on terms comparable to those
now applicable to directors and officers of the Company or any of its
subsidiaries; provided, however, that in no event shall Parent or the Surviving
Corporation be required to expend in excess of 200% of the annual premium
currently paid by the Company for such coverage; and provided further, that if
the premium for such coverage exceeds such amount, Parent or the Surviving
Corporation shall purchase a policy with the greatest coverage available for
such 200% of the annual premium.
(iv) From and after the Effective Time, Parent shall guarantee the
obligations of the Surviving Corporation under this Section.
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(v) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
the Surviving Corporation and shall be enforceable by the Indemnified Parties.
(b) Parent Indemnification and Insurance. (i) The Bye-Laws of Parent
which contain the provisions with respect to indemnification shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers, employees or
agents of Parent or any of its Subsidiaries, unless such modification is
required by law.
(ii) Parent shall, to the fullest extent permitted under applicable law
or under Parent's Memorandum of Association or Bye-Laws, indemnify and hold
harmless, each present and former director or officer of Parent or any of its
subsidiaries (collectively, the "Indemnified Parties") against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by this Agreement or (y) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
Parent's Memorandum of Association or Bye-Laws or any applicable contract or
agreement as in effect on the date hereof, in each case for a period of six
years after the date hereof. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (A) any counsel retained by the Indemnified Parties shall be reasonably
satisfactory to Parent, (B) after the Effective Time, Parent shall pay the
reasonable fees and expenses of such counsel, promptly after statements therefor
are received, and (C) Parent will cooperate in the defense of any such matter;
provided, however, that Parent shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld);
and provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the
disposition of any and all such claims. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties, in which case each Indemnified Person with respect to whom such a
conflict exists (or group of Indemnified Persons who among them have no such
conflict) may retain one separate law firm.
(iii) For a period of six years after the Effective Time, Parent shall
maintain in effect, if available, directors' and officers' liability insurance
covering those persons who are currently covered by Parent's directors' and
officers' liability insurance policy (a copy of which has been made available to
the Company) on terms comparable to those now applicable to directors and
officers of Parent or any of its Subsidiaries; provided, however, that in no
event shall Parent be required to expend in excess of 200% of the annual premium
currently paid by Parent for such coverage; and provided further, that if the
premium for
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such coverage exceeds such amount, Parent shall purchase a policy with the
greatest coverage available for such 200% of the annual premium.
(iv) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit Parent and the Indemnified Parties, shall
be binding on all successors and assigns of Parent and shall be enforceable by
the Indemnified Parties.
SECTION 5.08. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would be likely to cause any representation or warranty contained in
this Agreement to be materially untrue or inaccurate, or (ii) any failure of the
Company, Parent or Merger Sub, as the case may be, materially to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and provided further that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of Sections 6.02(a) or 6.03(a) unless the failure to give such notice
results in material prejudice to the other party.
SECTION 5.09. Further Action. Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and otherwise to satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement. The foregoing covenant shall not include any obligation by the
Company or Parent to agree to divest, abandon, license or take similar action
with respect to any assets (tangible or intangible) of Parent or the Company.
SECTION 5.10. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release with respect to the
Merger or this Agreement and shall not issue any such press release or make any
such public statement without the prior consent of the other party, which shall
not be unreasonably withheld; provided, however, that a party may, without the
prior consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the rules and
regulations of the NYSE or as Parent or the Company determines to be reasonably
necessary or appropriate in connection with any competing Acquisition Proposal
or competing proxy solicitation, if it has used all reasonable efforts to
consult with the other party.
SECTION 5.11. Listing of Shares of Parent Common Stock. Parent shall
use its best efforts to cause the shares of Parent Common Stock to be issued in
the Merger to be listed, upon official notice of issuance, on the NYSE prior to
the Effective Time.
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SECTION 5.12. Conveyance Taxes. Parent and the Company shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time, and the
Surviving Corporation shall be responsible for the payment of all such taxes and
fees.
SECTION 5.13. Accountant's Letters. Upon reasonable notice from the
other, the Company shall use its best efforts to cause Coopers & ▇▇▇▇▇▇▇ to
deliver to Parent, and Parent shall use its best efforts to cause Coopers &
▇▇▇▇▇▇▇ to deliver to the Company, a letter covering such matters as are
requested by Parent or the Company, as the case may be, and as are customarily
addressed in accountant's "comfort" letters.
