EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES Purchase Agreement (the "Agreement") is made as of
August 8, 2000, by and among Sentry Technology Corporation, a Delaware
corporation (the "Company"), and Dutch A&A Holding, B.V., a Netherlands
corporation (the "Purchaser").
WHEREAS, the Company desires to issue and sell to the Purchaser and
the Purchaser desires to acquire on the terms and subject to the conditions set
forth in this Agreement the number of shares of the Company's Common Stock, par
value $.001 per share (the "Common Stock") set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. The following terms have the meanings
specified in this Section 1:
"AVERAGE MARKET VALUE" - The Average Market Value of the Common Stock
shall be determined by multiplying (a) the weighted average number of shares of
Common Stock outstanding (including in such number any shares which are issuable
upon the exercise of vested "in-the-money" stock options, if any), by (b) the
closing sale price of the Common Stock as quoted on the OTC Bulletin Board, or
if none then the average of the closing bid and closing asked prices, if
available, of the Common Stock as quoted on the OTC Bulletin Board, or in either
case as published or quoted on the security industry "pink sheets" if the Common
Stock is not quoted on the OTC Bulletin Board on the relevant day.
"AMENDED AND RESTATED CERTIFICATE OF AMENDMENT" - The Amended and
Restated Certificate of Incorporation of the Company, substantially in the form
annexed hereto as Exhibit A, pursuant to which (i) the number of shares of
Common Stock, par value $0.001 per share, which the Company is authorized to
issue will be increased to 140,000,000 shares, and (ii) the outstanding shares
of the Company's Class A Preferred Stock, par value $0.001 per share, will be
reclassified as shares of Common Stock at the rate of five (5) shares of Common
Stock for each share of Class A Preferred Stock outstanding.
"CONTINUING DIRECTORS" - shall mean initially two Directors designated
by the Company's Board of Directors prior to the Initial Closing. In the event
of the death or resignation of a Continuing Director, the remaining Continuing
Director shall designate a replacement for such Director.
"DGCL" - means Delaware General Corporation Law.
"DISTRIBUTION AGREEMENT" - shall mean the Distribution Agreement,
substantially in the form annexed hereto as Exhibit B, to be dated the Initial
Closing Date, between the Company and the Purchaser pursuant to which the
products and services of each party will be made available to the other for
distribution and sale in accordance with the terms thereof.
"FIRST ANNIVERSARY DATE; SECOND ANNIVERSARY DATE" - The first or
second (as the case may be) anniversary of the Initial Closing Date, or if such
day falls on a Saturday, Sunday or other legal holiday in the State of New York,
the first business day thereafter.
"INITIAL CLOSING" - The closing of the sale of the Initial Shares to
the Purchaser on the Initial Closing Date, pursuant to Section 2.2.(a) of this
Agreement.
"INITIAL CLOSING DATE" - The date on which the Special Meeting
concludes and the Amended and Restated Certificate is filed with the Secretary
of State of the State of Delaware, or such other date as the parties may agree.
"MATERIAL ADVERSE EFFECT" - means, with respect to any Person, any
change or effect which is materially adverse to the financial condition or
results of operations of such Person and its subsidiaries, taken as a whole,
excluding in all cases: (i) events or conditions generally affecting the
industry in which such Person and its subsidiaries operate or arising from
changes in general business or economic conditions; (ii) any effect resulting
from any change in law or generally accepted accounting principles from the date
of this Agreement, which effects generally entities such as such Person; (iii)
events resulting directly from the execution and/or announcement of this
Agreement, including, without limitation, the cancellation or postponement of
customer orders or the absence of customer sales during the pendency of the
Agreement; and (iv) any effect resulting from compliance by such Person with the
terms of this Agreement.
"PERSON" - means any natural person, corporation, limited liability
company, partnership, unincorporated organization or other entity.
"PROXY STATEMENT/PROSPECTUS" and "REGISTRATION STATEMENT" shall have
the meaning set forth in Section 8.9 hereof.
"SCHEDULE 8.13 OPTIONS" shall mean the employee stock options set
forth on Schedule 8.13 annexed hereto.
"SPECIAL MEETING" - The annual or special meeting of stockholders of
the Company called for the purpose of considering, among other things, the
proposal to (i) approve the Amended and Restated Certificate and (ii) elect the
Purchaser's nominees to the Board of Directors.
"SUBSEQUENT CLOSING" - A closing of a sale of additional shares of
Common Stock pursuant to Section 2.2(b) or 2.2(c) of this Agreement.
"SUBSIDIARY" - of any Person means any other corporation or entity of
which such Person owns, directly or indirectly, stock or other equity interests
having a majority of the votes entitled to be cast in the election of directors
of such corporation or entity under ordinary circumstances or of which such
Person owns a majority beneficial interest.
"TRANSACTION AGREEMENTS" this Agreement and the Distribution
Agreement, as the same shall have been amended from time to time.
2. AUTHORIZATION AND SALE OF THE SHARES.
2.1 SALE OF THE SHARES. Subject to the terms and conditions set
forth in this Agreement, and in reliance upon the representations, warranties
and agreements contained herein, the Company will issue and sell to the
Purchaser and Purchaser will purchase from the Company, shares of Common Stock,
as follows:
2.2 (a) INITIAL SALE. At the Initial Closing the Company will
issue and sell to the Purchaser, and the Purchase will purchase from the
Company, such number of shares of Common Stock as shall increase the total
number of shares of Common Stock acquired hereunder by the Purchaser to 37.5% of
the Common Stock to be outstanding upon the closing of the Initial Sale,
calculated without giving effect to the exercise of Schedule 8.13 Options set
forth on Schedule 8.13 (whether or not such options have been exercised or are
still outstanding at the time of such closing), and calculated without giving
effect to unexercised stock options or warrants outstanding at the time of such
closing ("Initial Shares"). The purchase price for the Initial Shares shall be
$3.0 million, and shall be paid by certified check or by wire transfer, as
follows: $2.0 million shall be paid at the Initial Closing, and $1.0 million
shall be paid six months after the Initial Closing (or the first business day
thereafter, if such day falls on a Saturday, Sunday or other legal holiday in
the State of New York).
