XXXXXX PROTECTION GROUP, INC.,
TYCO INTERNATIONAL LTD.
and
T9 ACQUISITION CORP.
___________________________________________
___________________________________________
AGREEMENT AND PLAN OF MERGER
______________________________
______________________________
___________________________________________
___________________________________________
Dated as of December 28, 1997
_________________________________________________________
_________________________________________________________
TABLE OF CONTENTS
PAGE
ARTICLE I.
TENDER OFFER AND MERGER
1.1. The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2. Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.3. Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.4. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.5. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.6. Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.7. Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.8. Surrender of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.9. Options, Warrants and Convertible Securities . . . . . . . . . . . . . .9
1.10. Certificate of Incorporation and Bylaws. . . . . . . . . . . . . . . . 11
1.11. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . 12
1.12. Other Effects of Merger. . . . . . . . . . . . . . . . . . . . . . . . 12
1.13. Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.14. Additional Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.15. Merger Without Meeting of Stockholders.. . . . . . . . . . . . . . . . 13
1.16. Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . 13
1.17. Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . 14
2.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.3. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.4. Authorization; Binding Agreement . . . . . . . . . . . . . . . . . . . 16
2.5. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 16
2.6. No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.7. Securities Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.8. Company Financial Statements . . . . . . . . . . . . . . . . . . . . . 18
2.9. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . 18
2.10. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . 18
2.11. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.12. Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.13. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.14. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.15. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 20
2.16. Taxes and Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.17. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . 25
2.18. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.19. Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.20. Limitation on Business Conduct . . . . . . . . . . . . . . . . . . . . 27
2.21. Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.22. Leased Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.23. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . 28
2.24. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.25. Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.26. Interested Party Transactions. . . . . . . . . . . . . . . . . . . . . 29
2.27. Alarm Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.28. Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . 30
i
2.29. Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.30. Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.31. Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
3.1. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . 31
3.2. Authorization; Binding Agreement . . . . . . . . . . . . . . . . . . . 31
3.3. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4. No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.5. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.6. Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . 32
3.7. Financing Arrangements.. . . . . . . . . . . . . . . . . . . . . . . . 32
3.8. No Prior Activities. . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV.
ADDITIONAL COVENANTS OF THE COMPANY
4.1. Conduct of Business of the Company and the Company Subsidiaries . 33
4.2. Notification of Certain Matters. . . . . . . . . . . . . . . . . . . . 36
4.3. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . 36
4.4. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.5. Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . 37
4.6. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.7. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.8. No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.9. SEC and Stockholder Filings. . . . . . . . . . . . . . . . . . . . . . 40
4.10. Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V.
ADDITIONAL COVENANTS OF PURCHASER AND PARENT
5.1. Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . 40
5.2. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.3. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.4. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 41
5.5. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.6. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.7. Guarantee of Parent. . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VI.
MERGER CONDITIONS
6.1. Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.3. No Injunction or Action. . . . . . . . . . . . . . . . . . . . . . . . 43
6.4. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VII.
TERMINATION AND ABANDONMENT
7.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.2. Effect of Termination and Abandonment. . . . . . . . . . . . . . . . . 45
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ARTICLE VIII.
MISCELLANEOUS
8.1. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.2. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . 47
8.3. Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . 47
8.4. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.5. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.6. Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . 49
8.7. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.8. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.10. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.13. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.14. Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.15. Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Annex I
Glossary of Defined Terms
iii
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is made and
entered into as of December 28, 1997, by and among XXXXXX PROTECTION GROUP,
INC., a Delaware corporation (the "COMPANY"), TYCO INTERNATIONAL LTD., a Bermuda
company ("PARENT"), and T9 ACQUISITION CORP., a Delaware corporation and an
indirect wholly owned subsidiary of Parent ("PURCHASER").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company, Purchaser
and Parent have approved the acquisition by Purchaser of the Company; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser will
make a cash tender offer (the "OFFER") to acquire all of the issued and
outstanding shares ("SHARES") of common stock, $.01 par value, of the Company
("COMPANY STOCK"), for $17.00 per Share, or such higher price as may be paid in
the Offer (the "PER SHARE AMOUNT"), in each case net to the seller in cash
without interest; and
WHEREAS, also in furtherance of such acquisition, the respective
Boards of Directors of the Company, Purchaser and Parent have each approved the
merger (the "MERGER") of Purchaser with and into the Company following the Offer
in accordance with the laws of the State of Delaware; and
WHEREAS, the Board of Directors of the Company has approved and
resolved to recommend acceptance of the Offer and the Merger to the holders of
Shares and has determined that the consideration to be paid for each Share in
the Offer and the Merger is fair to and in the best interest of the holders of
such Shares and to recommend that the holders of such Shares accept the Offer
and approve this Agreement and the transactions contemplated hereby; and
WHEREAS, the Company, Purchaser and Parent desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
TENDER OFFER AND MERGER
1.1. THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with SECTION 7.1 hereof and that none of the
events set forth in ANNEX I hereto shall have occurred and be existing,
Purchaser shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "SECURITIES EXCHANGE ACT")) the Offer as promptly as
practicable, but in no event later than five business days following the
first public announcement of the Offer, and shall use reasonable best efforts
to consummate the Offer. The obligation of Purchaser to accept for payment
any Shares tendered shall be subject to the satisfaction of only those
conditions set forth in ANNEX I hereto. The Per Share Amount shall be net to
each seller in cash, subject to reduction only for any applicable federal
back-up withholding or stock transfer taxes payable by such seller. The
Company agrees that no Shares held by the Company (or any of its direct or
indirect subsidiaries) will be tendered pursuant to the Offer.
Without the prior written consent of the Company, Purchaser shall
not (i) decrease the Per Share Amount or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought in the Offer,
(iii) amend or waive satisfaction of the Minimum Condition (as defined in ANNEX
I hereto) or (iv) impose additional conditions to the Offer or amend any other
term of the Offer in any manner adverse to the holders of the Shares. The Offer
shall initially expire twenty (20) business days after the date of its
commencement, unless this Agreement is terminated in accordance with ARTICLE VII
hereof, in which case the Offer (whether or not previously extended in
accordance with the terms hereof) shall expire on such date of termination.
Purchaser agrees that it shall not terminate or withdraw the Offer or extend the
expiration date of the Offer unless at the expiration date of the Offer the
conditions to the Offer described in ANNEX I hereto shall not have been
satisfied or earlier waived. Notwithstanding the foregoing, Purchaser may,
without the consent of the Company, extend the Offer at any time, and from time
to time, (x) if at the then scheduled expiration date of the Offer any of the
conditions to Purchaser's obligation to accept for payment and pay for Shares
shall not have been satisfied or waived, until such time as such conditions are
satisfied or waived; (ii) for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or its staff applicable to the Offer; or (iii) if all conditions to Purchaser's
obligation to accept for payment and pay for Shares are satisfied or waived but
the number of Shares tendered is less than 90% of the then outstanding number of
Shares, for an aggregate period of not more than ten (10) business days (for all
such extensions) beyond the latest expiration date that would be permitted under
clause (i) or (ii) of this sentence.
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The Offer shall be made by means of an offer to purchase (the
"OFFER TO PURCHASE") having only the conditions set forth in ANNEX I hereto. As
soon as practicable on the date the Offer is commenced, Purchaser shall file
with the SEC a Tender Offer Statement on Schedule 14D-1 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-1") with respect to the
Offer that will comply in all material respects with the provisions of, and
satisfy in all material respects the requirements of, such Schedule 14D-1 and
all applicable federal securities laws and will contain (including as an
exhibit) or incorporate by reference the Offer to Purchase and forms of the
related letter of transmittal and summary advertisement (which documents,
together with any supplements or amendments thereto, and any other SEC schedule
or form which is filed in connection with the Offer and related transactions,
are referred to collectively herein as the "OFFER DOCUMENTS"). Each of Parent,
Purchaser and the Company agrees promptly to correct any information provided by
it for use in the Schedule 14D-1 or the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect and to supplement the information provided by it specifically for use in
the Schedule 14D-1 or the Offer Documents to include any information that shall
become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and Purchaser further
agrees to take all steps necessary to cause the Schedule 14D-1, as so corrected
or supplemented, to be filed with the SEC and the Offer Documents, as so
corrected or supplemented, to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. The
Company and its counsel shall be given a reasonable opportunity to review and
comment on any Offer Documents before they are filed with the SEC.
Upon the terms and subject to the conditions of the Offer,
Purchaser shall accept for payment and pay for Shares as soon as permitted under
the terms of the Offer and applicable law.
-3-
1.2. COMPANY ACTION. (a) The Company hereby approves and consents
to the Offer and represents and warrants that the Board of Directors of the
Company, at a meeting duly called and held on December 26, 1997, at which a
majority of the Directors was present, duly approved and adopted this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
recommended that stockholders of the Company accept the Offer, tender their
Shares pursuant to the Offer and approve this Agreement and the transactions
contemplated hereby, including the Merger, and determined that this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
are fair to and in the best interests of the stockholders of the Company. The
Company hereby consents to the inclusion in the Offer Documents of such
recommendation of the Board of Directors of the Company. The Company represents
that its Board of Directors has received the written opinion (the "FAIRNESS
OPINION") of X.X. Xxxxxx Securities Inc. (the "FINANCIAL ADVISOR") that the
proposed consideration to be received by the holders of Shares pursuant to the
Offer and the Merger is fair to such holders from a financial point of view.
The Company has been authorized by the Financial Advisor to permit, subject to
the prior review and consent by the Financial Advisor (such consent not to be
unreasonably withheld), the inclusion of the Fairness Opinion (or a reference
thereto) in the Offer Documents, the Schedule 14D-9 (as hereinafter defined) and
the Proxy Statement (as hereinafter defined).
The Company shall file with the SEC, as promptly as practicable
after the filing by Parent of the Schedule 14D-1 with respect to the Offer, a
Tender Offer Solicitation/ Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the "SCHEDULE 14D-9") that will
comply in all material respects with the provisions of all applicable federal
securities laws. The Company shall mail such Schedule 14D-9 to the stockholders
of the Company as promptly as practicable after the commencement of the Offer.
The Schedule 14D-9 and the Offer Documents shall contain the recommendations of
the Board of Directors of the Company described in SECTION 1.2(A) hereof. The
Company agrees promptly to correct the Schedule 14D-9 if and to the extent that
it shall become false or misleading in any material respect (and each of Parent
and Purchaser, with respect to written information supplied by it specifically
for use in the Schedule 14D-9, shall promptly notify the Company of any required
corrections of such information and cooperate with the Company with respect to
correcting such information) and to supplement the information contained in the
Schedule 14D-9 to include any information that shall become necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and the Company shall take all steps necessary to
cause the Schedule 14D-9 as so corrected or supplemented to be filed with the
SEC and disseminated to holders of Shares to the extent required by applicable
federal securities laws. Purchaser and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 before it is filed with
the SEC.
-4-
In connection with the Offer, the Company shall promptly upon
execution of this Agreement furnish Purchaser with mailing labels containing the
names and addresses of all record holders of Shares and security position
listings of Shares held in stock depositories, each as of a recent date, and
shall promptly furnish Purchaser with such additional information reasonably
available to the Company, including updated lists of stockholders, mailing
labels and security position listings, and such other information and assistance
as Purchaser or its agents may reasonably request for the purpose of
communicating the Offer to the record and beneficial holders of Shares.
1.3. DIRECTORS. Promptly upon the purchase by Parent of Shares
pursuant to the Offer (and provided that the Minimum Condition has been
satisfied), Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
will give Parent, subject to compliance with Section 14(f) of the Securities
Exchange Act, representation on the Board of Directors of the Company equal to
at least that number of directors which equals the product of the total number
of directors on the Board of Directors of the Company (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Parent or any affiliate of
Parent (including for purposes of this SECTION 1.3 such Shares as are accepted
for payment pursuant to the Offer, but excluding Shares held by the Company)
bears to the number of Shares outstanding. At such time, if requested by
Parent, the Company will also cause each committee of the Board of Directors of
the Company to include persons designated by Parent constituting the same
percentage of each such committee as Parent's designees are of the Board of
Directors of the Company. The Company shall, upon request by Parent, promptly
increase the size of the Board of Directors of the Company or exercise
reasonable best efforts to secure the resignations of such number of directors
as is necessary to enable Parent's designees to be elected to the Board of
Directors of the Company in accordance with the terms of this SECTION 1.3 and to
cause Parent's designees so to be elected; PROVIDED, HOWEVER, that, in the event
that Parent's designees are appointed or elected to the Board of Directors of
the Company, until the Effective Time (as hereinafter defined) the Board of
Directors of the Company shall have at least two directors who are directors on
the date hereof and each of whom is neither an officer of the Company nor a
designee, shareholder, affiliate or associate (within the meaning of the federal
securities laws) of Parent (such directors, the "INDEPENDENT DIRECTORS");
PROVIDED FURTHER, that if no Independent Directors remain, the other directors
shall designate one person to fill one of the vacancies who shall be neither an
officer of the Company nor a designee, shareholder, affiliate or associate of
Parent, and such person shall be deemed to be an Independent Director for
purposes of this Agreement. Subject to applicable law, the Company shall
promptly take all action necessary pursuant to Section 14(f) of the Securities
Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its
obligations under this SECTION 1.3 and
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shall include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer (or in an amendment thereof or an information
statement pursuant to Rule 14f-1 if Parent has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this SECTION 1.3. Parent will supply the Company and be
solely responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by such Section 14(f) and Rule 14f-
1. Notwithstanding anything in this Agreement to the contrary, prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
shall be required to (i) amend or terminate this Agreement on behalf of the
Company, (ii) exercise or waive any of the Company's rights or remedies
hereunder, (iii) extend the time for performance of Parent's obligations
hereunder, (iv) take any other action by the Company in connection with this
Agreement required to be taken by the Board of Directors of the Company or (v)
amend the Company's Certificate of Incorporation or the Company's Bylaws, each
as in effect on the date of this Agreement.