SECTION 5.14. Pooling Accounting Treatment. Parent and the Company each
agrees not to take any action that would reasonably be expected to adversely
affect the ability of Parent to account for the business combination to be
effected by the Merger as a pooling of interests, and Parent and the Company
each agrees to take such action as may be reasonably required to negate the
impact of any past actions by Parent, the Company or their respective affiliates
which would reasonably be expected to adversely impact the ability of Parent to
treat the Merger as a pooling of interests. The taking by Parent or the Company
of any action prohibited by the previous sentence, or the failure of Parent or
the Company to take any action required by the previous sentence, if the Merger
is not able to be accounted for as a pooling of interests because of such action
or failure to take action, shall constitute a breach of this Agreement by such
party for the purposes of Section 7.01(i).
SECTION 5.15. Company Stock Options. The Company shall take such action
as may be required under the Tyco International Ltd. Company 1995 Stock Option
Plan and all other stock options plans of the Company such that, following the
Effective Time, each Stock Option shall be treated in the manner described in
Section 1.06(c).
SECTION 5.16 Parent Stock Options and Severance Arrangements. (a)
Parent and the Company agree that at the Effective Time outstanding stock
options ("Parent Options") listed on Section 2.11(c) of the Parent Disclosure
Schedule shall be fully exercisable and that Parent shall take any and all
action prior to the Effective Time as may be required to effectuate such result;
provided that this shall not apply to any New Parent Options.
(b) Parent and the Company further agree that consummation of the
Merger shall constitute a "change of control" of Parent for purposes of the
severance and other similar agreements which contain "change of control"
provisions (the "Severance Agreements") and that, prior to the Effective Time,
Parent and the Company agree to take any and all such actions as may be required
to effectuate such result.
Notwithstanding anything to the contrary contained in this Section
5.16, no transaction contemplated by this Section 5.16 shall be effected if any
such transaction would
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reasonably be expected to adversely affect the ability of Parent to account for
the business combination to be effected by the Merger as a pooling of interests.
SECTION 5.17. Rights. Prior to the Effective Time, at the election of
the Company communicated to Parent not less than fifteen business days prior to
the Parent Shareholders Meeting, Parent shall take such action as shall be
required to either (i) amend the Shareholder Rights Plan to affirmatively
provide that no Distribution Date (as such term is defined in the Shareholder
Rights Plan) shall occur and no person shall become an Acquiring Person (as such
term is defined in the Shareholder Rights Plan), by reason or as a result of the
consummation of the Merger or any other transactions contemplated by this
Agreement or (ii) redeem or otherwise terminate all outstanding Rights, such
that all such Rights shall be of no further force and effect, and none of such
Rights shall entitle any holder thereof to any rights, payments, distributions
or other benefits whatsoever by reason or as a result of the consummation of
Merger or any other transactions contemplated by this Agreement; provided,
however, that if the Company shall communicate to Parent no such election, the
Company shall be deemed to have communicated to Parent the election in clause
(i) above.