2.2 (b) ADDITIONAL PURCHASE RIGHT. (A) At any time prior to the
First Anniversary Date, subject only to the conditions set forth in subsection
(B) hereof, the Purchaser may elect to purchase from the Company such number of
shares of Common Stock as shall increase the total number of shares of Common
Stock acquired hereunder by the Purchaser to 51% of the Common Stock to be
outstanding upon the closing of the sale, calculated without giving effect to
the exercise of Schedule 8.13 Options set forth on Schedule 8.13 (whether or not
such options have been exercised or are still outstanding at the time of such
additional closing), and calculated without giving effect to the exercise of any
unexercised stock options or warrants outstanding at the time of such additional
closing. The purchase price for such shares shall be determined as follows:
(I) If the Average Market Value of the Common Stock measured over any
ten-day trading period during the one year preceding the First Anniversary Date
is at least $15.0 million, the purchase price shall be determined by multiplying
the actual number of shares to be purchased, as calculated above, by $.001; or
(II) otherwise the purchase price shall be $1.5 million.
(B) The obligation of the Company to sell additional shares of
Common Stock pursuant to this Section 2.2(b) shall be subject to the condition
that Purchaser shall have performed in all material respects its obligations
under the Transaction Agreements.
2.2(c) SECOND ADDITIONAL PURCHASE RIGHT. (A) At any time on or
prior to the Second Anniversary Date, subject only to the conditions set forth
in Subsection (B) hereof, the Purchaser may elect to purchase from the Company
such number of shares of Common Stock as shall increase the total number of
shares of Common Stock acquired hereunder by the Purchaser to 60% of the Common
Stock to be outstanding upon the closing of the sale, calculated without giving
effect to the exercise of Schedule 8.13 Options set forth on Schedule 8.13
(whether or not such options have been exercised or are still outstanding at the
time of such additional closing), and calculated without giving effect to
unexercised stock options or warrants outstanding at the time of such additional
closing. The purchase price for such shares shall be determined as follows:
(I) If the Average Market Value of the Common Stock measured over any
ten-day trading period during the two years preceding the Second Anniversary
Date is at least $25.0 million, the purchase price shall be determined by
multiplying the actual number of shares to be purchased, as calculated above, by
$.001; or
(II) if the Purchaser acquired additional shares pursuant to Section
2.2(b) but the Average Market Value test set forth in 2.2(c)(I) is not met, then
the purchase price shall be $3.5 million; or
(III) otherwise the purchase price shall be $5.0 million.
(B) The obligation of the Company to sell additional shares of
Common Stock pursuant to this Section 2.2(c) shall be subject to the condition
that Purchaser shall have performed in all material respects its obligations
under the Transaction Agreements.
2.2(d) NOTICE OF ELECTION. In the event Purchaser determines to
purchase shares of Common Stock pursuant to Section 2.2(b) or (c) hereof,
Purchaser shall give written notice thereof to the Company within 20 business
days after the First or Second Anniversary Date or after the conclusion of the
relevant trading period, whichever the case may be.
3. CLOSING; DELIVERY.
3.1 INITIAL CLOSING AND SUBSEQUENT CLOSINGS. The Initial Closing
shall be held at the offices of Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx,
Xxx Xxxx, Xxx Xxxx 00000-0000, at 10:00 a.m., New York City time, on the Initial
Closing Date. Any Subsequent Closing shall be held at the office of the Company
five business days after the Purchaser shall have given notice of its election
to effect the Subsequent Closing.
3.2 DELIVERY. At the Initial Closing and at any Subsequent
Closing, the Company shall deliver to Purchaser one or more certificates, in
such denominations and registered in the Purchaser's name, representing in the
aggregate the number of shares of Common Stock which the Purchaser is purchasing
from the Company, against payment of the purchase price therefor by certified
check or by wire transfer of same day funds.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth
in the Company's disclosure schedule delivered to the Purchaser in connection
with this Agreement (the "the Company Disclosure Schedule"), the Company hereby
represents and warrants to the Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. Each of the Company and its
subsidiaries (a) is duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, (b) has requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and (c) is in good standing and duly qualified to
do business in each jurisdiction in which the transaction of its business makes
such qualification necessary, except where the failure to be so organized,
existing, qualified and in good standing or to have such power or authority
would not have a Material Adverse Effect on the Company. True and complete
copies of the Certificate of Incorporation and the By-Laws, as amended to date,
of the Company and its subsidiaries have been made available to the Purchaser.