1.4. THE MERGER. Upon the terms and subject to the conditions of
this Agreement, the Merger shall be consummated in accordance with the Delaware
General Corporation Law (the "DELAWARE CODE"). At the Effective Time (as
defined in SECTION 1.5 hereof), upon the terms and subject to the conditions of
this Agreement, Purchaser shall be merged with and into the Company in
accordance with the Delaware Code and the separate existence of Purchaser shall
thereupon cease, and the Company, as the surviving corporation in the Merger
(the "SURVIVING CORPORATION"), shall continue its corporate existence under the
laws of the State of Delaware as an indirect subsidiary of Parent. The parties
shall prepare and execute a certificate of merger (the "CERTIFICATE OF MERGER")
in order to comply in all respects with the requirements of the Delaware Code
and with the provisions of this Agreement.
1.5. EFFECTIVE TIME. The Merger shall become effective at the time
of the filing of the Certificate of Merger with the Secretary of State of
Delaware in accordance with the applicable provisions of the Delaware Code or at
such later time as may be specified in the Certificate of Merger. As soon as
practicable after all of the conditions set forth in ARTICLE VI of this
Agreement have been satisfied or waived by the party or parties entitled to the
benefit of the same, the parties hereto shall cause the Merger to become
effective. Parent and the Company shall mutually determine the time of such
filing and the place where the closing of the Merger (the "CLOSING") shall
occur. The time when the Merger shall become effective is herein referred to as
the "EFFECTIVE TIME", and the date on which the Effective Time occurs is herein
referred to as the "CLOSING DATE."
1.6. CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of Purchaser, the Company or the
holder of any of the securities
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specified below:
Each Share issued and outstanding immediately before the Effective
Time (other than any Dissenting Shares (as hereinafter defined) and Shares to be
canceled pursuant to SECTION 1.6(B)) shall be canceled and extinguished and be
converted into the right to receive the Per Share Amount in cash payable to the
holder thereof, without interest, upon surrender of the certificate representing
such Share in accordance with SECTION 1.8 hereof. From and after the Effective
Time, the holders of certificates evidencing ownership of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided for herein or by applicable
Law.
Each Share held in the treasury of the Company and each Share owned
by Parent or any direct or indirect wholly owned subsidiary of Parent
immediately before the Effective Time shall be canceled and extinguished, and no
payment or other consideration shall be made with respect thereto.
The shares of Purchaser common stock outstanding immediately prior
to the Merger shall be converted into 1,000 shares of the common stock of the
Surviving Corporation (the "SURVIVING CORPORATION COMMON STOCK"), which shares
of the Surviving Corporation Common Stock shall constitute all of the issued and
outstanding capital stock of the Surviving Corporation and shall be owned by an
indirect subsidiary of Parent.
1.7. DISSENTING SHARES. (a) Notwithstanding any provision of this
Agreement to the contrary, any Shares issued and outstanding immediately prior
to the Effective Time and held by a holder who has demanded and perfected his
demand for appraisal of his Shares in accordance with the Delaware Code
(including but not limited to Section 262 thereof), and as of the Effective Time
has neither effectively withdrawn nor lost his right to such appraisal
("DISSENTING SHARES"), shall not be converted into or represent a right to
receive cash pursuant to SECTION 1.6 hereof, but the holder thereof shall be
entitled to only such rights as are granted by the Delaware Code.
Notwithstanding the provisions of SECTION 1.7(A) hereof, if any
holder of Shares who demands appraisal of his Shares under the Delaware Code
shall effectively withdraw or lose (through failure to perfect or otherwise) his
right to appraisal, then as of the Effective Time or the occurrence of such
event, whichever occurs later, such holder's Shares shall automatically be
converted into and represent only the right to receive cash as provided in
SECTION 1.6 hereof, without interest thereon, upon surrender of the certificate
or certificates representing such Shares.
The Company shall give Purchaser (i) prompt notice of any written
demands for appraisal or payment of the fair value of any Shares, withdrawals of
such demands and any other instruments served pursuant to the Delaware Code
received
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by the Company after the date hereof and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
Delaware Code. The Company shall not voluntarily make any payment with respect
to any demands for appraisal and shall not, except with the prior written
consent of Parent, settle or offer to settle any such demands.
1.8. SURRENDER OF SHARES. (a) Prior to the Effective Time,
Purchaser shall appoint Xxxxx Xxxxxx Shareholder Services or such other
commercial bank or trust company designated by Purchaser and reasonably
acceptable to the Company to act as exchange agent hereunder (the "Exchange
Agent") for the payment of the Per Share Amount upon surrender of
certificates representing the Shares. All of the fees and expenses of the
Exchange Agent shall be borne by Purchaser.
(b) Parent shall cause the Surviving Corporation to provide the
Exchange Agent with cash in amounts necessary to pay for all of the Shares
pursuant to SECTION 1.8(C) hereof when and as such amounts are needed by the
Exchange Agent.
(c) On the Closing Date, Purchaser shall instruct the Exchange Agent
to mail to each holder of record of a certificate representing any Shares
canceled upon the Merger pursuant to SECTION 1.6(A) hereof, within five business
days of receiving from the Company a list of such holders of record, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates shall pass, only upon delivery of the
certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the certificates. Each holder of a certificate or
certificates representing any Shares canceled upon the Merger pursuant to
SECTION 1.6(A) hereof may thereafter surrender such certificate or certificates
to the Exchange Agent, as agent for such holder, to effect the surrender of such
certificate or certificates on such holder's behalf for a period ending one year
after the Effective Time. Upon the surrender of certificates representing the
Shares, Parent shall cause the Exchange Agent to pay the holder of such
certificates in exchange therefor cash in an amount equal to the Per Share
Amount multiplied by the number of Shares represented by such certificate.
Until so surrendered, each such certificate (other than certificates
representing Dissenting Shares) shall represent solely the right to receive the
aggregate Per Share Amount relating thereto.
(d) If payment of cash in respect of canceled Shares is to be made to
a person other than the person in whose name a surrendered certificate or
instrument is registered, it shall be a condition to such payment that the
certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the certificate or
instrument surrendered or shall have established to the satisfaction of Parent
or the
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Exchange Agent that such tax either has been paid or is not payable.
(e) At the Effective Time, the stock transfer books of the Company
shall be closed, and no transfer of Shares shall be made thereafter, other than
transfers of Shares that have occurred prior to the Effective Time. In the
event that, after the Effective Time, certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for cash as provided
in SECTION 1.6(A).
(f) The Per Share Amount paid in the Merger shall be net to the
holder of Shares in cash, and without interest thereon subject to reduction only
for any applicable federal back-up withholding or stock transfer taxes payable
by such holder.
(g) Promptly following the date which is one year after the Effective
Time, the Exchange Agent shall deliver to Parent all cash, certificates and
other documents in its possession relating to the transactions contemplated
hereby, and the Exchange Agent's duties shall terminate. Thereafter, each
holder of a certificate representing Shares (other than certificates
representing Dissenting Shares and certificates representing Shares held by
Parent or in the treasury of the Company) may surrender such certificate to the
Surviving Corporation and (subject to any applicable abandoned property, escheat
or similar law) receive in consideration therefor the aggregate Per Share Amount
relating thereto, without any interest thereon.
(h) None of the Company, Parent, the Surviving Corporation or the
Exchange Agent shall be liable to any holder of Shares for any cash delivered to
a public official pursuant to any abandoned property, escheat or similar law,
rule, regulation, statute, order, judgment or decree.
1.9. OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES. (a) Each of the
Company and Parent shall take all reasonable actions necessary to provide that
all then outstanding options to purchase Shares, whether or not then exercisable
or vested (I) under the Company's 1996 Stock Incentive Plan and (II) if and to
the extent required by the terms of the Company Option Plans (as hereinafter
defined) other than the Company's 1996 Stock Incentive Plan, under such other
Company Option Plans, shall become fully exercisable and vested upon the
consummation of the Offer. Holders of options under the Company Option Plans
("COMPANY OPTIONS") that become fully exercisable and vested upon the
consummation of the Offer in accordance with the provisions of the preceding
sentence will have a period of sixty days following the consummation of the
Offer to surrender their options to the Company in exchange for cash equal to
the excess of (i) the aggregate value of the Shares underlying the options,
based on the Per Share Amount, over (ii) the aggregate exercise price for the
Shares underlying the options. Each of the Company and Parent shall take all
reasonable actions necessary to provide that, upon consummation of the Merger,
all then outstanding
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Company Options, whether or not then exercisable or vested if and to the extent
so provided in the applicable Company Option Plan, shall be converted into the
right to receive, at the election of the holder, either (1) in cash, the
aggregate value of the Shares underlying the options, based on the Per Share
Amount, less the aggregate exercise price for the Shares underlying the options,
or (2) options, exercisable on the same terms and conditions as the surrendered
options (except that the option received in exchange shall be immediately
exercisable) to acquire that number of common shares, par value $.20, of Parent
("PARENT SHARES") determined by multiplying, in the case of each option, (A) the
number of Shares for which the surrendered option was exercisable immediately
prior to the Effective Time by (B) a fraction, the numerator of which is the Per
Share Amount and the denominator of which is the closing price per Parent Share
on the New York Stock Exchange on the trading day immediately preceding the
Closing Date. The exercise price per Parent Share for each new option issued
pursuant to the foregoing clause (2) shall be an amount equal to the aggregate
exercise price for the Shares underlying the surrendered option divided by the
number of Parent Shares for which such new option is exercisable. "COMPANY
OPTION PLANS" shall mean the Company's Amended and Restated Senior Executives'
Option Plan, the Company's 1992 Directors' Option Plan and the Company's 1996
Stock Incentive Plan.
(b) Each of the Company and Parent shall take all reasonable actions
necessary so that the Warrants expiring August 30, 2002 (except as otherwise
provided therein) to purchase 166,666 shares of Company Stock at a price of
$9.75 per share, subject to adjustment (the "BANK WARRANTS"), shall be
exercisable, from and after the Effective Time, for an amount of cash equal in
the aggregate to the Per Share Amount multiplied by the number of Shares for
which such warrants were exercisable immediately prior to the Effective Time.
Each of the Company and Parent shall take all reasonable actions necessary so
that the Warrants expiring August 13, 2002 to purchase 203,033 shares of Company
Stock at a price of $10.17 per share, subject to adjustment, and the Warrants
expiring August 1 2004 to purchase 685,714 shares of Company Stock at a price of
$4.58 per share, subject to adjustment (collectively, the "OTHER WARRANTS" and,
with the Bank Warrants, the "COMPANY WARRANTS"), shall be exercisable, from and
after the Effective, at the election of the holder as provided in the applicable
Other Warrant, for either (i) an amount of cash equal in the aggregate to the
Per Share Amount multiplied by the number of Shares for which such warrants were
exercisable immediately prior to the Effective Time or (ii) a number of Parent
Shares equal to the product of (I) the number of Shares for which such warrants
were exercisable immediately prior to the Effective Time and (II) a fraction,
the numerator of which is the Per Share Amount and the denominator of which is
the Current Market Price (as defined in the applicable Other Warrant) of the
Parent Shares on the trading day immediately preceding the Closing Date. The
exercise price per Parent Share under each Other Warrant, as adjusted pursuant
to the foregoing clause (ii), shall be an amount equal to the aggregate exercise
price for the Shares for which such warrant was exercisable prior to such
adjustment divided by the number of Parent Shares for which such
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warrant is exercisable as a result of such adjustment. In addition, the Company
shall deliver to the holders of the applicable Other Warrants notice of the
Merger, and the Parent shall deliver to the holders of the applicable Other
Warrants the instruments of assumption and legal opinions required to be
delivered, pursuant to the terms of the applicable Other Warrants, in connection
with the Merger. Notwithstanding the forgoing provisions of this SECTION 1.9(B),
any holder exercising a Company Warrant for cash in accordance with the
provisions of this Section 1.9(b) shall not be required to pay the exercise
price thereof and instead may receive in the aggregate upon exercise the
difference between (A) the Per Share Amount multiplied by the number of Shares
for which such warrants were exercisable immediately prior to the Effective Time
and (B) the aggregate exercise price for the Shares underlying such warrants.
(c) Each of the Company and Parent shall take all reasonable actions
necessary so that the Company's Subordinated Convertible Debentures convertible
into 24,810 shares of Company Stock, subject to adjustment (the "COMPANY
DEBENTURES"), shall be convertible, from and after the Effective Time, into an
amount of cash equal to the product of the number of Shares into which such
Company Debentures were convertible immediately prior to the Effective Time
multiplied by the Per Share Amount. The Company shall deliver to the holders of
the Company Debentures notice of the Merger.
1.10. CERTIFICATE OF INCORPORATION AND BYLAWS. Subject to SECTION
5.5 hereof, unless otherwise determined by Parent prior to the Effective Time,
at and after the Effective Time (a) the Restated Certificate of Incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by the Delaware Code and such Certificate of Incorporation;
PROVIDED, HOWEVER, that (i) Article Fourth shall be amended and restated in its
entirety to provide that the capital stock of the Surviving Corporation shall
consist of 1,000 shares of Common Stock, par value $.01 per share; (ii) Article
Fifth shall be amended and restated in its entirety to provide that the
Surviving Corporation's Board shall consist of not less than three members, all
of a single class, with the exact number to be fixed from time to time by
resolution of the Board of Directors; (iii) Article Sixth shall be amended by
deleting the second sentence thereof; (iv) Article Seventh shall be amended by
deleting the second sentence thereof; and (v) Article Eighth shall be deleted;
and (b) the Bylaws of the Surviving Corporation shall be the Bylaws of Purchaser
in effect at the Effective Time (subject to any subsequent amendments).