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ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no
proceedings for that purpose and no similar proceeding in respect of
the Joint Proxy Statement/Prospectus shall have been initiated or
threatened by the SEC;
(b) Shareholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the
shareholders of the Company, and the Reverse Stock Split, the Share
Amendment, the issuance of Parent Common Stock in the Merger, the
Parent Name Change and the New Parent Director Election, shall have
been approved by the requisite vote of the shareholders of Parent;
(c) Reverse Stock Split and Share Amendment. All actions shall
have been taken such that the Reverse Stock Split and the Share
Amendment shall become effective immediately prior to (but conditioned
upon the occurrence of) the Effective Time;
(d) Listing. The shares of Parent Common Stock issuable in the
Merger shall have been authorized for listing on the NYSE upon
official notice of issuance;
(e) HSR Act. All waiting periods applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated;
(f) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation
or other inquiry that might result in such an action or proceeding) by
any governmental authority or administrative agency before any
governmental authority, administrative agency or court of competent
jurisdiction, domestic or foreign, nor shall there be in effect any
judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, or any other
legal restraint (i) preventing or seeking to prevent consummation of
the Merger or the effectiveness of the Reverse Stock Split, the Share
Amendment or the New Parent Director Election, (ii) prohibiting or
seeking to prohibit or limiting or seeking to limit Parent from
exercising all material rights and privileges pertaining to its
ownership of the Surviving Corporation or the ownership or operation
by Parent or any of its subsidiaries of all or a material portion of
the business or assets of Parent or any of its subsidiaries, or (iii)
compelling or
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seeking to compel Parent or any of its subsidiaries to dispose of or
hold separate all or any material portion of the business or assets of
Parent or any of its subsidiaries (including the Surviving Corporation
and its subsidiaries), in each case as a result of the Merger or the
transactions contemplated by this Agreement;
(g) Illegality. No statute, rule, regulation or order shall be
enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger or the effectiveness of the
Reverse Stock Split, the Share Amendment or the New Parent Director
Election illegal; and
(h) Pooling Opinion. The Company and Parent shall have received a
written opinion of Coopers & ▇▇▇▇▇▇▇, in form and substance reasonably
satisfactory to each of them, to the effect that the Merger will
qualify for accounting treatment as a pooling of interests. To the
extent such a legal opinion is requested by Coopers & ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to Parent, shall have delivered its opinion,
in form and substance reasonably satisfactory to Coopers & ▇▇▇▇▇▇▇,
that Western Resources, Inc. is not an affiliate of Parent. Each party
agrees to make reasonable and necessary representations and covenants
in connection with the rendering of the opinion of Coopers & ▇▇▇▇▇▇▇,
and Parent shall make reasonable and necessary representations in
connection with the rendering of the opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇.
SECTION 6.02. Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true
and correct in all respects on and as of the Effective Time, except
for (i) changes contemplated by this Agreement, (ii) those
representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such
date, subject to clause (iii)), and (iii) where the failure to be true
and correct would not reasonably be expected to have a Material
Adverse Effect, with the same force and effect as if made on and as of
the Effective Time, and Parent and Merger Sub shall have received a
certificate to such effect signed by the Chief Executive Officer and
the Chief Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on
or prior to the Effective Time, and Parent and Merger Sub shall have
received a certificate to such effect signed by the Chief Executive
Officer and the Chief Financial Officer of the Company;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings
required to be made, by the Company for the authorization, execution
and delivery of this Agreement and
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the consummation by it of the transactions contemplated hereby shall
have been obtained and made by the Company, except where the failure
to receive such consents, etc. would not reasonably be expected to
have a Material Adverse Effect on the Company or Parent; and
(d) Company Affiliate Agreements. Parent shall have received from
each person who is identified in the Company Affiliate Letter as an
"affiliate" of the Company a Company Affiliate Agreement, and such
Company Affiliate Agreement shall be in full force and effect.
SECTION 6.03. Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall
be true and correct in all respects on and as of the Effective Time,
except for (i) changes contemplated by this Agreement, (ii) those
representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such
date, subject to clause (iii)), and (iii) where the failure to be true
and correct would not reasonably be expected to have a Material
Adverse Effect, with the same force and effect as if made on and as of
the Effective Time, and the Company shall have received a certificate
to such effect signed by the Chief Executive Officer and the Chief
Financial Officer of Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with
by them on or prior to the Effective Time, and the Company shall have
received a certificate to such effect signed by the Chief Executive
Officer and the Chief Financial Officer of Parent;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings
required to be made, by Parent and Merger Sub for the authorization,
execution and delivery of this Agreement and the consummation by them
of the transactions contemplated hereby shall have been obtained and
made by Parent and Merger Sub, except where the failure to receive
such consents, etc. would not reasonably be expected to have a
Material Adverse Effect on the Company or Parent;
(d) Parent Affiliate Agreements. The Company shall have received
from each person who is identified in the Parent Affiliate Letter as
an "affiliate" of Parent a Parent Affiliate Agreement, and such Parent
Affiliate Agreement shall be in full force and effect; and
(e) Rights. The Shareholder Rights Plan shall have been amended
or the Rights shall have been redeemed or otherwise terminated, as
provided in Section 5.17.