4.2 CAPITALIZATION. (a) The authorized capital stock of the
Company presently consists of 40,000,000 shares of Common Stock and 10,000,000
shares of preferred stock, par value $.001 per share. As of the date of this
Agreement, (i) 9,750,760 shares of Common Stock are issued and outstanding, (ii)
1,857,056 shares of Common Stock are reserved for issuance pursuant to
outstanding stock options, 362,177 shares of Common Stock are reserved for
issuance in respect of future grants of stock options, and 100,000 shares of
Common Stock are reserved for issuance pursuant to outstanding warrants, (iii)
5,333,334 shares of Class A Preferred Stock are issued and outstanding, (iv)
380,056 shares of Class A Preferred Stock are reserved for issuance pursuant to
outstanding stock options and (v) an indeterminate number of shares of Series B
Junior Participating Preferred Stock are reserved for issuance in connection
with the Company's Shareholder Rights Plan. All outstanding shares of Common
Stock and Class A Preferred Stock are validly issued, fully paid and
nonassessable. No shares of Series B Junior Participating Preferred Stock are
outstanding. The Common Stock is not subject to preemptive rights. Except as
disclosed in the Company Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, calls, rights, commitments or any other
agreements to which the Company is a party or by which the Company is bound
which obligate the Company to (i) issue, deliver or sell or cause to be issued,
delivered or sold any additional shares of Common Stock, Class A Preferred Stock
or any other capital stock of the Company or any other securities convertible
into, or exercisable or exchangeable for, or evidencing the right to subscribe
for, any such shares or (ii) purchase, redeem or otherwise acquire any shares of
Common Stock, Class A Preferred Stock and any other capital stock of the
Company.
(b) Upon the filing of the Amended and Restated Certificate, the
authorized capital stock of the Company will consist of 140,000,000 shares of
Common Stock and 10,000,000 shares of preferred stock, par value $.001 per
share. At that time (assuming no stock options outstanding on the date hereof
will have been exercised), (i) 38,417,420 shares of Common Stock will be issued
and outstanding, (ii) 3,957,336 shares of Common Stock will be reserved for
issuance pursuant to outstanding stock options, (iii) 362,177 shares of Common
Stock will be reserved for issuance in respect of future grants of stock
options, (iv) 100,000 shares of Common Stock will be reserved for issuance
pursuant to outstanding warrants and (iii) an indeterminate number of shares of
Series B Junior Participating Preferred Stock will be reserved for issuance in
connection with the Company's Shareholders Rights Plan. No shares of Series B
Junior Participating Preferred Stock will be outstanding.
(c) Except as set forth in the Company Disclosure Schedule, the
Company owns, directly or indirectly, all of the outstanding shares of or other
interests in each of its subsidiaries, which subsidiaries are listed in Section
4.2(c) of the Company Disclosure Schedule. Each of the outstanding shares of
capital stock of each of the Company's subsidiaries has been duly authorized, is
validly paid and nonassessable, and except as set forth on the Company
Disclosure Schedule, is owned, directly or indirectly, by the Company, free and
clear of all liens, pledges, security interests, claims or other encumbrances,
except for such liens, pledges, security interests, claims or encumbrances that
would not have a Material Adverse Effect on the Company.
(d) Except as set forth in Section 4.2 of the Company Disclosure
Schedule, the Company does not own, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation, partnership, joint
venture, business, trust or entity (other than investments in short-term
investment securities).
(e) There are no voting trusts or shareholder agreements to which
the Company is a party with respect to the voting of the capital stock of the
Company.
4.3 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby in accordance with the
terms hereof (subject to the approval of the Amended and Restated Certificate by
the holders of a majority of the outstanding shares of Common Stock, and by the
holders of two-thirds of the outstanding shares of Class A Preferred Stock, each
voting as a class, and the filing and recordation of the Amended and Restated
Certificate as required by the DGCL). The Company's Board of Directors (the "the
Company Board") has duly authorized the execution, delivery and performance of
this Agreement by the Company, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or the transactions
contemplated hereby (other than the aforementioned approval of the Amended and
Restated Certificate by the stockholders of the Company). This Agreement has
been duly executed and delivered by the Company and, assuming this Agreement
constitutes the legal, valid and binding obligation of the Purchaser,
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as may be limited by
any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally or
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.4 CONSENTS AND APPROVALS. Neither the execution and delivery of
this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will require on the part of the Company any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, except (i) as may be required in
connection with the applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) pursuant to the
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and state securities or "blue sky" laws and state takeover
laws, (iii) the filing of the Amended and Restated Certificate pursuant to the
DGCL and appropriate documents with the relevant authorities of other states in
which the Company is authorized to do business, (iv) as set forth in Section 4.4
of the Company Disclosure Schedule or (v) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not have a Material Adverse Effect on the Company or prevent
the consummation of the transactions contemplated hereby.
4.5 NO VIOLATION. Except as set forth in Section 4.5 of the
Company Disclosure Schedule, assuming the Amended and Restated Certificate has
been duly approved by the stockholders of the Company as set forth above,
neither the execution and delivery of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will (a)
conflict with or violate the Certificate of Incorporation, as so amended, or the
By-Laws of the Company or any of its subsidiaries, (b) result in a violation or
breach of, constitute a default (with or without notice or lapse of time, or
both) under, give rise to any right of termination, cancellation or acceleration
of, or result in the imposition of any lien, charge or other encumbrance on any
assets or property of the Company or any of its subsidiaries pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company, any of its subsidiaries, or any of their
respective assets or properties are bound, except for such violations, breaches
and defaults (or rights of termination, cancellation or acceleration or lien or
other charge or encumbrance) as to which requisite waivers or consents have been
obtained or which would not have a Material Adverse Effect on the Company or
prevent the consummation of the transactions contemplated hereby or (c) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Company, any of its subsidiaries or any of their respective assets and
properties, except for such violations which would not have a Material Adverse
Effect on the Company or prevent the consummation of the transactions
contemplated hereby.