1.11. DIRECTORS AND OFFICERS. At and after the Effective Time, the
directors of Purchaser immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, and the officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their successors are duly elected or
appointed and qualified.
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1.12. OTHER EFFECTS OF MERGER. The Merger shall have all further
effects as specified in the applicable provisions of the Delaware Code.
1.13. PROXY STATEMENT. (a) Following the consummation of the Offer
and if required by the Securities Exchange Act because of action by the
Company's stockholders necessary in order to consummate the Merger, the Company
shall prepare and file with the SEC and, when cleared by the SEC, shall mail to
stockholders, a proxy statement in connection with a meeting of the Company's
stockholders to vote upon the adoption of this Agreement and the Merger and the
transactions contemplated hereby and thereby (the "COMPANY PROPOSALS"), or an
information statement, as appropriate, satisfying all requirements of the
Securities Exchange Act (such proxy or information statement in the form mailed
by the Company to its stockholders, together with any and all amendments or
supplements thereto, is herein referred to as the "PROXY STATEMENT").
Parent will furnish the Company with such information concerning
Parent and its subsidiaries as is necessary in order to cause the Proxy
Statement, insofar as it relates to Parent and its subsidiaries, to comply with
applicable Law. Parent agrees promptly to advise the Company if, at any time
prior to the meeting of stockholders of the Company referenced herein, any
Parent Information (as defined) in the Proxy Statement is or becomes incorrect
or incomplete in any material respect and to provide the Company with the
information needed to correct such inaccuracy or omission. Parent will furnish
the Company with such supplemental information as may be necessary in order to
cause the Proxy Statement, insofar as it relates to Parent and its subsidiaries,
to comply with applicable Law after the mailing thereof to the stockholders of
the Company.
The Company and Parent agree to cooperate in making any
preliminary filings of the Proxy Statement with the SEC, as promptly as
practicable, pursuant to Rule 14a-6 under the Securities Exchange Act.
The Company shall provide Parent for its review a copy of the
Proxy Statement prior to each filing thereof, with reasonable time and
opportunity for such review. Parent authorizes the Company to utilize in the
Proxy Statement the information concerning Parent and its subsidiaries provided
to the Company in connection with, or contained in, the Proxy Statement.
1.14. ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Purchaser or the Company or otherwise to carry out this
Agreement, the officers and directors of the Company and Purchaser shall be
authorized to execute and deliver, in the name and on behalf of Purchaser or the
Company,
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all such deeds, bills of sale, assignments and assurances and to take and do, in
the name and on behalf of Purchaser or the Company, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
1.15. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the
foregoing provisions of this ARTICLE I, in the event that Purchaser, or any
other direct or indirect subsidiary of Parent, shall acquire at least 90 percent
of the outstanding shares of Company Stock, the parties hereto agree to take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer without a meeting of
stockholders of the Company, in accordance with Section 253 of the Delaware
Code.
1.16. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates representing shares of Company Stock shall have been lost, stolen
or destroyed, the Exchange Agent shall make such payment in exchange for such
lost, stolen or destroyed certificates upon the making of an affidavit of that
fact by the holder thereof; PROVIDED, HOWEVER, that Parent may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against Parent or the Exchange Agent with respect to the certificates alleged to
have been lost, stolen or destroyed.
1.17. MATERIAL ADVERSE EFFECT. When used in connection with the
Company or any 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
similar changes, effects or circumstances that have occurred during the
period relevant to the determination of such Material Adverse Effect, is or
is reasonably likely to be materially adverse to the business, assets
(including intangible assets), financial condition or results of operations
of the Company and its subsidiaries or Parent and its subsidiaries, as the
case may be, in each case taken as a whole. Changes, effects and
circumstances referred to in any of the provisions of SECTION 2.15 hereof
shall be deemed similar for purposes of this SECTION 1.17.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser that,
except as set forth in the correspondingly numbered Sections of the letter,
dated the date hereof, from the Company to Parent (the "COMPANY DISCLOSURE
LETTER"):
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2.1. ORGANIZATION AND GOOD STANDING. The Company and each of the
Company Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company and
each of the Company Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not reasonably be
expected to have a Material Adverse Effect. The Company has heretofore made
available to Parent accurate and complete copies of the Certificate of
Incorporation and Bylaws, as currently in effect, of the Company. For purposes
of this Agreement, the term "COMPANY SUBSIDIARY" shall mean any "Subsidiary" (as
such term is defined in Rule 1-02 of Regulation S-X of the SEC) of the Company.
2.2. CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of (a) 12,000,000 shares of Company Stock, and (b)
1,000,000 shares of undesignated preferred stock, par value $1.00 per share. As
of November 14, 1997, (a) 6,317,291 shares of Company Stock were issued and
outstanding, (b) no shares of preferred stock were issued and outstanding and
(c) 7,142 shares of Company Stock were issued and held in the treasury of the
Company. As of November 14, 1997, (i) no shares of Company Stock or preferred
stock were held by subsidiaries of the Company, (ii) 2,087,734 shares of Company
Stock were reserved for future issuance pursuant to outstanding stock options
granted under the Company Option Plans, (iii) 1,055,413 shares of Company Stock
were reserved for future issuance upon exercise of Company Warrants and (iv)
24,810 shares of Company Stock were reserved for issuance upon conversion of the
Company Debentures. No material change in the capitalization of the Company has
occurred between November 14, 1997 and the date hereof. No other capital stock
of the Company is authorized or issued. All issued and outstanding shares of
the Company Stock are duly authorized, validly issued, fully paid and
non-assessable. Except as set forth in the Company Securities Filings (as
hereinafter defined) or as otherwise contemplated by this Agreement, as of the
date hereof, there are no outstanding rights, subscriptions, warrants, puts,
calls, unsatisfied preemptive rights, options or other agreements of any kind
relating to any of the outstanding, authorized but unissued or treasury shares
of the capital stock or any other security of the Company, and there is no
authorized or outstanding security of any kind convertible into or exchangeable
for any such capital stock or other security. Except as disclosed in the
Company Securities Filings, there are no obligations, contingent or other, of
the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any shares of 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 or any other entity, other
than pursuant to intercompany agreements, the Credit Agreement (as
-14-
defined in the Company Disclosure Letter), and guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. The Company has
in effect no shareholder rights plan or any similar plan or arrangement pursuant
to which the Company's stockholders have or may obtain the right to acquire
capital stock of the Company at a price below the market price thereof.
2.3. SUBSIDIARIES. SECTION 2.3 of the Company Disclosure Letter
sets forth the name and jurisdiction of incorporation of each Company
Subsidiary, each of which is wholly owned by the Company except as otherwise
indicated in said SECTION 2.3 of the Company Disclosure Letter. All of the
capital stock and other interests of the Company Subsidiaries so held by the
Company are owned by it or a Company Subsidiary as indicated in said SECTION
2.3 of the Company Disclosure Letter, free and clear of any claim, lien,
encumbrance or security interest with respect thereto. All of the
outstanding shares of capital stock of each of the Company Subsidiaries
directly or indirectly held by the Company are duly authorized, validly
issued, fully paid and non-assessable and were issued free of preemptive
rights and in compliance with applicable Laws. No equity securities or other
interests of any of the Company Subsidiaries are or may become required to be
issued or purchased by reason of any options, warrants, rights to subscribe
to, puts, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any
capital stock of any Company Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Company Subsidiary
is bound to issue additional shares of its capital stock, or options,
warrants or rights to purchase or acquire any additional shares of its
capital stock or securities convertible into or exchangeable for such shares.
Except as set forth in the Company Securities Filings, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity, with respect to which interest the Company has
invested or is required to invest $100,000 or more, excluding securities in
any publicly traded company held for investment by the Company and comprising
less than five percent of the outstanding stock of such company.
2.4. AUTHORIZATION; BINDING AGREEMENT. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, including, but not limited to, the Merger, have been
duly and validly authorized by the Company's Board of Directors, and no other
corporate proceedings on the part of the Company or any Company Subsidiary
are necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions contemplated hereby (other than the adoption of
this Agreement by the stockholders holding a majority of the outstanding
shares of Company Stock of the Company in accordance with the Delaware Code).
This Agreement has been duly and
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validly executed and delivered by the Company and constitutes the legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by principles
of equity regarding the availability of remedies ("ENFORCEABILITY EXCEPTIONS").
2.5. GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("CONSENT") any nation
or government, any state or other political subdivision thereof or any entity,
authority or body exercising executive, legislative, judicial or regulatory
functions of or pertaining to government, including, without limitation, any
governmental or regulatory authority, agency, department, board, commission or
instrumentality, any court, tribunal or arbitrator and any self-regulatory
organization ("GOVERNMENTAL AUTHORITY"), on the part of the Company or any of
the Company Subsidiaries is required in connection with the execution or
delivery by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby other than (i) the filing of the
Certificate of Merger with the Secretary of State of Delaware in accordance with
the Delaware Code, (ii) filings with the SEC, (iii) filings under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR ACT"), (iv) consents or filings
required under the Communications Act of 1934, as amended, relating to change in
ownership or control of certain business radio and related licenses held by the
Company or its subsidiaries and (v) those Consents that, if they were not
obtained or made, would not reasonably be expected to have a Material Adverse
Effect.
2.6. NO VIOLATIONS. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by the Company with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of the Company or any of the Company Subsidiaries,
(ii) require any Consent under or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of, any Company Material Contract
(as hereinafter defined), (iii) result in the creation or imposition of any
lien or encumbrance of any kind upon any of the assets of the Company or any
Company Subsidiary or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in SECTION 2.5 hereof, violate any
applicable provision of any statute, law, rule or regulation or any order,
decision, injunction, judgment, award or decree ("LAW") to which the Company
or any Company Subsidiary or its assets or properties are subject, except, in
the case of each of clauses (ii), (iii) and (iv) above, for any deviations
from the foregoing which would not reasonably be expected to have a Material
Adverse Effect.
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2.7. SECURITIES FILINGS. The Company has made available to
Parent true and complete copies of (i) its Annual Reports on Form 10-K, as
amended, for the years ended December 31, 1994, 1995 and 1996, as filed with
the SEC, (ii) its proxy statements relating to all of the meetings of
stockholders (whether annual or special) of the Company since January 1,
1995, as filed with the SEC, and (iii) all other reports, statements and
registration statements and amendments thereto (including, without
limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K,
as amended) filed by the Company with the SEC since January 1, 1997. The
reports and statements set forth in clauses (i) through (iii) above, and
those subsequently provided or required to be provided pursuant to this
SECTION 2.7, are referred to collectively herein as the "COMPANY SECURITIES
FILINGS." As of their respective dates, or as of the date of the last
amendment thereof, if amended after filing, the Company Securities Filings
(i) were prepared in all material respects in accordance with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT")
and the rules and regulations promulgated thereunder, or the Exchange Act, as
the case may be, and none of the Company Securities Filings contained or, as
to the Company Securities Filings subsequent to the date hereof, will
contain, any untrue statement of a material fact or omitted or, as to the
Company Securities Filings subsequent to the date hereof, will omit, to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2.8. COMPANY FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited interim financial statements of the
Company included in the Company Securities Filings (the "COMPANY FINANCIAL
STATEMENTS") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and present fairly, in all
material respects, the financial position of the Company and its subsidiaries
as at the dates thereof and the results of their operations and cash flows
for the periods then ended subject, in the case of the unaudited interim
financial statements, to normal year-end audit adjustments, any other
adjustments described therein and the fact that certain information and notes
have been condensed or omitted in accordance with the Securities Exchange Act.
2.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Company Securities Filings, since December 31, 1996, through the date
of this Agreement, there has not been: (i) any event that has had or would
reasonably be expected to have a Material Adverse Effect, (ii) any
declaration, payment or setting aside for payment of any dividend or other
distribution or any redemption or other acquisition of any shares of capital
stock or securities of the Company by the Company, (iii) any material damage
or loss to any material asset or property, whether or not covered by
insurance, (iv) any change by the Company in accounting principles or
practices, (v) any material revaluation by the Company of any of its assets,
including writing down the value of inventory or writing off
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notes or accounts receivable other than in the ordinary course of business, (vi)
any sale of a material amount of property of the Company, except in the ordinary
course of business, or (vii) any other action or event, involving an amount
exceeding $250,000, that would have required the consent of Parent pursuant to
Section 4.1 hereof had such action or event occurred after the date of this
Agreement.
2.10. NO UNDISCLOSED LIABILITIES. Except as set forth in the
Company Securities Filings, neither the Company nor any of its subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise), except
liabilities (a) in the aggregate adequately provided for in the Company's
audited balance sheet (including any related notes thereto) for the fiscal
year ended December 31, 1996 included in the Company's 1996 Annual Report on
Form 10-K (the "1996 BALANCE SHEET"), (b) incurred in the ordinary course of
business and not required under generally accepted accounting principles to
be reflected on the 1996 Balance Sheet, (c) incurred since December 31, 1996
in the ordinary course of business consistent with past practice, (d)
incurred in connection with this Agreement or (e) which would not reasonably
be expected to have a Material Adverse Effect.
2.11. COMPLIANCE WITH LAWS. The business of the Company and each
of the Company Subsidiaries has been operated in compliance with all Laws
applicable thereto, except for any non-compliance which would not reasonably
be expected to have a Material Adverse Effect.
2.12. PERMITS. (i) The Company and the Company Subsidiaries have
all permits, certificates, licenses, approvals and other authorizations from
Governmental Authorities required in connection with the operation of their
respective businesses (collectively, "COMPANY PERMITS"), (ii) neither the
Company nor any of its subsidiaries is in violation of any Company Permit and
(iii) no proceedings are pending or, to the knowledge of the Company,
threatened, to revoke or limit any Company Permit, except, in the case of
each of clauses (i), (ii) and (iii) above, those the absence or violation of
which would not reasonably be expected to have a Material Adverse Effect.