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ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval hereof or of the
transactions contemplated hereby by the shareholders of the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have
been consummated by August 15, 1997 (provided that the right to
terminate this Agreement under this Section 7.01(b) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a nonappealable final order, decree or
ruling or taken any other action having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, the
Reverse Stock Split, the Share Amendment, the Parent Name Change or
the New Parent Director Election (provided that the right to terminate
this Agreement under this Section 7.01(c) shall not be available to
any party who has not complied with its obligations under Section 5.09
and such noncompliance materially contributed to the issuance of any
such order, decree or ruling or the taking of such action); or
(d) by Parent, if the requisite vote of the shareholders of the
Company shall not have been obtained by August 15, 1997, or by the
Company, if the requisite vote of the shareholders of Parent shall not
have been obtained by August 15, 1997; or
(e) by the Company, if (i) the Board of Directors of Parent shall
withdraw, modify or change its approval or recommendation of this
Agreement, the Merger or the other transactions contemplated hereby in
a manner adverse to the Company or shall have resolved to do so; (ii)
the Board of Directors of Parent shall have recommended to the
shareholders of Parent an Alternative Transaction (as hereinafter
defined); or (iii) a tender offer or exchange offer for 25% or more of
the outstanding shares of Parent Common Stock is commenced (other than
by the Company or an affiliate of the Company) and the Board of
Directors of Parent recommends that the shareholders of Parent tender
their shares in such tender or exchange offer; or
(f) by Parent, if the Board of Directors of Parent shall
withdraw, modify or change its approval or recommendation of this
Agreement or the Merger in a
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manner adverse to the Company or shall have resolved to do so, in each
case in compliance with the provisions of Section 4.02; or
(g) by Parent or the Company, if any representation or warranty
of the Company or Parent, respectively, set forth in this Agreement
shall be untrue when made, such that the conditions set forth in
Sections 6.02(a) or 6.03(a), as the case may be, would not be
satisfied (a "Terminating Misrepresentation"); provided, that, if such
Terminating Misrepresentation is curable prior to August 15, 1997 by
the Company or Parent, as the case may be, through the exercise of its
reasonable best efforts and for so long as the Company or Parent, as
the case may be, continues to exercise such reasonable best efforts,
neither Parent nor the Company, respectively, may terminate this
Agreement under this Section 7.01(g); or
(h) by Parent, if any representation or warranty of the Company
shall have become untrue such that the condition set forth in Section
6.02(a) would not be satisfied, or by the Company, if any
representation or warranty of Parent shall have become untrue such
that the condition set forth in Section 6.03(a) would not be
satisfied, in either case other than by reason of a Terminating Breach
(as hereinafter defined); provided that if any such Terminating
Misrepresentation is curable prior to August 15, 1997 by the Company
or Parent, as the case may be, through the exercise of its reasonable
best efforts, and for so long as the Company or Parent, as the case
may be, continues to exercise such reasonable best efforts, neither
Parent nor the Company, respectively, may terminate this Agreement
under this Section 7.01(h); or
(i) by Parent or the Company, upon a breach of any covenant or
agreement on the part of the Company or Parent, respectively, set
forth in this Agreement, such that the conditions set forth in
Sections 6.02(b) or 6.03(b), as the case may be, would not be
satisfied (a "Terminating Breach"); provided, that, if such
Terminating Breach is curable prior to August 15, 1997 by the Company
or Parent, as the case may be, through the exercise of its reasonable
best efforts and for so long as the Company or Parent, as the case may
be, continues to exercise such reasonable best efforts, neither Parent
nor the Company, respectively, may terminate this Agreement under this
Section 7.01(i);
(j) by Parent, if the Board of Directors of the Company shall
withdraw, modify or change its approval or recommendation of this
Agreement, the Merger or the other transactions contemplated hereby in
a manner adverse to Parent or shall have resolved to do so; or
(k) by the Company, if the Board of Directors of the Company
shall withdraw, modify or change its approval or recommendation of
this Agreement or the Merger in a manner adverse to Parent or shall
have resolved to do so, in each case in compliance with the provisions
of Section 4.04; or
(l) by Parent or the Company, if the 10-Day Reference Price (as
defined below) for any 10 consecutive trading day period commencing on
or after ▇▇▇▇▇ ▇,
-▇▇-
▇▇▇▇ ▇▇▇▇▇ ▇▇ below $56; provided, however, that such right to
terminate pursuant to this subsection (l) may only be exercised in
respect of any such 10-day period within three trading days following
the expiration of such 10-day period; and provided further that the
right of Parent or the Company to terminate pursuant to this
subsection (l) shall be a continuing one and may be exercised at any
time that the conditions set forth in this subsection are satisfied
notwithstanding that the Company or Parent, as the case may be, has
not exercised its right to terminate pursuant to this subsection at
any prior time that such conditions were satisfied;
(m) by the Company, if the 10-Day Reference Price for the 10
consecutive trading days ending on the fourth trading day prior to the
Parent Shareholders Meeting (the "Final 10-Day Reference Price") is
less than $56, and the Company has not agreed to change the Reverse
Stock Split Ratio as provided in clause (y) of subsection (n) below;
or
(n) by Parent, if (x) the Final 10-Day Reference Price is less
than $56 and (y) on or before the second trading day prior to the date
of the Parent Shareholders Meeting, the Company has not agreed by
notice to Parent in writing to change the Reverse Stock Split Ratio so
that each share of Parent Common Stock, par value $.10 per share,
shall be consolidated in the ratio of one share of Parent Common
Stock, par value $.20 per share, for a number of shares of Parent
Common Stock, par value $.10 per share, not greater than the number
determined by dividing the Final 10-Day Reference Price by $27;
provided that, the Reverse Stock Split Ratio shall thereafter, for all
purposes of this Agreement, be deemed to be such ratio.