4.6 SEC REPORTS; FINANCIAL STATEMENTS. (a) Since February 12,
1997, the Company has filed with the Securities and Exchange Commission (the
"SEC") all forms, reports, schedules, statements and other documents required to
be filed by it with the SEC pursuant to the Exchange Act, the Securities Act and
the SEC's rules and regulations thereunder (collectively, the "the Company SEC
Documents"). The Company SEC Documents, including, without limitation, any
financial statements or schedules included therein, at the time filed, or in the
case of registration statements on their respective effective dates, (i)
complied as to form in all material respects with the applicable requirements of
the Exchange Act and the Securities Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder and (ii) did not at the time filed
(or, in the case of registration statements, at the time of effectiveness),
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements of the Company
(including any related notes thereto) included in the Company SEC Documents
(excluding the Company SEC Documents described in Section 4.7 hereof) comply as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the period involved (except as may be
indicated in such financial statements or in the notes thereto or, in the case
of unaudited financial statements, as permitted by the requirements of Form
10-Q) and fairly present in all material respects (subject, in the case of the
unaudited statements, to normal year-end adjustments and the absence of
footnotes) the financial position of the Company as of the dates thereof and the
results of the Company's operations and cash flows for the periods presented
therein.
4.7 PROXY STATEMENT/PROSPECTUS. None of the information to be
included in the Proxy Statement/Prospectus or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy
Statement/Prospectus or any amendments thereof or supplements thereto, and at
the time of the Special Meeting, will contain any untrue statement of a material
fact or 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. None of the information to be included in the
Registration Statement or any amendments thereto, at the time the Registration
Statement becomes effective (or in the case of a post-effective amendment, at
the time such amendment becomes effective) will contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Proxy Statement/Prospectus will comply as to form
in all material respects with the provisions of the Securities Act and the
Exchange Act. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to the statements made in the Proxy
Statement/Prospectus based on information supplied by or on behalf of the
Purchaser or any of Purchaser's affiliates specifically for inclusion therein.
4.8 COMPLIANCE WITH LAW. Except as set forth in Section 4.8 of
the Company Disclosure Schedule, neither the Company nor any of its subsidiaries
is in violation of any applicable statute, rule, regulation, decree or order of
any governmental or regulatory authority applicable to the Company or its
subsidiaries, except for violations which would not have a Material Adverse
Effect on the Company. Except as set forth in Section 4.8 of the Company
Disclosure Schedule or as contemplated or permitted by this Agreement, the
Company and its subsidiaries hold all permits, licenses, exemptions, orders and
approvals of governmental and regulatory authorities necessary for the conduct
of their respective businesses, as now being conducted, except where the failure
to hold permits, licenses, exemptions, orders and approvals would not have a
Material Adverse Effect on the Company.
4.9 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Section
4.9 of the Company Disclosure Schedule, since December 31, 1999 through the date
of this Agreement, the Company and its subsidiaries have conducted their
respective businesses only in the ordinary course and there has not been (a) any
changes which could have a Material Adverse Effect on the Company; (b) any
declaration, setting aside or payment of any dividend or payment in cash, stock
or property or other distribution with respect to the Company's capital stock;
(c) any reclassification, combination, split, subdivision, redemption, purchase
or other acquisition, directly or indirectly, of any of the Company's capital
stock; (d) any material change in the Company's accounting principles, practices
or methods; or (e) any material alteration in the character or conduct of the
Company's business.
4.10 NO UNDISCLOSED LIABILITIES. Except (a) for liabilities
incurred in the ordinary course of business, (b) liabilities incurred in
connection with the transactions contemplated by this Agreement, (c) liabilities
which would not have a Material Adverse Effect on the Company and (d) as set
forth on the Company Disclosure Schedule, from December 31, 1999 until the date
of this Agreement, the Company and its subsidiaries had not incurred any
material liabilities that would be required to be reflected in or reserved
against a consolidated balance sheet of the Company prepared in accordance with
generally accepted accounting principles.
4.11 LITIGATION. Except as set forth on the Company Disclosure
Schedule, there are no claims, actions, proceedings or governmental
investigations pending, nor has the Company or any of its subsidiaries received
notice of any threatened claims, actions, proceedings or governmental
investigations against the Company or any of its subsidiaries by or before any
court or other governmental or regulatory body, which, if adversely determined,
would have a Material Adverse Effect on the Company. Neither the Company or any
of its subsidiaries nor their respective assets is subject to any outstanding
and unsatisfied order, writ, judgment, injunction or decree which would have a
Material Adverse Effect on the Company.
4.12 EMPLOYEE BENEFIT MATTERS. All employee benefit plans and
other benefit arrangements covering employees of the Company and its
subsidiaries (the "the Company Benefit Plans") are listed in Section 4.12 of the
Company Disclosure Schedule. True and complete copies of the Company Benefit
Plans have been made available to the Purchaser. To the extent applicable, the
Company Benefit Plans comply in all material respects with the requirements of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
the Code, except as disclosed in Section 4.12(a) of the Company Disclosure
Schedule, and any Company Benefit Plan intended to be qualified under Section
401(a) of the Code has been determined by the Internal Revenue Service (the
"IRS") to be so qualified. No Company Benefit Plan is covered by Title IV of
ERISA or Section 412 of the Code. Neither the Company nor any entity under
"common control" with the Company within the meaning of Section 4001 of ERISA
has contributed to, or been required to contribute to, any "multi-employer plan"
(as defined in Sections 3(37) and 4001(a)(3) of ERISA).
4.13 TAXES. Except as set forth on the Company Disclosure
Schedule, the Company and each of its subsidiaries (a) have filed all federal,
state and foreign tax returns required to be filed by the Company or any of its
subsidiaries for tax years ended prior to the date of this Agreement, except for
those tax returns the failure of which to file would not have a Material Adverse
Effect on the Company or for which requests for extensions have been timely
filed, and all such returns are complete in all material respects, (b) have paid
or accrued all taxes shown to be due and payable on such returns, (c) have
accrued all such taxes for such periods subsequent to the periods covered by
such returns ending on or prior to the date hereof and (d) have "open" years for
federal income tax returns only as set forth on the Company Disclosure Schedule.