2.13. LITIGATION. Except as disclosed in the Company Securities
Filings, there is no suit, action or proceeding ("LITIGATION") pending or, to
the knowledge of the Company, threatened against the Company or any of the
Company Subsidiaries which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority
outstanding against the Company or any of its subsidiaries which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. Except as set forth in the Company Securities
Filings, since December 31, 1996, and prior to or on the date hereof, there
have been no actions, suits or proceedings made or pending against the
Company or any of its subsidiaries alleging (x) any Environmental Claims (as
hereinafter defined) or (y) any claim against the Company in connection with
its rendering of any security services, except
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for (i) such claims (not resulting as of the date hereof in an action, suit or
proceeding) not exceeding in any individual case $500,000 or (ii) such actions,
suits or proceedings which, in the case of either clause (x) or (y) above, would
not reasonably be expected to result in liability to the Company or any of its
subsidiaries, not covered by insurance, of $100,000 or more in any individual
case or (without regard to whether or not any thereof is covered by insurance)
$500,000 in the aggregate. The Company has not established any reserves in the
Company Financial Statements with respect to claims referred to in clauses (x)
and (y) of the preceding sentence. SECTION 2.14 of the Company Disclosure
Letter lists all letters received by the Company from insurance carriers
asserting a reservation of rights with respect to any action, suit or
proceeding.
2.14. CONTRACTS. SECTION 2.14 of the Company Disclosure Letter
includes a list of all loan agreements and financing agreements and of all
equipment lease financing agreements involving obligations of the Company or
any subsidiary in excess of $250,000. Neither the Company nor any of the
Company Subsidiaries is a party or is subject to any note, bond, mortgage,
indenture, contract, lease, license, agreement or instrument that is required
to be described in or filed as an exhibit to any Company Securities Filing
(collectively with those agreements listed in Section 2.14 of the Company
Disclosure letter, the "COMPANY MATERIAL CONTRACTS") that is not so described
in or filed as required by the Securities Act or the Securities Exchange Act,
as the case may be. The Company is not a party to any agreements to acquire
in the future the stock or substantially all the assets of another person.
Except as disclosed in the Company Securities Filings, all such Company
Material Contracts are valid and binding and are in full force and effect and
enforceable against the Company or such subsidiary in accordance with their
respective terms, subject to the Enforceability Exceptions. Neither the
Company nor any of its subsidiaries is in violation or breach of or default
under any such Company Material Contract where such violation or breach would
reasonably be expected to have a Material Adverse Effect. To the knowledge
of the Company, no party (other than the Company or its subsidiaries) is in
default, violation or breach of any Company Material Contract where such
violation or breach would reasonably be expected to have a Material Adverse
Effect.
2.15. EMPLOYEE BENEFIT PLANS. (a) Section 2.15(a) of the Company
Disclosure Letter lists all employee pension benefit plans (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), all employee welfare benefit plans (as defined in Section
3(1) of ERISA) and all other bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
fringe or employee benefit plans, programs or arrangements, and any
employment, executive compensation or severance agreements, written or
otherwise, as amended, modified or supplemented, for the benefit of, or
relating to, any former or current employee, officer or consultant (or any of
their beneficiaries) of the Company or any other entity (whether or not
incorporated) which is a member of a
-19-
controlled group including the Company or which is under common control with the
Company (an "ERISA AFFILIATE") within the meaning of Section 414(b), (c), (m) or
(o) of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder (the "CODE") or Section 4001(a)(14) or (b) of ERISA, or any
subsidiary of the Company with respect to which the Company has or could have
any current (actual or contingent) liability, as well as each plan with respect
to which the Company or an ERISA Affiliate could incur liability under Title IV
of ERISA or Section 412 of the Code (together for purposes of this SECTION 2.15,
the "EMPLOYEE PLANS"). Prior to the date of this Agreement, the Company has
provided or made available to Parent copies of (i) each such written Employee
Plan (or a written description of any Employee Plan which is not written) and
all related trust agreements, insurance and other contracts (including
policies), summary plan descriptions, summaries of material modifications and
any material communications to plan participants, (ii) the three most recent
annual reports on Form 5500 series, with accompanying schedules and attachments,
filed with respect to each Employee Plan required to make such a filing, (iii)
the 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)
the most recent favorable determination letters issued for each Employee Plan
and related trust which is subject to Parts 1, 2 and 4 of Subtitle B of Title I
of ERISA (and, if an application for such determination is pending, a copy of
the application for such determination).
(b) (i) None of the Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, and none of the
Employee Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA; (ii) to the knowledge of the Company, no party in interest or
disqualified person (as defined in Section 3(14) of ERISA and Section 4975 of
the Code) has at any time engaged in a transaction with respect to any Employee
Plan which could subject the Company or any ERISA Affiliate, directly or
indirectly, to a tax, penalty or other liability for prohibited transactions
under ERISA or Section 4975 of the Code, except for any such tax, penalty or
liability that would not reasonably be expected to result in a Material Adverse
Effect; (iii) to the knowledge of the Company, no fiduciary of any Employee Plan
has breached any of the responsibilities or obligations imposed upon fiduciaries
under Title I of ERISA, except where such breach would not reasonably be
expected to result in a Material Adverse Effect; (iv) all Employee Plans have
been established and maintained substantially in accordance with their terms and
have operated in compliance with the requirements prescribed by any and all
statutes (including ERISA and the Code), orders, or governmental rules and
regulations currently in effect with respect thereto (including all applicable
requirements for notification to participants or the Department of Labor, the
Internal Revenue Service (the "IRS") or the Secretary of the Treasury) except
where failure to do so would not reasonably be expected to result in a Material
Adverse Effect, and may by their terms be amended and/or terminated at
-20-
any time subject to applicable law and any applicable collective bargaining
agreement; and the Company and each of its subsidiaries have performed all
obligations required to be performed by them under, are not in default under or
violation of except where failure to do so would not reasonably be expected to
result in a Material Adverse Effect, and have no knowledge of any default or
violation by any other party to, any of the Employee Plans; (v) each Employee
Plan which is subject to Parts 1, 2 and 4 of Subtitle B of ERISA is the subject
of a favorable determination letter from the IRS, and to the knowledge of the
Company nothing has occurred which may reasonably be expected to impair such
determination; (vi) all contributions required to be made with respect to any
Employee Plan pursuant to 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) or any event described in Section 4062, 4063 or 4041 of ERISA has
occurred for which there is any outstanding liability to the Company or any
ERISA Affiliate, except where such liability would not reasonably be expected to
result in a Material Adverse Effect, nor would the consummation of the
transaction contemplated hereby (including the execution of this Agreement)
constitute a reportable event for which the 30-day requirement has not been
waived; and (viii) neither the Company 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), except where such liability would not
reasonably be expected to result in a Material Adverse Effect.
(c) Section 2.15(c) of the Company Disclosure Letter sets forth a
true and complete list of each current or former employee, officer or director
of the Company or any of its subsidiaries who holds (i) any option to purchase
Company Stock as of the date hereof, together with the number of shares of
Company Stock subject to such option, the option price of such option (to the
extent determined as of the date hereof), whether such option is intended to
qualify as an incentive stock option within the meaning of Section 422(b) of the
Code (an "ISO"), and the expiration date of such option; (ii) any shares of
Company Stock that are restricted as a result of an agreement with or stock plan
of the Company; and (iii) any other right, directly or indirectly, to receive
Company Stock, except as otherwise disclosed in Section 2.15 of the Company
Disclosure Letter, together with the number of shares of Company Stock subject
to such right, except as otherwise disclosed in Section 2.15 of the Company
Disclosure Letter. Section 2.15(c) of the Company Disclosure Letter also sets
forth the total number of any such ISOs and any such nonqualified options and
other such rights.
(d) Unless otherwise disclosed in Section 2.15(a) of the Company
Disclosure Letter, Section 2.15(d) of the Company Disclosure Letter sets forth a
true and complete list of (i) all
-21-
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
$100,000; (iii) all agreements with respect to the services of independent
contractors or leased employees whether or not they participate in any of the
Employee Plans; (iv) all officers of the Company or any of its subsidiaries who
have executed a non-competition agreement with the Company or any of its
subsidiaries; (v) 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 $100,000, excluding programs and policies
required to be maintained by law; and (vi) all plans, programs, agreements and
other arrangements of the Company which contain change in control provisions.
(e) The PBGC has not instituted proceedings to terminate any Employee
Benefit Plan that is subject to Title IV of ERISA (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 most recent
actuarial valuation with respect to any of the Company's Defined Benefit Plans
made available to Parent is true and correct in all material respects and there
has been no change since the date of such valuation that would reasonably be
expected to result in a Material Adverse Effect. 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 any Defined Benefit
Plan which would give rise to a Lien on the assets of the Company under Section
4068 of ERISA or otherwise. All the assets of the Defined Benefit Plans are
readily marketable securities or insurance contracts.
(f) (i) The Company does not currently maintain an employee stock
ownership plan (within the meaning of Section 4975(e)(7) of the Code) or any
other Employee Plan that invests in Company Stock; and (ii) the consummation of
the transactions contemplated by this Agreement will not result in an increase
in the amount of compensation or benefits or accelerate the vesting or timing of
payment of any benefits or compensation payable in respect of any employee
except as otherwise disclosed in SECTION 1.9 hereof or except where such
increase or acceleration would not reasonably be expected to result in a
Material Adverse Effect. The Company will take all actions within its control
to ensure that all actions required to be taken by a fiduciary of any Employee
Plan in order to effectuate the transaction contemplated by this Agreement shall
comply with the terms of such Plan, ERISA and other applicable laws. The
Company will take all actions within its control to ensure that all actions
required to be taken by a trustee of any Employee Plan that owns Company Stock
shall have been duly authorized by the appropriate fiduciaries of such Plan and
shall comply with the terms of such Plan, ERISA and other applicable laws.
(g) The Company maintains no Employee Plan covering
-22-
non-U.S. employees.
(h) The Company has fiduciary liability insurance of at least
$500,000 in effect covering the fiduciaries of the Employee Plans (including the
Company) with respect to whom the Company may have liability.
2.16. TAXES AND RETURNS. (a) The Company and each of the Company
Subsidiaries has timely filed, or caused to be timely filed, all material Tax
Returns (as hereinafter defined) required to be filed by it, and has paid,
collected or withheld, or caused to be paid, collected or withheld, all material
amounts of Taxes (as hereinafter defined) required to be paid, collected or
withheld, other than such Taxes for which adequate reserves in the Company
Financial Statements have been established or which are being contested in good
faith. There are no material claims or assessments pending against the Company
or any of its subsidiaries for any alleged deficiency in any Tax, and the
Company has not been notified in writing of any proposed Tax claims or
assessments against the Company or any of its subsidiaries (other than in each
case, claims or assessments for which adequate reserves in the Company Financial
Statements have been established or which are being contested in good faith or
are immaterial in amount). Neither the Company nor any of its subsidiaries has
executed any waivers or extensions of any applicable statute of limitations to
assess any material amount of Taxes. There are no outstanding requests by the
Company or any of its subsidiaries for any extension of time within which to
file any material Tax Return or within which to pay any material amounts of
Taxes shown to be due on any Tax Return. To the best knowledge of the Company,
there are no liens for material amounts of Taxes on the assets of the Company or
any of its subsidiaries except for statutory liens for current Taxes not yet due
and payable.
(b) For purposes of this Agreement, the term "TAX" shall mean any
federal, state, local, foreign or provincial income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty imposed by any Governmental
Authority. The term "TAX RETURN" shall mean a report, return or other
information (including any attached schedules or any amendments to such report,
return or other information) required to be supplied to or filed with a
governmental entity with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
(c) (i) Neither the Company nor any of its subsidiaries has ever been
a member of an affiliated group within the meaning of Section 1504 of the Code
or filed or been included in a combined, consolidated or unitary Tax Return,
other than of the Company and its subsidiaries; (ii) other than with respect to
the Company and its subsidiaries, neither the Company nor any of its
subsidiaries is liable for Taxes of any other Person, or is
-23-
currently under any contractual obligation to indemnify any person with respect
to Taxes (except for customary agreements to indemnify lenders or
securityholders in respect of taxes other than income taxes), or is a party to
any tax sharing agreement or any other agreement providing for payments by the
Company or any of its subsidiaries with respect to Taxes; (iii) neither the
Company nor any of its subsidiaries is a party to any joint venture, partnership
or other arrangement or contract which could be treated as a partnership for
federal income tax purposes; (iv) neither the Company nor any of its
subsidiaries has entered into any sale leaseback or any leveraged lease
transaction that fails to satisfy the requirements of Revenue Procedure 75-21
(or similar provisions of foreign law); (v) neither the Company nor any of its
subsidiaries has agreed or is required, as a result of a change in method of
accounting or otherwise, to include any adjustment under Section 481 of the Code
(or any corresponding provision of state, local or foreign law) in taxable
income; (vi) neither the Company nor any of its subsidiaries is a party to any
agreement, contract, arrangement or plan that would result (taking into account
the transactions contemplated by this Agreement), separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code; (vii) the prices for any property or services (or
for the use of property) provided by the Company or any of its subsidiaries to
any other subsidiary or to the Company have been arm's length prices, determined
using a method permitted by the Treasury Regulations under Section 482 of the
Code; (viii) neither the Company nor any of its subsidiaries is liable with
respect to any indebtedness the interest of which is not deductible for
applicable federal, foreign, state or local income tax purposes; (ix) neither
the Company nor any of its subsidiaries is a "consenting corporation" under
Section 341(F) of the Code or any corresponding provision of state, local or
foreign law; and (x) none of the assets owned by the Company or any of its
subsidiaries is property that is required to be treated as owned by any other
person pursuant to Section 168(g)(8) of the Internal Revenue Code of 1954, as
amended, as in effect immediately prior to the enactment of the Tax Reform Act
of 1986, or is "tax-exempt use property" within the meaning of Section 168(h) of
the Code; PROVIDED that each of the statements made in clauses (i) through (x)
above shall be deemed true and correct for purposes of this Agreement unless in
any such case any failure of such statement to be true or correct would
reasonably be expected to result in a Material Adverse Effect.