"10-Day Reference Price" means the average of the Daily Per Share
Prices (as hereinafter defined) for any ten consecutive trading days. The "Daily
Per Share Price" for any trading day means the weighted average of the per share
selling prices on the NYSE of Company Common Stock (as reported in the NYSE
Composite Transactions) for that day.
As used herein, "Alternative Transaction" means any of (i) a
transaction pursuant to which any person (or group of persons) other than the
Company or its affiliates (a "Third Party") acquires or would acquire more than
25% of the outstanding shares of any class of equity securities of Parent, or,
in the case of any person (or group of persons other than the Company and its
affiliates) which has filed a statement on Schedule 13D as of the date of this
Agreement indicating that it is the beneficial owner of more than 25% of the
outstanding shares of Parent Common Stock, would acquire an additional 5% or
more of such securities, whether from Parent or pursuant to a tender offer or
exchange offer or otherwise, (ii) a merger or other business combination
involving Parent pursuant to which any Third Party acquires more than 25% of the
outstanding equity securities of Parent or the entity surviving such merger or
business combination, or (iii) any other transaction pursuant to which any Third
Party acquires or would acquire control of assets (including for this purpose
the outstanding equity securities of subsidiaries of Parent and the entity
surviving any merger or business combination including any of them) of Parent,
or any of its subsidiaries having a fair market value (as determined by the
Board of Directors of the Company in good faith) equal to more than 25% of the
fair market value of all the assets of
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Parent and its subsidiaries, taken as a whole, immediately prior to such
transaction; 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.
SECTION 7.02. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Section 7.03 and Section 8.01 hereof, and (ii) nothing herein shall relieve any
party from liability for any breach hereof.
SECTION 7.03. Fees and Expenses. (a) Except as set forth in this
Section 7.03, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated; provided, however, that
Parent and the Company shall share equally all SEC filing fees and printing
expenses incurred in connection with the printing and filing of the Joint Proxy
Statement/Prospectus (including any preliminary materials related thereto) and
the Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto.
(b) Parent shall pay the Company a fee of $150 million (the "Fee"),
plus the Company's actual, documented and reasonable out-of-pocket expenses
relating to the transactions contemplated by this Agreement (including, but not
limited to, fees and expenses of counsel and accountants and out-of-pocket
expenses (but not fees) of financial advisers) ("Expenses"), but in no event
shall such Expenses exceed $7,500,000, upon the first to occur of any of the
following events; provided that no Fee or Expenses shall be payable pursuant to
this Section 7.03(b) if this Agreement has been previously terminated and such
previous termination did not entitle the Company to receive a Fee pursuant to
this Section 7.03(b):
(i) the Final 10-Day Reference Price is equal to or greater than
$56 and either (x) the shareholders of Parent shall not have approved
each of the Reverse Stock Split, the Share Amendment, the issuance of
Parent Common Stock in the Merger, the Parent Name Change and the New
Parent Director Election on or before August 15, 1997 or (y) the
shareholders of Parent shall have affirmatively disapproved any of
such actions at any time on or before August 15, 1997; or
(ii) the shareholders of Parent shall have approved an
Acquisition Proposal (other than with the Company or its affiliates)
on or before August 15, 1997; or
(iii) if following the termination of this Agreement by the
Company pursuant to Section 7.01(l), Parent shall accept and
consummate an Acquisition Proposal at a price per share of Parent
Common Stock in excess of $29, which Acquisition Proposal is publicly
announced within 60 days of such termination; or
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(iv) the termination of this Agreement by the Company pursuant to
Section 7.01(e); or
(v) the termination of this Agreement by Parent pursuant to
Section 7.01(f); or
(vi) the termination of this Agreement by the Company pursuant to
Section 7.01(i).