There are no liens for taxes on the assets of the Company or any of its
subsidiaries, except for liens that would not have a Material Adverse Effect on
the Company, and there is no pending, nor has the Company or any of its
subsidiaries received notice of any threatened, tax audit, examination, refund
litigation or adjustment in controversy which, if determined adversely, would
have a Material Adverse Effect on the Company. Neither the Company nor any of
its subsidiaries is a party to any agreement providing for the allocation or
sharing of taxes.
4.14 INTELLECTUAL PROPERTY. The Company and its subsidiaries own
or possess rights in all patents, trademarks, tradenames, copyrights and other
intellectual property rights used in or necessary for the conduct of the
businesses of the Company and its subsidiaries as now operated (collectively,
"the Company Intellectual Property"), except where the failure to own or possess
any such the Company Intellectual Property would not have a Material Adverse
Effect on the Company. Neither the Company nor any of its subsidiaries has
received any notice that the products of the Company and its subsidiaries, or
the use thereof, violate, infringe or otherwise conflict with the Intellectual
Property of third parties, except for such violations, infringements or
conflicts that would not have a Material Adverse Effect on the Company or as
disclosed on Section 4.14 of the Company Disclosure Schedule.
4.15 LABOR MATTERS. Neither the Company nor any of its
subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor union
organization. There is no unfair labor practice or labor arbitration proceeding
pending or, to the knowledge of the senior executive officers of the Company,
threatened against the Company or any of its subsidiaries relating to their
respective businesses, except for any such proceeding that would not have a
Material Adverse Effect on the Company.
4.16 BROKERS AND FINDERS. Except as set forth on Schedule 4.16,
no broker, finder or investment bank has acted directly or indirectly for the
Company, nor has the Company incurred any obligation to pay any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated hereby.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company as follows:
5.1 ORGANIZATION AND QUALIFICATION. The Purchaser is duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its organization and has requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as it is
now being conducted.
5.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Purchaser has
the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby in accordance
with the terms hereof. The Purchaser's Directors have duly authorized the
execution, delivery and performance of this Agreement by the Purchaser, and no
other corporate proceedings on the part of the Purchaser are necessary to
authorize this Agreement or the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Purchaser and, assuming this
Agreement constitutes the legal, valid and binding obligation of the Company,
constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as may be
limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors' rights
generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3 CONSENTS AND APPROVALS. Except as set forth in the
Purchaser's disclosure schedule delivered to the Company in connection with this
Agreement (the "Purchaser Disclosure Schedule"), neither the execution and
delivery of this Agreement by the Purchaser nor the consummation by the
Purchaser of the transactions contemplated hereby will require on the part of
the Purchaser any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, except (i) as may
be required in connection with the applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) pursuant to the applicable requirements of the Securities Act, the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or (iii)
where the failure to obtain such consent, approval, authorization or permit, or
to make such filing or notification, would not have a Material Adverse Effect on
the Purchaser or prevent the consummation of the transactions contemplated
hereby.
5.4 NO VIOLATION. Except as set forth in the Purchaser Disclosure
Schedule, neither the execution and delivery of this Agreement by the Purchaser
nor the consummation by the Purchaser of the transactions contemplated hereby
will (a) conflict with or violate the Certificate of Incorporation or By-Laws of
the Purchaser or any of its subsidiaries, (b) result in a violation or breach
of, constitute a default (with or without notice or lapse of time, or both)
under, give rise to any right of termination, cancellation or acceleration of,
or result in the imposition of any lien, charge or other encumbrance on any
assets or property of the Purchaser or any of its subsidiaries pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license or other
instrument or obligation to which the Purchaser or any of its subsidiaries is a
party or by which the Purchaser, any of its subsidiaries, or any of their
respective assets or properties are bound, except for such violations, breaches
and defaults (or rights of termination, cancellation or acceleration or lien or
other charge or encumbrance) as to which requisite waivers or consents have been
obtained or which would not have a Material Adverse Effect on the Purchaser or
prevent the consummation of the transactions contemplated hereby or (c) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Purchaser, any of its subsidiaries or any of their respective assets and
properties, except for such violations which would not have a Material Adverse
Effect on the Purchaser or prevent the consummation of the transactions
contemplated hereby.
5.5 PROXY STATEMENT/PROSPECTUS. None of the information supplied
by the Purchaser to be included in the Proxy Statement/Prospectus or the
Registration Statement will, in the case of the Proxy Statement/Prospectus or
any amendments thereof or supplements thereto, at the time of the mailing of the
Proxy Statement/Prospectus or any amendments thereof or supplements thereto, and
at the time of the Special Meeting, or, in the case of the Registration
Statement, at the time it becomes effective, contain any untrue statement of a
material fact or 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.
5.6 LITIGATION. Except as set forth in the Purchaser Disclosure
Schedule, there are no claims, actions, proceedings or governmental
investigations pending, nor has the Purchaser or any of its subsidiaries
received notice of any threatened claims, actions, proceedings or governmental
investigations against the Purchaser or any of its subsidiaries by or before any
court or other governmental or regulatory body, which, if adversely determined,
would have a Material Adverse Effect on the Purchaser. Neither the Purchaser or
any of its subsidiaries nor their respective assets is subject to any
outstanding and unsatisfied order, writ, judgment, injunction or decree which
would have a Material Adverse Effect on the Purchaser.
5.7 BROKERS AND FINDERS. Except as has been disclosed to the
Company, no broker, finder or investment bank has acted directly or indirectly
for the Purchaser, nor has the Purchaser incurred any obligation to pay any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby.