(d) The amount of net operating losses (as defined in Section 172 of
the Code) of the Company and its subsidiaries as of the end of the fiscal year
ended December 31, 1996, and any limitation on the use of such losses as a
result of an ownership change within the meaning of Section 382(g) of the Code
occurring on or prior to December 31, 1996, is as set forth in the Company's
financial statements for such year.
2.17. INTELLECTUAL PROPERTY. The Company or its subsidiaries
own, or are licensed or otherwise possess legal enforceable rights to use,
all patents, trademarks, trade names, service marks, copyrights and any
applications therefor,
-24-
technology, know-how, trade secrets, computer software programs or applications,
domain names and tangible or intangible proprietary information or materials
that are used in the respective businesses of the Company and its subsidiaries
as currently conducted, except for any such failures to own, be licensed or
possess that would not reasonably be expected to have a Material Adverse Effect.
To the best knowledge of the Company, there are no valid grounds for any bona
fide claims (i) to the effect that the business of the Company or any of its
subsidiaries infringes on any copyright, patent, trademark, service xxxx or
trade secret; (ii) 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; (iii) challenging the ownership, validity or effectiveness of any
of the patents, registered and material unregistered trademarks and service
marks, registered copyrights, trade names and any applications therefor owned by
the Company or any of its subsidiaries (the "COMPANY INTELLECTUAL PROPERTY
RIGHTS") or other trade secret material to the Company; or (iv) challenging the
license or legally enforceable right to use of any third-party patents,
trademarks, service marks and copyrights by the Company or any of its
subsidiaries, except, in the case of each of clauses (i), (ii), (iii) and (iv)
above, for matters that, if determined adversely to the Company, would not
reasonably be expected to have a Material Adverse Effect. To the best knowledge
of the Company, all material patents, registered trademarks, service marks and
copyrights held by the Company are valid and subsisting. Except as set forth in
the Company Securities Filings, 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.
2.18. DISCLOSURE DOCUMENTS. The Proxy Statement will comply in all
material respects with the applicable requirements of the Securities Exchange
Act except that no representation or warranty is being made by the Company with
respect to the Parent Information included in the Proxy Statement. The Proxy
Statement will not, at the time the Proxy Statement is filed with the SEC or
first sent to stockholders, at the time of the Company's stockholders' meeting
or at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading except that no representation or warranty is
being made by the Company with respect to the Parent Information included in the
Proxy Statement. The Schedule 14D-9 will comply in all material respects with
the Securities Exchange Act except that no representation or warranty is being
made by the Company with respect to the Parent Information included in the
Schedule 14D-9. Neither the Schedule 14D-9 nor any of the information relating
to the Company or its affiliates provided by or on behalf of the Company
specifically for inclusion in the Schedule 14D-1 or the
-25-
Offer Documents will, at the respective times the Schedule 14D-9, the Schedule
14D-1 and the Offer Documents are filed with the SEC and are first published,
sent or given to stockholders of the Company, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
2.19. LABOR MATTERS. Except as set forth in the Company Securities
Filings, (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
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, as of the date of this
Agreement, does the Company or any of its subsidiaries know of any activities or
proceedings of any labor union to organize any such employees; 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.
2.20. LIMITATION ON BUSINESS CONDUCT. Except as set forth in the
Company Securities Filings, neither the Company nor any of its subsidiaries
is a party to, or has any obligation under, any contract or agreement,
written or oral, which contains any covenants currently or prospectively
limiting in any material respect the freedom of the Company or any of its
subsidiaries to engage in any line of business or to compete with any entity.
2.21. TITLE TO PROPERTY. Except as set forth in the Company
Securities Filings, each of the Company and each of its subsidiaries owns the
properties and assets that it purports to own free and clear of all liens,
charges, mortgages, security interests or encumbrances of any kind ("LIENS"),
except for Liens which arise in the ordinary course of business and do not
materially impair the Company's or its subsidiaries' ownership or use of such
properties or assets, Liens for taxes not yet due and Liens securing
obligations under the Credit Agreement. With respect to the property and
assets it leases, the Company , its subsidiaries, and to the best of the
Company's knowledge each of the other parties thereto, is in material
compliance with such leases, and the Company or its subsidiaries, as the case
may be, hold a valid leasehold interest free of any Liens, except those
referred to above. The rights, properties and assets presently owned, leased
or licensed by the Company and its subsidiaries include all rights,
properties and assets necessary to permit the Company and its subsidiaries to
conduct their business in all material respects in the same manner as their
businesses have been conducted prior to the date hereof.
-26-
2.22. LEASED PREMISES. Neither the Company nor any of its
subsidiaries owns any real property. Each of the buildings, structures and
premises leased by the Company or any of its subsidiaries is in reasonably
good repair and operating condition, except as would not reasonably be
expected to have a Material Adverse Effect.
2.23. ENVIRONMENTAL MATTERS. (a) Except as set forth in the
Company Securities Filings, the Company and its subsidiaries are in material
compliance with the Environmental Laws (as hereinafter defined), which
compliance includes the possession by the Company and its subsidiaries of all
material permits and governmental authorizations required under applicable
Environmental Laws, and compliance in all material respects with the terms
and conditions thereof, except in each case where such non-compliance would
not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries has received any communication (written
or oral), whether from a governmental authority, citizens group, employee or
otherwise, that alleges that the Company or any of its subsidiaries is not in
such material compliance, and there are no circumstances that may prevent or
interfere with such compliance in the future, except where such
non-compliance would not reasonably be expected to have a Material Adverse
Effect.
(b) There are no Environmental Claims (as hereinafter defined),
including claims based on "arranger liability," pending or, to the best
knowledge of the Company, threatened against the Company or any of its
subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained or
assumed either contractually or by operation of law, except for such
Environmental Claims that would not reasonably be expected to have a Material
Adverse Effect.
(c) To the best knowledge of the Company, there are no past or
present actions, inactions, activities, circumstances, conditions, events or
incidents, including the release, emission, discharge, presence or disposal of
any Material of Environmental Concern (as hereinafter defined), that would form
the basis of any Environmental Claim against the Company or any of its
subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries have retained or
assumed either contractually or by operation of law, except for such
Environmental Claims that would not reasonably be expected to have a Material
Adverse Effect.
(d) The Company is in compliance in all material respects with
Environment Laws as they relate to any on-site or off-site locations where the
Company or any of its subsidiaries has stored, disposed or arranged for the
disposal of Materials of Environmental Concern for itself (but not on behalf of
others) or (ii) any underground storage tanks located on property owned or
leased by the Company or any of its subsidiaries. There is no asbestos
contained in or forming part of any building, building component, structure or
office space owned or leased by the Company or any of its subsidiaries. No
polychlorinated biphenyls
-27-
(PCB's) or PCB-containing items are used or stored at any property owned or
leased by the Company or any of its subsidiaries.
(e) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (x) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned or operated by the
Company or any of its subsidiaries, or (y) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means all Federal, state, local and foreign
laws or regulations relating to pollution or protection of human health and the
environment (including ambient air, surface water, ground water, land surface or
sub-surface strata), including laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
(iii) "Materials of Environmental Concern" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances and
hazardous wastes, toxic substances, petroleum and petroleum products.
2.24. INSURANCE. The Company maintains insurance that provides
adequate coverage for normal risks incident to the business of the Company
and its subsidiaries and their respective properties and assets and in
character and amount comparable to that carried by persons engaged in similar
businesses. The insurance polices maintained by the Company are with
reputable insurance carriers and have no premium delinquencies.
2.25. CUSTOMERS. No customer of the Company accounted for more
than 4% of the revenues of the Company and its subsidiaries for the fiscal
year ended December 31, 1996.
2.26. INTERESTED PARTY TRANSACTIONS. Except as set forth in the
Company Securities Filings, since the date of the Company's proxy statement
dated April 30, 1997, no event has occurred that would be required to be
reported as a Certain Relationship or Related Transaction, pursuant to Item
404 of Regulation S-K promulgated by the SEC, except for contracts entered
into in the ordinary course of business of the Company, on an arms-length
basis, with terms no less favorable to the Company than would reasonably be
expected in a similar transaction with an unaffiliated third party.
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2.27. ALARM CONTRACTS. The Chief Executive Officer and the Chief
Financial Officer of the Company believe, following reasonable inquiry, that
no more than 20% of accounts for alarm system monitoring and/or service owned
by the Company or any Company Subsidiary are not evidenced by a written
contract.
2.28. FINDERS AND INVESTMENT BANKERS. Neither the Company nor
any of its officers or directors has employed any broker, finder or financial
advisor or otherwise incurred any liability for any brokerage fees,
commissions, or financial advisors' or finders' fees in connection with the
transactions contemplated hereby, other than pursuant to an agreement with
X.X. Xxxxxx Securities Inc., the terms of which have been disclosed to Parent.
2.29. FAIRNESS OPINION. The Company's Board of Directors has
received from its financial advisor, X.X. Xxxxxx Securities Inc., a written
opinion addressed to it for inclusion in the Schedule 14D-9 and the Proxy
Statement to the effect that the consideration to be received by the
stockholders of the Company pursuant to each of the Offer and the Merger is
fair to the Company's stockholders from a financial point of view.
2.30. TAKEOVER STATUTES. Assuming Parent and its "associates" and
"affiliates" (as defined in Section 203 of the Delaware Code) collectively
beneficially own and have beneficially owned at all times during the three-year
period prior to the date hereof less than fifteen percent (15%) of the Company
Stock outstanding, Section 203 of the Delaware Code is, and shall be,
inapplicable to the acquisition of Shares pursuant to the Offer and the Merger.
2.31. FULL DISCLOSURE. No statement contained in any certificate or
schedule furnished or to be furnished by the Company or its subsidiaries to
Parent or Purchaser in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and warrant to
the Company that:
3.1. ORGANIZATION AND GOOD STANDING. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
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3.2. AUTHORIZATION; BINDING AGREEMENT. Parent and Purchaser have
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including, but not limited to, the Merger,
have been duly and validly authorized by the respective Boards of Directors
of Parent and Purchaser, as appropriate, and no other corporate proceedings
on the part of Parent, Purchaser or any other subsidiary of Parent are
necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions contemplated hereby (other than the requisite
approval by the sole stockholder of Purchaser of this Agreement and the
Merger). This Agreement has been duly and validly executed and delivered by
each of Parent and Purchaser and constitutes the legal, valid and binding
agreement of Parent and Purchaser, enforceable against each of Parent and
Purchaser in accordance with its terms, subject to the Enforceability
Exceptions.
3.3. GOVERNMENTAL APPROVALS. No Consent from or with any
Governmental Authority on the part of Parent or Purchaser is required in
connection with the execution or delivery by Parent and Purchaser of this
Agreement or the consummation by Parent and Purchaser of the transactions
contemplated hereby other than (i) filings with the SEC and (ii) filings
under the HSR Act.
3.4. NO VIOLATIONS. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent or Purchaser with any of the provisions hereof will not
(i) conflict with or result in any breach of any provision of the Certificate
of Incorporation or Bylaws or other governing instruments of Parent or any
subsidiary of Parent, (ii) require any Consent under or result in a violation
or breach of, or constitute (with or without notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of, any
material note, bond, mortgage, indenture, contract, lease, license, agreement
or instrument to which Parent is a party or by which Parent or any of its
assets or property is subject, (iii) result in the creation or imposition of
any material lien or encumbrance of any kind upon any of the assets of Parent
or any subsidiary of Parent or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in SECTION 3.3 hereof, violate any Law
to which Parent or any subsidiary of Parent or its assets or properties are
subject, except in any such case for any such conflicts, violations,
breaches, defaults or other occurrences that would not prevent or delay
consummation of the Offer or the Merger, or otherwise materially and
adversely affect the ability of Parent or Purchaser to perform their
respective obligations under this Agreement.
3.5. DISCLOSURE DOCUMENTS. None of the information supplied by
Parent, its officers, directors, representatives, agents or employees (the
"PARENT INFORMATION")
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for inclusion in the Proxy Statement will, at the time the Proxy Statement is
filed with the SEC or first mailed to the Company's stockholders, at the time of
the Company's stockholders' meeting or at the Effective Time, contain any untrue
statement of a material fact, or will omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances in which
they were made not misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for such
stockholders' meeting which has become false or misleading. Neither the
Schedule 14D-1 or the Offer Documents or any amendments thereof or supplements
thereto nor any of the Parent Information provided specifically for inclusion in
the Schedule 14D-9 will, at the respective times the Schedule 14D-1, the Offer
Documents or the Schedule 14D-9 are filed with the SEC or first published, sent
or given to the Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Notwithstanding the foregoing, neither Parent nor Purchaser
makes any representation or warranty with respect to any information that has
been supplied by the Company or its accountants, counsel or other authorized
representatives for use in any of the foregoing documents. The Schedule 14D-1
and the Offer Documents will comply as to form in all material respects with the
provisions of the Securities Exchange Act.
3.6. FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of its
officers or directors has employed any broker, finder or financial advisor or
otherwise incurred any liability for any brokerage fees, commissions or
financial advisors' or finders' fees in connection with the transactions
contemplated hereby.
