EXHIBIT 99.40
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
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
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 Severance 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
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
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 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 By-Laws 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 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 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 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.
(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 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 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 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 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 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, 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.
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 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 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 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 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 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 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 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 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).
(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 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
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.
(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.
(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 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 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 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.
(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 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 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.
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 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.
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 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;
(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 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 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 organization 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 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 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 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 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 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 By-Laws, 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.
(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 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.
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 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.
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 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 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.
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 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 April 8, 1997 shall be 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 more 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
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
(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 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.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
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Attention: ▇.▇. ▇▇▇▇▇▇▇▇, Esq.
(b) If to the Company:
Tyco International Ltd.
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chairman
With a copy to:
Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇
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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 understanding,
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.
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.
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.]
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.
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
and Executive Vice
President
LIMITED APACHE, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
TYCO INTERNATIONAL LTD.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President-Treasurer
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).
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
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