5.8 FINANCIAL CAPABILITY. At the Initial Closing the Purchaser
will have sufficient working capital or readily available funds sufficient to
pay the purchase price of the Initial Shares. The Purchaser has received one or
more letters from recognized financial advisors to the effect that such advisor
is confident that Purchaser can obtain at or before the Initial Closing funds
sufficient to, among other things, acquire the Initial Shares. At or prior to
the effective time of the Proxy Statement/Prospectus the Purchaser shall furnish
to the Company a letter from a recognized financial advisor specifically to the
effect that such advisor is confident that Purchaser can obtain at or before the
Initial Closing funds sufficient to acquire the Initial Shares.
6. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The Purchaser's
obligation to purchase the Initial Shares at the Initial Closing is subject to
the fulfillment to the Purchaser's satisfaction, or waiver thereof in writing,
on or prior to the Initial Closing Date of each of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by the Company in Section 4 hereof shall be true and correct
in all material respects when made and shall be true and correct in all material
respects on the Initial Closing Date with the same force and effect as if they
had been made on and as of the Initial Closing Date.
6.2 PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Company on
or prior to the Initial Closing Date shall have been performed or complied with
in all material respects.
6.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to
the Purchaser a certificate of an officer of the Company, dated the Initial
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 6.1 and 6.2 hereof.
6.4 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings of the Company in connection with the transactions contemplated
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchaser.
6.5 AUTHORIZATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body that are required to be
obtained by the Company in connection with the lawful issuance and sale of the
Shares pursuant to this Agreement shall have been duly obtained and shall be
effective on and as of the Initial Closing.
6.6 AMENDED AND RESTATED CERTIFICATE. The Amended and Restated
Certificate shall have been filed with the Secretary of State of the State of
Delaware and the Purchaser's nominees shall have been elected directors of the
Company at the Special Meeting to terms satisfactory to Purchaser (up to three
years); provided, however, that the approval by the Company's stockholders of
the proposal to adopt the new Article Twelfth or otherwise to rescind the
classified Board provisions of the Company's Amended and Restated Certificate of
Incorporation shall not be a condition to Purchaser's obligations hereunder.
6.7 TRANSACTION AGREEMENTS. The Company shall have executed the
other Transaction Agreements.
6.8 NO INJUNCTION. No federal or state governmental or regulatory
body or court of competent jurisdiction shall have enacted, issued, promulgated
or enforced any statute, rule, regulation, executive order, decree, judgment,
preliminary or permanent injunction or other order which is in effect and which
prohibits, enjoins or otherwise restrains the consummation of the Initial
Closing; provided, that the parties shall use commercially reasonable efforts to
cause any such decree, judgment, injunction or order to be vacated or lifted.
6.9 REGISTRATION STATEMENT. The Registration Statement as
hereinafter defined in Section 8.9 shall have become effective and shall be
effective at the Effective Time, and no stop order suspending effectiveness of
the Registration Statement shall have been issued, no action, suit, proceeding
or investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
laws relating to the issuance or trading of the Common Stock to be issued
pursuant hereto or pursuant to the Amended and Restated Certificate shall have
been received.
6.10 OPINION OF COUNSEL. The Company shall have delivered to the
Purchaser an opinion of counsel to the Company in form and substance reasonably
satisfactory to the Purchaser.
6.11 OTHER CONDITIONS. (a) The Company shall have obtained the
written consent of GE Capital Corporation to the execution, delivery and
performance of this Agreement and to the transactions contemplated hereby; (b)
the Company and NOG (NY) QRS 12-23, Inc. shall have entered into an amendment to
the lease dated December 24, 1996, as amended, in substance satisfactory to the
Purchaser, in its sole judgment; provided, however that this condition shall not
apply if Purchaser's dissatisfaction relates solely to current rent payable
under the lease or to similar current rent-related economic terms; (c) a
petition of bankruptcy shall not have been filed by the Company or any of its
subsidiaries; and (d) an involuntary petition of bankruptcy with respect to the
Company or any of its subsidiaries shall not have been filed and not been
dismissed prior to the Initial Closing; provided, however, that in such event
the Company shall have the unilateral right to extend the date of the Initial
Closing to a date not more than thirty (30) business days following the Special
Meeting.
7. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to sell the Initial Shares at the Initial Closing is subject to the fulfillment
to its satisfaction, or waiver thereof in writing, on or prior to the Initial
Closing Date of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by the Purchaser in Section 5 hereof shall be true and
correct in all material respects when made and shall be true and correct in all
material respects on the Initial Closing Date with the same force and effect as
if they had been made on and as of the Initial Closing Date.
7.2 PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Purchaser on
or prior to the Initial Closing Date shall have been performed or complied with
in all material respects.
7.3 COMPLIANCE CERTIFICATE. The Purchaser shall have delivered to
the Company a certificate of an officer of the Purchaser, dated the Initial
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 7.1 and 7.2 hereof.
7.4 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings of the Purchaser in connection with the transactions contemplated
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Company.
7.5 AUTHORIZATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body that are required to be
obtained by the Purchaser in connection with the lawful issuance and sale of the
Shares pursuant to this Agreement shall have been duly obtained and shall be
effective on and as of the Initial Closing.
7.6 AMENDED AND RESTATED CERTIFICATE; ELECTION OF DIRECTORS. The
Amended and Restated Certificate shall have been filed with the Secretary of
State of the State of Delaware, and the Purchaser's nominees shall have been
elected directors of the Company at the Special Meeting; provided, however, that
the approval by the Company's stockholders of the proposal to adopt the new
Article Twelfth or otherwise to rescind the classified Board provisions of the
Company's Amended and Restated Certificate of Incorporation shall not be a
condition to Company's obligations hereunder.
7.7 TRANSACTION AGREEMENTS. The Purchaser shall have executed the
other Transaction Agreements.