3.7. FINANCING ARRANGEMENTS. Parent (including for this purpose
one or more of its wholly-owned subsidiaries) has funds available to it
sufficient to enable the Purchaser to purchase the Shares in accordance with
the terms of this Agreement and to pay all amounts due (or which will, as a
result of the transactions contemplated hereby, become due) in respect of any
indebtedness of the Company for money borrowed.
3.8. NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing in connection therewith), Purchaser has not incurred
any obligations or liabilities and has not engaged in any business or activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any person or entity.
ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
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4.1. CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY
SUBSIDIARIES. (a) Unless Parent shall otherwise agree in writing and except
as expressly contemplated by this Agreement or in the Company Disclosure
Letter, during the period from the date of this Agreement to the Effective
Time, (i) the Company shall conduct, and it shall cause the Company
Subsidiaries to conduct, its or their businesses in the ordinary course and
consistent with past practice, and the Company shall, and it shall cause the
Company Subsidiaries to, use its or their reasonable best efforts to preserve
substantially intact its business organization, to keep available the
services of its present officers and employees and to preserve the present
commercial relationships of the Company and the Company Subsidiaries with
persons with whom the Company or the Company Subsidiaries do significant
business and (ii) without limiting the generality of the foregoing, neither
the Company nor any of the Company Subsidiaries will:
(A) amend or propose to amend its Certificate of
Incorporation or Bylaws in any material respect;
(B) authorize for issuance, issue, grant, sell, pledge,
dispose of or propose to issue, grant, sell, pledge or dispose of any
shares of, or any options, warrants, commitments, subscriptions or rights
of any kind to acquire or sell any shares of, the capital stock or other
securities of the Company or any of the Company Subsidiaries, including,
but not limited to, any securities convertible into or exchangeable for
shares of stock of any class of the Company or any of the Company
Subsidiaries, except for (a) the issuance of shares pursuant to the
exercise of Company Options outstanding on the date of this Agreement in
accordance with their present terms, (b) the issuance of shares upon the
exercise of Company Warrants, or conversion of the Company Debentures,
outstanding on the date of this Agreement in accordance with their present
terms and (c) the issuance of not more than an aggregate of 15,000 shares
of Company Stock to the sellers under the agreements pursuant to which the
Company acquired Certified Systems, Inc., Certified Systems Central
Station, Inc. and Security Solutions, Inc. to the extent required pursuant
to the terms of such agreements;
(C) split, combine or reclassify any shares of its capital
stock or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock, other than dividends or distributions to the Company
or a subsidiary of the Company, or directly or indirectly redeem, purchase
or otherwise acquire or offer to acquire any shares of its capital stock or
other securities;
(D) create, incur or assume any indebtedness for borrowed
money or issue any debt securities, except pursuant to the Credit
Agreement, or make any loans (except as provided in paragraph (E) (b)
below);
(E) other than in the ordinary course of business
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consistent with past practice, (a) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, indirectly, contingently or
otherwise) for the obligations of any person (other than the Company or a
Company Subsidiary); (b) make any capital expenditures (it being understood
that the acquisition of the stock or substantially all the assets of any
other person shall not be deemed a "capital expenditures" for these
purposes) or make any advances or capital contributions to, or investments
in, any other person (other than to a Company Subsidiary); (c) voluntarily
incur any material liability or obligation (absolute, accrued, contingent
or otherwise); or (d) sell, transfer, mortgage, pledge or otherwise dispose
of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise
dispose of or encumber, any assets or properties, real, personal or mixed,
material to the Company and the Company Subsidiaries taken as a whole other
than to secure debt permitted under paragraph (D);
(F) increase in any manner the compensation of any of its
officers or employees (other than, except with respect to employees who are
executive officers or directors, in the ordinary course of business
consistent with past practice) or enter into, establish, amend or terminate
any employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing, health
or other welfare, stock option or other equity, pension, retirement,
vacation, severance, deferred compensation or other compensation or benefit
plan, policy, agreement, trust, fund or arrangement with, for or in respect
of, any stockholder, officer, director, employee, consultant or affiliate
other than, in any such case referred to above, as may be required by Law
or as required pursuant to the terms of agreements in effect on the date of
this Agreement and other than arrangements with new employees (other than
employees who will be officers of the Company) hired in the ordinary course
of business consistent with past practice and providing for compensation
(other than equity-based compensation) and other benefits consistent with
those provided for similarly situated employees of the Company as of the
date hereof;
(G) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership
of any subsidiary or the Company;
(H) except as may be required as a result of a change in
law or as required by the SEC, change any of the accounting principles or
practices used by it;
(I) make any material tax election or settle or compromise
any material income tax liability;
(J) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than
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the payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of liabilities reflected or reserved
against in, or contemplated by, the financial statements (or the notes
thereto) of the Company or incurred in the ordinary course of business
consistent with past practice;
(K) except to the extent necessary for the exercise of its
fiduciary duties by the Board of Directors of the Company as set forth in,
and consistent with the provisions of, SECTION 4.8 hereof, waive, amend or
allow to lapse any term or condition of any confidentiality or "standstill"
agreement to which the Company or any subsidiary is a party; or
(L) take, or agree in writing or otherwise to take, any of
the foregoing actions or any action which would make any of the
representations or warranties of the Company contained in this Agreement
untrue or incorrect in any material respect at or prior to the Effective
Time.
(b) The Company shall, and the Company shall cause each of the
Company Subsidiaries to, comply with all Laws applicable to it or any of its
properties, assets or business and maintain in full force and effect all the
Company Permits necessary for such business, except in any such case for any
failure so to comply or maintain that would not reasonably be expected to result
in a Material Adverse Effect.
4.2. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent if any of the following occur after the date of this Agreement:
(i) receipt of any notice or other communication in writing from any third party
alleging that the Consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement, provided that
such Consent would have otherwise been required to have been disclosed in this
Agreement; (ii) receipt of any material notice or other communication from any
Governmental Authority (including, but not limited to, the NASD or any
securities exchange) in connection with the transactions contemplated by this
Agreement; (iii) the occurrence of an event which would be reasonably likely to
(A) have a Material Adverse Effect or (B) cause any condition set forth in ANNEX
I hereto to be unsatisfied in any material respect at any time prior to the
consummation of the Offer or (iv) the commencement or threat of any Litigation
involving or affecting the Company or any of the Company Subsidiaries, or any of
their respective properties or assets, or, to its knowledge, any employee,
agent, director or officer, in his or her capacity as such, of the Company or
any of the Company Subsidiaries which, if pending on the date hereof, would have
been required to have been disclosed in this Agreement or which relates to the
consummation of the Merger.
4.3. ACCESS AND INFORMATION. Between the date of this Agreement
and the Effective Time, and without intending by this SECTION 4.3 to limit
any of the other obligations of the parties under this Agreement, the Company
will
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give, and shall direct its accountants and legal counsel to give, Parent and its
authorized representatives (including, without limitation, its financial
advisors, accountants and legal counsel), at reasonable times and without undue
disruption to or interference with the normal conduct of the business and
affairs of the Company, access as reasonably required in connection with the
transactions provided for in this Agreement to all offices and other facilities
and to all contracts, agreements, commitments, books and records of or
pertaining to the Company and its subsidiaries and will furnish Parent with
(a) such financial and operating data and other information with respect to the
business and properties of the Company and its subsidiaries as Parent may from
time to time reasonably request in connection with such transactions and (b) a
copy of each material report, schedule and other document filed or received by
the Company or any of its subsidiaries pursuant to the requirements of
applicable securities laws or the NASD.
4.4. STOCKHOLDER APPROVAL. As soon as practicable following the
consummation of the Offer, the Company will take all steps necessary to duly
call, give notice of, convene and hold a meeting of its stockholders for the
purpose of voting upon the Company Proposals and for such other purposes as may
be necessary or desirable in connection with effectuating the transactions
contemplated hereby, if such meeting is required. Except as otherwise
contemplated by this Agreement, the Board of Directors of the Company will
recommend to the stockholders of the Company that they approve the Company
Proposals.
4.5. REASONABLE BEST EFFORTS. Subject to the terms and conditions
herein provided, the Company agrees to use reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including, but not
limited to, (i) obtaining all Consents from Governmental Authorities and other
third parties required for the consummation of the Offer and the Merger and the
transactions contemplated thereby and (ii) timely making all necessary filings
under the HSR Act. Upon the terms and subject to the conditions hereof, the
Company agrees to use reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary to satisfy the
other conditions of the Closing set forth herein.
4.6. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
effect, the Company shall not, and shall use reasonable best efforts to cause
its affiliates not to, issue or cause the publication of any press release or
any other announcement with respect to the Offer or the Merger or the
transactions contemplated hereby without the consent of Parent (such consent
not to be unreasonably withheld or delayed), except where such release or
announcement is required by applicable Law or pursuant to any applicable
listing agreement with, or rules or regulations of, the NASD, in which case
the Company, prior to making such announcement, will consult with Parent
regarding the same.
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4.7. COMPLIANCE. In consummating the transactions contemplated
hereby, the Company shall comply in all material respects with the provisions
of the Securities Exchange Act and the Securities Act and shall comply, and
cause the Company Subsidiaries to comply or to be in compliance, in all
material respects, with all other applicable Laws.
4.8. NO SOLICITATION. (a) The Company shall, and shall cause its
officers, directors, employees, representatives and agents to, immediately cease
any discussions or negotiations with any parties that may be ongoing with
respect to a Company Takeover Proposal (as hereinafter defined). The Company
shall not, nor shall it permit any of its subsidiaries to, nor shall it
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Company Takeover Proposal or
(ii) participate in any discussions or negotiations regarding any Company
Takeover Proposal; PROVIDED, HOWEVER, that if, at any time prior to the
Effective Time, the Board of Directors of the Company determines in good faith,
with the advice of outside counsel, that the failure to do so could reasonably
be determined to be a breach of its fiduciary duties to the Company's
stockholders under applicable law, the Company many (and may authorize or permit
any of the other persons referred to above in this SECTION 4.8 to), in response
to a Company Takeover Proposal, and subject to compliance with SECTION 4.8(C),
(x) furnish information with respect to the Company or its subsidiaries to any
person pursuant to a confidentiality agreement similar in form to that between
an affiliate of Parent and the Company and (y) participate in discussions or
negotiations regarding such Company Takeover Proposal. "COMPANY TAKEOVER
PROPOSAL" means any inquiry, proposal or offer, in each case not solicited in
violation of this Agreement, from any person or persons relating to any direct
or indirect acquisition or purchase of a substantial amount of the assets of the
Company and its subsidiaries or 10% or more of any class of equity securities of
the Company or any Company Subsidiary, any tender offer or exchange offer that
if consummated would result in any person or group of related persons
beneficially owning 10% or more of any class of equity securities of the Company
or any Company Subsidiary or any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any Company Subsidiary, other than the transactions
contemplated by this Agreement.
Except as set forth in this SECTION 4.8, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or indicate publicly its intention to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer or the Company
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Proposals, (ii) approve or recommend, or indicate publicly its intention to
approve or recommend, any Company Takeover Proposal or (iii) cause the Company
to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, a "COMPANY ACQUISITION AGREEMENT")
related to any Company Takeover Proposal. Notwithstanding the foregoing, in the
event that prior to the Effective Time the Board of Directors of the Company
determines in good faith, with the advice of outside counsel, that the failure
to do so could reasonably be determined to be a breach of its fiduciary duties
to the Company's stockholders under applicable law, the Board of Directors of
the Company may (subject to this and the following sentences) (x) withdraw or
modify its approval or recommendation of the Offer or the Company Proposals or
(y) approve or recommend a Company Superior Proposal (as hereinafter defined) or
terminate this Agreement (and concurrently with or after such termination, if it
so chooses, cause the Company to enter into any Company Acquisition Agreement
with respect to any Company Superior Proposal), but in each of the cases set
forth in this clause (y), only at a time that is after the third business day
following Parent's receipt of written notice advising Parent that the Board of
Directors of the Company has received a Company Superior Proposal and, in the
case of any previously received Company Superior Proposal that has been
materially modified or amended, such modification or amendment and specifying
the material terms and conditions of such Company Superior Proposal,
modification or amendment (PROVIDED that such material terms shall not be deemed
to include the identity of the person or persons making such Company Superior
Proposal). For purposes of this Agreement, a "COMPANY SUPERIOR PROPOSAL" means
any bona fide proposal, not solicited in violation of this Agreement, made by a
third party or third parties to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the Shares then outstanding or all or substantially all
the assets of the Company and otherwise on terms which the Board of Directors of
the Company determines in its good faith judgment (based on the advice of its
advisors) to be more favorable to the Company's stockholders than the Offer and
the Merger (taking into account all factors relating to such proposed
transaction deemed relevant by the Board of Directors of the Company, including,
without limitation, the financing thereof, the proposed timing thereof and all
other conditions thereto).
In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this SECTION 4.8, the Company shall promptly advise
Parent orally and in writing of any request for information, or for access to
information, or of any Company Takeover Proposal and the material terms and
conditions of such request or Company Takeover Proposal or any amendment or
modification thereto (PROVIDED that such material terms shall not be deemed to
include the identity of the person or persons making such request or Company
Takeover Proposal).
Nothing contained in this SECTION 4.8 shall prohibit the Company
from taking and
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disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Securities Exchange Act or from making any disclosure to
the Company's stockholders if, in the good faith judgment of the Board of
Directors of the Company, with the advice of outside counsel, failure so to
disclose could be determined to be a breach of its fiduciary duties to the
Company's stockholders under applicable law; PROVIDED, HOWEVER, that neither the
Company nor its Board of Directors nor any committee thereof shall, except as
permitted by SECTION 4.8(B), withdraw or modify, or indicate publicly its
intention to withdraw or modify, its position with respect to the Offer or the
Company Proposals or approve or recommend, or indicate publicly its intention to
approve or recommend, a Company Takeover Proposal.