(c) The Company shall pay Parent a fee of $150 million (the "Fee"),
plus Parent's actual, documented and reasonable out-of-pocket expenses relating
to the transactions contemplated by this Agreement (including, but not limited
to, fees and expenses of counsel and accountants and out-of-pocket expenses (but
not fees) of financial advisers) ("Expenses"), but in no event shall such
Expenses exceed $7,500,000, upon the first to occur of any of the following
events; provided that no Fee or Expenses shall be payable pursuant to this
Section 7.03(c) if this Agreement has been previously terminated and such
previous termination did not entitle Parent to receive a Fee pursuant to this
Section 7.03(c):
(i) the shareholders of Parent shall have approved each of the Reverse
Stock Split, the Share Amendment, the issuance of Parent Common Stock in the
Merger, the Parent Name Change and the New Parent Director Election on or before
August 15, 1997 and either (x) the shareholders of the Company shall not have
approved and adopted this Agreement by August 15, 1997 or (y) the shareholders
of the Company shall have affirmatively disapproved this Agreement at any time
on or before August 15, 1997; or
(ii) the termination of this Agreement by Parent pursuant to
Section 7.01(j); or
(iii) the termination of this Agreement by the Company pursuant
to Section 7.01(k); or
(vi) the termination of this Agreement by Parent pursuant to
Section 7.01(i).
(d) Upon a termination of this Agreement by Parent pursuant to Section
7.01(g), the Company shall pay to Parent the Expenses of Parent relating to the
transactions contemplated by this Agreement, but in no event more than
$7,500,000. Upon a termination of this Agreement by the Company pursuant to
Section 7.01(g), Parent shall pay to the Company the Expenses of the Company
relating to the transactions contemplated by this Agreement, but in no event
more than $7,500,000.
(e) The Fee and/or Expenses payable pursuant to Section 7.03(b),
Section 7.03(c) or Section 7.03(d) shall be paid within three business days
after the first to occur of any of the events described in Section 7.03(b),
Section 7.03(c) or Section 7.03(d); provided
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that, in no event shall Parent or the Company, as the case may be, be required
to pay such Fee and/or Expenses to the other party if, immediately prior to the
termination of this Agreement, the party entitled to receive such Fee and/or
Expenses was in material breach of its obligations under this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties and
Agreements; Knowledge, Etc. (a) Except as otherwise provided in this Section
8.01, the representations, warranties and agreements of each party hereto shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any other party hereto, any person controlling any such
party or any of their officers or directors, whether prior to or after the
execution of this Agreement. The representations, warranties and agreements in
this Agreement shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Section 7.01, as the case may be, except that the
agreements set forth in Article I and Article VIII and Section 5.07 and Section
5.16 shall survive the Effective Time indefinitely and those set forth in
Section 7.03 shall survive termination indefinitely. The Confidentiality Letter
shall survive termination of this Agreement as provided therein.
(b) Any disclosure made with reference to one or more Sections of the
Company Disclosure Schedule or the Parent Disclosure Schedule shall be deemed
disclosed with respect to each other section therein as to which such disclosure
is relevant provided that such relevance is reasonably apparent.
SECTION 8.02. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a person as shall be specified by like notice):
(a) If to Parent or Merger Sub:
ADT Limited
Cedar ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇▇, Esq.