7.8 NO INJUNCTION. No federal or state governmental or regulatory
body or court of competent jurisdiction shall have enacted, issued, promulgated
or enforced any statute, rule, regulation, executive order, decree, judgment,
preliminary or permanent injunction or other order which is in effect and which
prohibits, enjoins or otherwise restrains the consummation of the Initial
Closing; provided, that the parties shall use commercially reasonable efforts to
cause any such decree, judgment, injunction or order to be vacated or lifted.
7.9 REGISTRATION STATEMENT. The Registration Statement shall have
become effective and shall be effective at the Effective Time, and no stop order
suspending effectiveness of the Registration Statement shall have been issued,
no action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and all
necessary approvals under state securities laws relating to the issuance or
trading of the Common Stock to be issued pursuant hereto or pursuant to the
Amended and Restated Certificate shall have been received.
7.10 PAYMENT OF PURCHASE PRICE. The Purchaser shall have
delivered to the Company the purchase price for the Initial Shares and as set
forth in Section 2.2 hereof.
7.11 OPINION OF COUNSEL. The Purchaser shall have delivered to
the Company an opinion of counsel to the Purchaser in form and substance
reasonably satisfactory to the Company.
7.12 OPINION OF FINANCIAL ADVISOR. The Company's Board of
Directors shall have received on or before 5:00 P.M. on Eastern Time August 21,
2000, from a financial advisor to be selected by the Company's Board of
Directors, such advisor's opinion to the effect that, as of the date of this
Agreement, the transactions contemplated by the Transaction Documents are fair,
from a financial point of view, to the stockholders of the Company.
8. COVENANTS.
8.1 CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE INITIAL
CLOSING. From the date hereof until the Initial Closing, the Company shall use
commercially reasonable efforts to conduct its business in all material respects
only in the ordinary course consistent with past practice, and to preserve
intact its business organization and keep available the services of its present
key officers and employees (provided, that to satisfy the foregoing obligation,
the Company shall not be required to make any payments or enter into or amend
any contractual arrangements or understandings, except in the ordinary course of
business consistent with past practice). Except as otherwise required by
applicable law or as set forth in Section 8.1 of the Company Disclosure
Schedule, the Company shall not, without the prior written consent of the
Purchaser (which consent shall not be unreasonably withheld):
(a) amend its Certificate of Incorporation or By-Laws;
(b) declare, set aside or pay any dividend or other distribution
or payment in cash, stock or property in respect of its capital stock, or
reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock;
(c) issue, grant, sell or pledge or agree to or authorize the
issuance, grant, sale or pledge of any shares of, or rights of any kind to
acquire any shares of, its capital stock other than Common Stock issuable upon
the exercise of stock options or warrants;
(d) acquire, sell, transfer, lease or encumber any material
assets except in the ordinary course of business;
(e) adopt a plan of complete or partial liquidation or adopt
resolutions providing for the complete or partial liquidation, dissolution,
consolidation, merger, restructuring or recapitalization;
(f) grant any severance or termination pay to, or enter into any
employment agreement with, any of its executive officers or directors;
(g) increase the compensation payable or to become payable to its
executive officers or employees, enter into any contract or other binding
commitment in respect of any such increase (other than pursuant to a Company
Benefit Plan or policy or agreement existing as of the date hereof) to, or enter
into any severance agreement with any of its directors, executive officers or
other employees, or establish, adopt, enter into, make any new grants or awards
under or amend, any Company Benefit Plan except as required by applicable law,
including any obligation to engage in good faith collective bargaining, to
maintain tax-qualified status or as may be required by any Company Benefit Plan
as of the date hereof;
(h) settle or compromise any material claims or litigation or,
except in the ordinary course of business, modify, amend or terminate any of its
material contracts or waive, release or assign any material rights or claims, or
make any payment, direct or indirect, of any material liability before the same
becomes due and payable in accordance with its terms;
(i) take any action, other than in the ordinary course of
business, with respect to accounting policies or procedures (including tax
accounting policies and procedures), except as may be required by law or
generally accepted accounting principles;
(j) make any material tax election or permit any material
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated; and
(k) authorize or enter into an agreement to do any of the
foregoing.
8.2 ACCESS; CONFIDENTIALITY. (a) From the date of this Agreement
until the Initial Closing, upon reasonable prior notice to the Company or the
Purchaser, as the case may be, the Company and the Purchaser shall give one
another and their respective authorized representatives reasonable access during
normal business hours to their respective executive officers, properties, books
and records, and shall furnish one another and their respective authorized
representatives with such financial and operating data and other information
concerning the businesses and properties of the Company and the Purchaser as the
Purchaser and the Company may from time to time reasonably request; provided,
however, that the Company's right under this Section 8.2 shall be limited solely
to matters relating to the Purchaser's ability to carry out the terms and
provisions of this Agreement.
(b) Each of the Company and the Purchaser will hold and treat,
and will cause their respective affiliates, agents and other representatives to
hold and treat, all documents and information concerning the Company or the
Purchaser, as the case may be, furnished to one another or their respective
representatives in connection with the transactions contemplated by this
Agreement confidential in accordance with the Confidentiality Agreement dated
February 14, 2000, between the Company and the Purchaser, which Confidentiality
Agreement shall remain in full force and effect until terminated in accordance
with its terms.