The Company shall advise its officers and directors and any
investment banker or attorney retained by the Company in connection with the
transactions contemplated by this Agreement of the restrictions set forth in
this SECTION 4.8.
4.9. SEC AND STOCKHOLDER FILINGS. The Company shall send to
Parent a copy of all material public reports and materials as and when it
sends the same to its stockholders, the SEC or any state or foreign
securities commission.
4.10. TAKEOVER STATUTES. If any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or
regulation enacted under state or federal laws in the United States (each a
"TAKEOVER STATUTE"), including, without limitation, Section 203 of the
Delaware Code, is or may become applicable to the Offer or the Merger, the
Company will use reasonable best efforts to grant such approvals and take
such actions as are necessary so that the transactions contemplated by this
Agreement and the Company Proposals may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act so as to
eliminate or minimize the effects of any Takeover Statute on any of the
transactions contemplated hereby.
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ARTICLE V
ADDITIONAL COVENANTS OF PURCHASER AND PARENT
Parent and Purchaser covenant and agree as follows:
5.1. REASONABLE BEST EFFORTS. Subject to the terms and conditions
herein provided, Purchaser agrees to use reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including, but not
limited to, (i) obtaining all Consents from Governmental Authorities and other
third parties required for the consummation of the Offer and the Merger and the
transactions contemplated thereby and (ii) timely making all necessary filings
under the HSR Act. Upon the terms and subject to the conditions hereof, Parent
agrees to use reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary to satisfy the other
conditions of the closing set forth herein.
5.2. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
Parent and Purchaser shall not, and shall use reasonable best efforts to cause
its affiliates not to, issue or cause the publication of any press release or
any other announcement with respect to the Offer or the Merger or the
transactions contemplated hereby without the consent of the Company (such
consent not to be unreasonably withheld or delayed), except where such release
or announcement is required by applicable Law or pursuant to any applicable
listing agreement with, or rules or regulations of, any stock exchange on which
shares of Parent's capital stock are listed or the NASD, or other applicable
securities exchange, in which case Parent, prior to making such announcement,
will consult with the Company regarding the same.
5.3. COMPLIANCE. In consummating the transactions contemplated
hereby, Parent and Purchaser shall comply in all material respects with the
provisions of the Securities Exchange Act and the Securities Act and shall
comply, and cause its subsidiaries to comply or to be in compliance, in all
material respects, with all other applicable Laws.
EMPLOYEE BENEFIT PLANS.
5.4. BENEFIT PLANS. As of the Effective Time, Parent shall cause
the Surviving Corporation to honor and satisfy all obligations and
liabilities with respect to the Employee Plans. Notwithstanding the
foregoing, the Surviving Corporation shall not be required to continue any
particular Employee Plan after the Effective Time, and any Employee Plan may
be amended or terminated in accordance with its terms and applicable Law. To
the extent that any Employee Plan is terminated or amended after the
Effective Time so as to reduce the benefits that are then being provided with
respect to participants thereunder, Parent shall arrange for each individual
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who is then a participant in such terminated or amended plan to participate in a
comparable Parent Benefit Plan ("PARENT BENEFIT PLAN") in accordance with the
eligibility criteria thereof, provided that (i) such participants shall receive
full credit for years of service with the Company or any of its subsidiaries
prior to the Effective Time for all purposes for which such service was
recognized under the applicable Employee Plan, including, but not limited to,
recognition of service for eligibility, vesting (including acceleration thereof
pursuant to the terms of the applicable Employee Plan) and, to the extent not
duplicative of benefits received under such Employee Plan, the amount of
benefits, (ii) such participants shall participate in the Parent Benefit Plans
on terms no less favorable than those offered by Parent to similarly situated
employees of Parent and (iii) Parent shall cause any and all pre-existing
condition limitations (to the extent such limitations did not apply to a
pre-existing condition under the Employee Plans) and eligibility waiting periods
under any group health plans to be waived with respect to such participants and
their eligible dependents.
CHANGE IN CONTROL PROVISIONS. Parent and the Company hereby
acknowledge that the consummation of the Offer and the transactions contemplated
under this Agreement will be treated as a "Change in Control" for purposes of
each of the applicable Employee Plans, and each applicable employment, severance
or similar agreement applicable to any employee of the Company or any of its
subsidiaries, listed in SECTION 5.4(B) of the Company Disclosure Letter (such
Plans and agreements collectively, "CHANGE IN CONTROL AGREEMENTS") and agree to
abide by the provisions of any Change in Control Agreements which relate to a
Change in Control, including, but not limited to, the accelerated vesting
and/or payment of equity-based awards.
(c) The provisions of this Section 5.4 are not intended to and do not
create rights of third party beneficiaries.
5.5. INDEMNIFICATION. (a) From and after the Effective Time, the
Surviving Corporation shall indemnify and hold harmless all past and present
officers and directors (the "INDEMNIFIED PARTIES") of the Company and of its
subsidiaries to the full extent such persons may be indemnified by the Company
pursuant to Delaware law, the Company's Certificate of Incorporation and Bylaws,
as each is in effect on the date of this Agreement, for acts and omissions (x)
arising out of or pertaining to the transactions contemplated by this Agreement
or arising out of the Offer Documents or (y) otherwise with respect to any acts
or omissions occurring or arising at or prior to the Effective Time and shall
advance reasonable litigation expenses incurred by such persons in connection
with defending any action arising out of such acts or omissions, PROVIDED that
such persons provide the requisite affirmations and undertaking, as set forth in
Section 145(e) of the Delaware Code.
In addition, Parent will provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's
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current directors and officers an insurance and indemnification policy that
provides coverage for events occurring or arising at or prior to the Effecting
Time (the "D&O INSURANCE") that is no less favorable than the existing policy
or, if substantially equivalent insurance coverage is unavailable, the best
available coverage; PROVIDED, HOWEVER, that Parent and the Surviving Corporation
shall not be required to pay an annual premium for the D&O Insurance in excess
of 300% of the annual premium currently paid by the Company for such insurance,
but in such case shall purchase as much such coverage as possible for such
amount.
This SECTION 5.5 is intended to benefit the Indemnified Parties and
shall be binding on all successors and assigns of Parent, Purchaser, the Company
and the Surviving Corporation. Parent hereby guarantees the performance by the
Surviving Corporation of the indemnified obligations pursuant to this SECTION
5.5, which guaranty is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including the bankruptcy or insolvency of the
Surviving Corporation or any other person. The Indemnified Parties shall be
intended third-party beneficiaries of this SECTION 5.5.
5.6. VOTING OF SHARES. At any meeting of the Company's
stockholders held for the purpose of voting upon the Company Proposals, all
of the Shares then owned by Parent, Purchaser or any other subsidiaries of
Parent shall be voted in favor of the Company Proposals.
5.7. GUARANTEE OF PARENT. Parent hereby guarantees the payment by
Purchaser of the Per Share Amount and any other amounts payable by Purchaser
pursuant to this Agreement and will cause Purchaser to perform all of its other
obligations under this Agreement in accordance with their terms.
ARTICLE VI
MERGER CONDITIONS
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment or waiver at or prior to the Effective Time of the
following conditions:
6.1. OFFER. The Offer shall have been consummated; provided that
this condition shall be deemed to have been satisfied with respect to the
obligation of Parent and Purchaser to effect the Merger if Parent fails to
accept for payment or pay for Shares pursuant to the Offer in violation of
the terms of the Offer or of this Agreement.
6.2. STOCKHOLDER APPROVAL. If required, the Company Proposals
shall have been approved at or prior to the Effective Time by the requisite
vote of the stockholders of the Company in accordance with the Delaware Code.
6.3. NO INJUNCTION OR ACTION. No order, statute, rule, regulation,
executive order, stay, decree,
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judgment or injunction shall have been enacted, entered, promulgated or enforced
by any court or other Governmental Authority which prohibits or prevents the
consummation of the Merger which has not been vacated, dismissed or withdrawn
prior to the Effective Time. The Company and Parent shall use all reasonable
best efforts to have any of the foregoing vacated, dismissed or withdrawn by the
Effective Time.
6.4. GOVERNMENTAL APPROVALS. All Consents of any Governmental
Authority required for the consummation of the Merger and the transactions
contemplated by this Agreement shall have been obtained or those Consents the
failure to obtain which will not have a material adverse effect on the
business, assets, condition (financial or other), liabilities or results of
operations of the Surviving Corporation and its subsidiaries taken as a whole.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
stockholders of the Company described herein:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if any Governmental Authority
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement and such order, decree or ruling
or other action shall have become final and nonappealable;
(c) by Parent if
(i) the Company shall have breached or failed to perform in any
material respect any of its covenants or other agreements contained in this
Agreement, which breach or failure to perform is incapable of being cured
or has not been cured within 5 days after the giving of written notice
thereof to the Company (but not later than the expiration of the twenty
(20) business day period provided for the Offer under SECTION 1.1(b)
hereof);
(ii) any representation or warranty of the Company shall not have been
true and correct in all material respects when made;
(iii) any representation or warranty of the Company shall cease to be
true and correct in all material respects at any later date as if made on
such date (other than representations and warranties made as of a specified
date) other than as a result of a breach or failure to perform by
-42-
the Company of any of its covenants or agreements under this Agreement;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this
SECTION 7.1(C) shall not be available to Parent if Purchaser or any other
affiliate of Parent shall acquire shares of Common Stock pursuant to the Offer;
(d) by Parent if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to Parent
its approval or recommendation of the Offer or any of the Company Proposals or
shall have approved or recommended any Company Takeover Proposal or (ii) the
Board of Directors of the Company or any committee thereof shall have resolved
to take any of the foregoing actions;
(e) by either Parent or the Company if the Offer shall have expired
or been terminated without any Shares being purchased thereunder by Purchaser as
a result of the occurrence of any of the events set forth in ANNEX I hereto;
(f) by either the Company or Parent if either (x) as the result of
the failure of the Minimum Condition or any of the other conditions set forth in
Annex I hereto, the Offer shall have terminated or expired in accordance with
its terms without Purchaser having purchased any Shares pursuant to the Offer or
(y) the Offer shall not have been consummated on or before March 31, 1998,
PROVIDED that the right to terminate this Agreement pursuant to this SECTION
7.1(F) shall not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure of the Offer to be
consummated by such time;
(g) by the Company if Parent or Purchaser shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform is incapable of being cured or has not been cured
within 5 days after the giving of written notice thereof to Parent; or
(h) by the Company in accordance with SECTION 4.8(B) hereof;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this
SECTION 7.1(H) shall not be available (x) if the Company has breached in any
material respect its obligations under SECTION 4.8 hereof, or (y) if the Company
shall fail to pay when due the fees and expenses contemplated by SECTION 8.7
hereof.
The party desiring to terminate this Agreement pursuant to the
preceding paragraphs shall give written notice of such termination to the other
party in accordance with SECTION 8.5 hereof.
7.2. EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Offer or the Merger
pursuant to this ARTICLE VII, this
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Agreement (other than SECTIONS 7.2, 8.1, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.10,
8.11, 8.12, 8.13, 8.14 and 8.15 hereof) shall become void and of no effect with
no liability on the part of any party hereto (or of any of its directors,
officers, employees, agents, legal or financial advisors or other
representatives); PROVIDED, HOWEVER, that no such termination shall relieve any
party hereto from any liability for any breach of this Agreement prior to
termination. If this Agreement is terminated as provided herein, each party
shall use all reasonable best efforts to redeliver all documents, work papers
and other material (including any copies thereof) of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same.
ARTICLE VIII
MISCELLANEOUS
8.1. CONFIDENTIALITY. (a) Unless (i) otherwise expressly
provided in this Agreement, (ii) required by applicable Law or any listing
agreement with, or the rules and regulations of, any applicable securities
exchange or the NASD, (iii) necessary to secure any required Consents as to
which the other party has been advised or (iv) consented to in writing by
Parent and the Company, all information (whether oral or written) and
documents furnished in connection herewith together with analyses,
compilations, studies or other documents prepared by such party which contain
or otherwise reflect such information shall be kept strictly confidential by
the Company, Parent and their respective officers, directors, employees and
agents. Prior to any disclosure pursuant to the preceding sentence, the
party intending to make such disclosure shall consult with the other party
regarding the nature and extent of the disclosure. Nothing contained herein
shall preclude disclosures to the extent necessary to comply with accounting,
SEC and other disclosure obligations imposed by applicable Law. In the event
the transactions contemplated by this Agreement are not consummated, each
party shall return to the other any documents furnished by the other and all
copies thereof that any of them may have made and will hold in confidence any
information obtained from the other party except to the extent (a) such party
is required to disclose such information by Law or such disclosure is
necessary or desirable in connection with the pursuit or defense of a claim,
(b) such information was known by such party prior to such disclosure (and
PROVIDED that, except with respect to information referred to in the
following clause (c), such party shall have advised the other party of such
knowledge upon or promptly after its receipt of such information) or was
thereafter developed or obtained by such party independent of such disclosure
or (c) such information is or becomes generally available to the public other
than by breach of this SECTION 8.1 (or, to such party's knowledge, breach of
a confidentiality agreement with the other party). Prior to any disclosure
of information pursuant to the exception in clause (a) of the preceding
sentence, the party intending to disclose the same shall so notify the party
which provided the same in order that such party may seek a protective
-44-
order or other appropriate remedy should it choose to do so.
(b) The Parent and the Company further acknowledge that certain of
the business and activities of each of them is competitive with business and
activities of the other party, and each of them therefore agrees that it will
not use, or seek to obtain any competitive or other business advantage as a
result of, the information or documents so received by it in connection
herewith, such party acknowledging that such use would be unfair and
materially detrimental to the other party, PROVIDED that the provisions of
this SECTION 8.1(b) shall not apply to information referred to in clause (c)
of SECTION 8.1(a) hereof.