(b) If to the Company:
Tyco International Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chairman
With a copy to:
Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 8.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned person; including,
without limitation, any partnership or joint venture in which the
Company (either alone, or through or together with any other
subsidiary) has, directly or indirectly, an interest of 5% or more;
(b) "beneficial owner" with respect to any shares of Company
Common Stock means a person who shall be deemed to be the beneficial
owner of such shares (i) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 of the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or
any of its affiliates or associates has, directly or indirectly, (A)
the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise, or (B) the
right to vote pursuant to any agreement, arrangement or understand-
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ing, or (iii) which are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on which banks
in the City of New York, Borough of Manhattan are required or
authorized to be closed;
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management or policies of a person, whether through the
ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company,
the Surviving Corporation, Parent or such other person, as the case
may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% of the stock
or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
SECTION 8.04. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the stockholders of the Company, no amendment may be made which
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Effective Time, any
party hereto may with respect to any other party hereto (a) extend the time for
the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
SECTION 8.06. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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SECTION 8.07. Severability. (a) If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
(b) The Company and Parent agree that the Fees provided in Section
7.03(b) and 7.03(c) are fair and reasonable in the circumstances. If a court of
competent jurisdiction shall nonetheless, by a final, non-appealable judgment,
determine that the amount of any such Fee exceeds the maximum amount permitted
by law, then the amount of such Fee shall be reduced to the maximum amount
permitted by law in the circumstances, as determined by such court of competent
jurisdiction.
SECTION 8.08. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Letter), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof.
SECTION 8.09. Assignment; Merger Sub. This Agreement shall not be
assigned by operation of law or otherwise, except that all or any of the rights
of Merger Sub hereunder may be assigned to any direct, wholly-owned subsidiary
of Parent provided that no such assignment shall relieve the assigning party of
its obligations hereunder. Parent guarantees the full and punctual performance
by Merger Sub of all the obligations hereunder of Merger Sub or any such
assignees.
SECTION 8.10. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation, other
than Section 5.07 (which is intended to be for the benefit of the Indemnified
Parties and may be enforced by such Indemnified Parties) and Section 5.16 (which
is intended to be for the benefit of the persons who are parties to the Parent
Options and the Severance Agreements and may be enforced by such persons).
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
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SECTION 8.12. Governing Law; Jurisdiction. (a) This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York applicable to contracts executed and fully performed within the State
of New York.
(b) Each of the parties hereto submits to the non-exclusive
jurisdiction of the federal courts of the United States and the courts of the
State of New York located in the City of New York, Borough of Manhattan solely
with respect to any claim or cause of action arising out of this Agreement or
the transactions contemplated hereby.
SECTION 8.13. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER
BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
[This space intentionally left blank.]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ADT LIMITED
By
-----------------------------
Name:
Title:
LIMITED APACHE, INC.
By
-----------------------------
Name:
Title:
TYCO INTERNATIONAL LTD.
By
-----------------------------
Name:
Title:
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ADT LIMITED
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer and
Executive Vice President
LIMITED APACHE, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
TYCO INTERNATIONAL LTD.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President-Treasurer
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ANNEX A
The following persons shall be nominated for election pursuant to the
New Parent Director Election (as defined in Section 5.03):
(i) The current Chairman of the Board and Chief Executive Officer
of the Company and each other member of the Board of Directors of the
Company serving on the date of this Agreement, or any other person
selected by the Company and reasonably acceptable to Parent, such that
the total number of directors nominated in accordance with this clause
(i) shall be eight (8); and
(ii) The current Chairman of the Board and Chief Executive
Officer of Parent and any two independent members of the Board of
Directors of Parent serving on the date of this Agreement, or any
other person selected by Parent and reasonably acceptable to the
Company, such that the total number of directors nominated in
accordance with this clause (ii) shall be three (3).
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ANNEX B
ADT Holdings, Inc.
ADT Operations, Inc.
ADT Security Services, Inc.
ADT Automotive Holdings, Inc.
ADT Automotive, Inc.
ADT Security Services Canada, Inc.
ADT Group N.V.
ADT Holdings B.V.
ADT Services AG
ADT Monitoring Services AG
ADT Franchising AG
ADT (UK) Holdings plc
ADT Finance plc
Electric Protection Services Limited
Modern Security Systems Ltd.
Sandalwood
ADT Luxembourg SA
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ANNEX C
Carlisle Plastics, Inc.
The Earth Technology Corporation (USA)
▇▇▇▇▇▇▇▇ Corporation
Allied Tube & Conduit Corp.
Ludlow Corporation
▇▇▇▇▇▇▇ Co.
Simplex Technologies
Water Holdings Corp.
Ansul, Incorporated
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