8.2. AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement among the Company, Parent
and Purchaser.
8.3. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company
on the one hand, or Parent and Purchaser on the other hand, to comply with
any obligation, covenant, agreement or condition herein may be waived by
Parent on the one hand, or the Company on the other hand, only by a written
instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this SECTION 8.3.
8.4. SURVIVAL. The respective representations, warranties,
covenants and agreements of the Company and Parent contained herein or in any
certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement, notwithstanding any
investigation made or information obtained by the other party, but shall
terminate at the Effective Time, except for those contained in SECTIONS 1.7,
1.8, 1.9, 1.14, 5.4, 5.5, 5.7 and 8.8 hereof and this SECTION 8.4, which
shall survive beyond the Effective Time.
8.5. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when
delivered in person, by facsimile, receipt confirmed, or on the next business
day when sent by overnight courier or on the second succeeding business day
when sent by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
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(i) if to the Company, to:
Xxxxxx Protection Group, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Senior Vice President and General Counsel
Xxxxxx Protection Group, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
and to
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx, III, Esq.
Telecopy: (000) 000-0000
and
(ii) if to Parent or Purchaser, to:
Tyco International Ltd.
The Xxxxxxx Building
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx XX00 Xxxxxxx
Xxxxxxxxx: Secretary
Telecopy: (000) 000-0000
with a copy to:
Tyco International (US) Inc.
Xxx Xxxx Xxxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
and to
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
8.6. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
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Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the Company, in the case of a proposed assignment by
Parent or Purchaser, or by Parent, in the case of a proposed assignment by the
Company, except that Purchaser may assign its rights, interest and obligations
hereunder to any other wholly-owned direct or indirect subsidiary of Parent,
provided that the provisions of SECTION 5.7 hereof shall apply to such other
subsidiary.
8.7. EXPENSES. (a) Except as provided in SECTION 8.7(b) or 8.7(c)
hereof, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.
(b) The Company agrees that if this Agreement is terminated pursuant
to
(i) Section 7.1(d);
(ii) Section 7.1(h); or
(iii) SECTION 7.1(F) and, with respect to this clause (iii), at the
time of such termination any person, entity or group (as defined in Section
13(d)(3) of the Exchange Act) (other than Parent or any of its affiliates
or any person identified in the Company's Proxy Statement dated April 30,
1997 and who has executed a Stockholder Agreement of even date herewith
with Parent and Purchaser, provided that such person has not breached the
terms of such Stockholder Agreement) shall have become the beneficial owner
of more than 20% of the outstanding shares of Company Stock and such
person, entity or group (or any affiliate of such person, entity or group)
thereafter (x) shall make a Company Takeover Proposal and, in the case of a
consensual transaction with the Company, shall substantially have
negotiated the terms thereof, at any time on or prior to the date which is
six months after such termination of this Agreement, and (y) shall
consummate such Company Takeover Proposal at any time on or prior to the
date which is one year after termination of this Agreement, in the case of
a consensual transaction, or six months after termination of this
Agreement, in the case of a non-consensual transaction, in each case with a
value per share of Company Stock of at least $17.00 (with appropriate
adjustments for reclassifications of capital stock, stock dividends, stock
splits, reverse stock splits and similar events);
then the Company shall pay to Parent the sum of (a) $3.5 million. Any payment
required by this SECTION 8.7(b) shall be made as promptly as practicable but in
no event later than two business days following termination of this Agreement
pursuant to SECTION 7.1(d) OR 7.1(h) hereof, or, in the case of clause (iii) of
this SECTION 8.7(b), upon consummation of such Company Takeover Proposal, and
shall be made by wire transfer of immediately
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available funds to an account designated by Parent.
(c) The Company further agrees that if this Agreement is terminated
pursuant to SECTION 7.1(C)(I) hereof,
(i) the Company will pay to Parent, as promptly as practicable
but in no event later than two business days following termination of
this Agreement, the amount of all documented and reasonable costs and
expenses incurred by Parent, Purchaser and their affiliates (including
but not limited to fees and expenses of counsel and accountants and
out-of-pocket expenses (but not fees) of financial advisors) in an
aggregate amount not to exceed $350,000 in connection with this
Agreement or the transactions contemplated hereby ("PARENT EXPENSES");
and
(ii) in the event that the Company consummates a Company Takeover
Proposal (whether or not solicited in violation of this Agreement)
within one year from the date of termination of this Agreement, the
sum of $3.5 million, less the amount of any payment made pursuant
to clause (i) of this Section 8.7(c), which payment shall be made not
later than two business days following consummation of such Company
Takeover Proposal.
(d) The Company further agrees that if this Agreement is terminated
pursuant to SECTION 7.1(C)(II) hereof, the Company will pay to Parent, as
promptly as practicable but in no event later than two business days following
termination of this Agreement, the Parent Expenses.
8.8. GOVERNING LAW. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed and governed by and
in accordance with the laws of, the State of New York.
8.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10. INTERPRETATION. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of
the agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i) the term
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an association,
an unincorporated organization, a Governmental Authority and any other
entity, (ii) unless otherwise specified herein, the term "AFFILIATE," with
respect to any person, shall mean and include any person controlling,
controlled by or under common control with such person and (iii) the term
"SUBSIDIARY" of any specified person shall mean any corporation 50 percent or
more of the outstanding voting power of which, or any
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partnership, joint venture, limited liability company or other entity 50 percent
or more of the total equity interest of which, is directly or indirectly owned
by such specified person.
8.11. ENTIRE AGREEMENT. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Annex(es)
attached hereto and the Disclosure Letter referred to herein, which Annex(es)
and Disclosure Letter are incorporated herein by reference, embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
representations, warranties, covenants, or undertakings other than those
expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings among the parties with respect to such
subject matter. Notwithstanding the foregoing provisions of this SECTION
8.11, the provisions of the letter agreement dated October 14, 1997 between
Tyco International (US) Inc. and X.X. Xxxxxx Securities Inc., as agent for
the Company, shall remain in effect in accordance with their terms.
8.12. SEVERABILITY. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable in a jurisdiction, such
provision shall be modified or deleted, as to the jurisdiction involved, only
to the extent necessary to render the same valid, legal and enforceable, and
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby nor shall the validity,
legality or enforceability of such provision be affected thereby in any other
jurisdiction.
8.13. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, the parties further agree that each
party shall be entitled to an injunction or restraining order to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other right or remedy to which
such party may be entitled under this Agreement, at law or in equity.
8.14. THIRD PARTIES. Nothing contained in this Agreement or in
any instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not a party hereto
or thereto or a successor or permitted assign of such a party; PROVIDED
HOWEVER, that the parties hereto specifically acknowledge that the provisions
of SECTION 5.5 hereof are intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties.
8.15. DISCLOSURE LETTER. Parent acknowledges that the Company
Disclosure Letter (i) relates to certain matters concerning the disclosures
required and transactions contemplated
-49-
by this Agreement, (ii) is qualified in its entirety by reference to specific
provisions of this Agreement, (iii) is not intended to constitute and shall not
be construed as indicating that such matter is required to be disclosed, nor
shall such disclosure be construed as an admission that such information is
material with respect to the Company, except to the extent required by this
Agreement.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be signed and delivered by their respective duly authorized
officers as of the date first above written.
TYCO INTERNATIONAL LTD.
By:/s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Vice President and Chief
Financial Officer
T9 ACQUISITION CORP.
By:/s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
XXXXXX PROTECTION GROUP, INC.
By:/s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: President
-51-
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision of the
Offer, Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the Securities Exchange Act (relating to Purchaser's obligation to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and (subject to any such rules or regulations) may delay the
acceptance for payment of any tendered Shares and (except as provided in this
Agreement) amend or terminate the Offer as to any Shares not then paid for if
(i) the condition that there shall be validly tendered and not withdrawn prior
to the expiration of the Offer a number of Shares which represents at least 51%
of the total number of Shares on a fully-diluted basis shall not have been
satisfied (the "MINIMUM CONDITION") or (ii) any applicable waiting period under
the HSR Act shall not have expired or been terminated prior to the expiration of
the Offer or (iii) at any time after the date of this Agreement and before the
time of payment for any such Shares (whether or not any Shares have theretofore
been accepted for payment or paid for pursuant to the Offer), any of the
following conditions exists:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a Governmental Authority of competent jurisdiction or a
Law shall have been promulgated, or enacted by a Governmental Authority of
competent jurisdiction which in any such case (i) restrains or prohibits the
making or consummation of the Offer or the consummation of the Merger, (ii)
prohibits or restricts the ownership or operation by Parent (or any of its
affiliates or subsidiaries) of any portion of the Company's business or assets,
or Parent's business or assets relating to the security services business, which
is material to the security services business of all such entities taken as a
whole, or compels Parent (or any of its affiliates or subsidiaries) to dispose
of or hold separate any portion of the Company's business or assets, or Parent's
business or assets relating to the security services business, which is material
to the security services business of all such entities taken as a whole, (iii)
imposes material limitations on the ability of Purchaser effectively to acquire
or to hold or to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by Purchaser on all
matters properly presented to the stockholders of the Company, or (iv) imposes
any material limitations on the ability of Parent or any of its affiliates or
subsidiaries effectively to control in any material respect the business and
operations of the Company, or (v) seeks to restrict any future business activity
by Parent (or any of its affiliates) relating to the security services business,
including, without limitation, by requiring the prior consent of any person or
entity (including any Governmental Authority) to future transactions by Parent
(or any of its affiliates); or
(b) there shall have been instituted, pending or threatened an
action by a Governmental Authority seeking to restrain or prohibit the making
or consummation of the Offer or the consummation of the Merger or to impose
any other restriction, prohibition or limitation referred to in the foregoing
paragraph (a); or
(c) this Agreement shall have been terminated by the Company or
Parent in accordance with its terms; or
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in the Shares on the NASDAQ National Market
System, (ii) any decline, measured from the date of this Agreement, in the
Dow Xxxxx Industrial Average or Standard & Poor's 500 Index by an amount in
excess of 15%, (iii) a declaration of a banking moratorium or any general
suspension of payments in respect of banks in the United States or (iv) in
the case of any of the foregoing existing at the time of the execution of
this Agreement, a material acceleration or worsening thereof; or
(e) Parent and the Company shall have agreed that Purchaser shall
amend the Offer to terminate the Offer or postpone the payment for Shares
pursuant thereto; or
(f) any of the representations and warranties made by the Company
in the Merger Agreement shall not have been true and correct in all material
respects when made, or shall thereafter have ceased to be true and correct in
all material respects as if made as of such later date (other than
representations and warranties made as of a specified date), or the Company
shall not in all material respects have performed each obligation and
agreement and complied with each covenant to be performed and complied with
by it under this Agreement, PROVIDED, however, that such breach or future to
perform is incapable of being cured or has not been cured within 5 days after
the giving of written notice thereof to the Company, PROVIDED, however, that
no such 5-day cure period shall require extension of the Offer beyond the
twenty (20) business days provided under Section 1.1(b) of the Agreement; or
(g) the Company's Board of Directors shall have modified or
amended its recommendation of the Offer in any manner adverse to Parent or
shall have withdrawn its recommendation of the Offer, or shall have
recommended acceptance of any Company Takeover Proposal or shall have
resolved to do any of the foregoing; or
(h) any corporation, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) ("PERSON"), other than Parent and Purchaser and
any person identified in the Company's Proxy Statement dated April 30, 1997
and who has executed a Stockholder Agreement of even date herewith with
Parent and Purchaser, provided that such person has not breached the terms of
such Stockholder Agreement, shall have acquired beneficial ownership of more
than 20% of the outstanding Shares, or shall have been granted any options or
rights, conditional or
A-2
otherwise, to acquire a total of more than 20% of the outstanding Shares; (ii)
any new group shall have been formed which beneficially owns more than 20% of
the outstanding Shares; or (iii) any person (other than Parent or one or more of
its affiliates) shall have entered into an agreement in principle or definitive
agreement with the Company with respect to a tender or exchange offer for any
Shares or a merger, consolidation or other business combination with or
involving the Company; or
(i) any change, development, effect or circumstance shall have
occurred or be threatened that would reasonably be expected to have a
Material Adverse Effect with respect to the Company; or
(j) the Company shall commence a case under any chapter of Title
XI of the United States Code or any similar law or regulation; or a petition
under any chapter of Title XI of the United States Code or any similar law or
regulation is filed against the Company which is not dismissed within 2
business days.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent or Purchaser regardless of the circumstances
giving rise to any such condition and may be waived by Parent or Purchaser, in
whole or in part, at any time and from time to time, in the sole discretion of
Parent. The failure by Parent or Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any right, the waiver of such
right with respect to any particular facts or circumstances shall not be deemed
a waiver with respect to any other facts or circumstances, and each right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be returned
by the Exchange Agent to the tendering stockholders.
A-3
GLOSSARY OF DEFINED TERMS
1996 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Bank Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certificate of Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Change in Control Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Company Acquisition Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Company Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Company Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Company Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Company Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . 26
Company Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Company Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Company Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Company Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Company Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Company Securities Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Company Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Company Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Company Superior Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Company Takeover Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Company Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
D&O Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Defined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Delaware Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Enforceability Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Environmental Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ERISA Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Financial Advisor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Independent Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ISO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Materials of Environmental Concern . . . . . . . . . . . . . . . . . . . . . . . . 29
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Minimum Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Offer Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Offer to Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Other Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Parent Benefit Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Parent Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Parent Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Parent Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Per Share Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Schedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Securities Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Surviving Corporation Common Stock . . . . . . . . . . . . . . . . . . . . . . . . .7
Takeover Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