8.3 SPECIAL MEETING OF STOCKHOLDERS. The Company will take all
action necessary in accordance with applicable law and the Certificate of
Incorporation and By-Laws of the Company to convene the Special Meeting. The
Board of Directors of the Company shall recommend approval of the Amended and
Restated Certificate and take such other action, whether before or after the
Special Meeting, as will cause the Board of Directors to include the Continuing
Directors (having a term of office expiring at the 2001 Annual Meeting of
Stockholders) and the Purchaser's nominees, and the Company shall use its best
efforts and take all lawful action to solicit stockholder approval required for
such action, including, without limitation, timely mailing of the Proxy
Statement/Prospectus; provided, that such recommendation or solicitation is
subject to any action (including any withdrawal or change of its recommendation)
taken by, or upon authority of, the Board of Directors of the Company pursuant
to Section 8.8 in the exercise of its good faith judgment as to its fiduciary
duties to its stockholders imposed by law, and provided further that while the
election of Purchaser's nominees and the approval of the proposal to reclassify
the Class A Preferred Stock are conditions to the parties' obligations to
complete the Initial Closing, the Company's obligation to remove the classified
Board provisions from the Company's Amended and Restated Certificate of
Incorporation is "best efforts" on the part of the Company.
8.4 RIGHTS PLAN. On or prior to the Initial Closing Date, the
Company shall take action to amend the Company's Shareholder Rights Agreement to
make it inapplicable to the transactions contemplated hereby.
8.5 BOARD OF DIRECTORS. After the Initial Closing Date, and until
such time as the Purchaser has acquired at least 51% of the Company's
outstanding Common Stock, the Purchaser and the Company will use their best
efforts to cause the Company's Board of Directors to consist of five directors,
including the Continuing Directors and three other directors nominated by the
Purchaser. In the event Purchaser has not acquired at least 51% of the Company's
outstanding Common Stock on or before the Second Anniversary Date, then one of
the Purchaser's representatives serving on the Board of Directors shall be
replaced pursuant to the following procedure:
(I) in the first instance the Continuing Directors shall have the
right to nominate the proposed replacement for the Purchaser's representative.
The nomination shall be made promptly after the Second Anniversary date. The
Purchaser shall have the right to approve such nominee.
(II) In the event the Purchaser does not approve the Continuing
Directors' nominee, then the Purchaser shall have the right to nominate the
proposed replacement for its representative. The Continuing Directors shall have
the right to approve such nominee.
(III) If the Purchaser's nominee is not approved by the
Continuing Directors, then the Continuing Directors and the Purchaser shall
continue to alternately nominate the proposed director until the Purchaser and
the Continuing Directors shall have agreed on a nominee.
(IV) In selecting a nominee, the nominating party shall endeavor
in good faith to nominate a candidate who is (A) unaffiliated with a stockholder
of the Company or with an existing director, (B) experienced in one or more of
the businesses conducted by the Company and (C) has such other experience and
knowledge as is appropriate for a member of the Board of Directors.
8.6 REASONABLE EFFORTS. Subject to the terms and conditions of
this Agreement and applicable law, each of the parties shall act in good faith
and use commercially reasonable 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 the transactions contemplated by this
Agreement as soon as practicable, including such actions or things as any other
party may reasonably request in order to cause any of the conditions to such
other party's obligation to consummate the transactions contemplated by this
Agreement to be fully satisfied. Without limiting the foregoing, the parties
shall (and shall cause their respective subsidiaries, and use commercially
reasonable efforts to cause their respective affiliates, directors, officers,
employees, agents, attorneys, accountants and representatives, to) consult and
fully cooperate with and provide assistance to each other in (a) the preparation
and filing with the SEC of the Proxy Statement/Prospectus, and any necessary
amendments or supplements thereto; (b) seeking to have the Proxy
Statement/Prospectus cleared by the SEC as soon as reasonably practicable after
filing; (c) obtaining all necessary consents (including in particular the
consent of the Company's lender and landlord), approvals, waivers, licenses,
permits, authorizations, registrations, qualifications, or other permission or
action by, and giving all necessary notices to and making all necessary filings
with and applications and submissions to, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (collectively, "Governmental Entity"), or other person or entity as soon
as reasonably practicable after filing; (d) seeking early termination of any
waiting period under the HSR Act; (e) providing all such information concerning
such party, its subsidiaries and its officers, directors, partners and
affiliates and making all applications and filings as may be necessary or
reasonably requested in connection with any of the foregoing; and (f) in
general, consummating and making effective the transactions contemplated hereby.
Prior to making any application to or filing with any Governmental Entity or
other person or entity in connection with this Agreement (other than filing
under the HSR Act), each party shall provide the other party with drafts thereof
and afford the other party a reasonable opportunity to comment on such drafts.
8.7 PUBLIC ANNOUNCEMENTS. The Company and the Purchaser will
consult with one another prior to issuing any release or otherwise making any
public statements with respect to the transactions contemplated hereby and shall
not issue any such press release or make any public statement prior to such
consultation, except as may be required by applicable law or any listing
agreement with a national securities exchange by which such party is bound.
8.8 ACQUISITION PROPOSALS. Except as contemplated hereby, the
Company agrees not to (and shall use reasonable efforts to cause its officers,
directors and employees and any investment banker, attorney, accountant, or
other agent retained by it not to) solicit, directly or indirectly, any proposal
or offer to acquire all or any significant part of its business and properties
or its capital stock, whether by merger, purchase of assets, tender offer or
otherwise (an "Acquisition Proposal" and, any such transaction, an "Acquisition
Transaction") or provide any non-public information concerning the Company to
any third party in connection with an Acquisition Proposal. Notwithstanding the
foregoing, the Company may furnish information or cause information to be
furnished to, and may participate in discussions and negotiations directly or
through their respective representatives and enter into an agreement relating to
an Acquisition Proposal with, any third party (including parties with whom the
Company has had discussions on any basis on or prior to the date hereof) who
makes an unsolicited proposal or offer to it, if the Board of Directors of the
Company determines in good faith that the failure to consider such proposal or
offer could reasonably be deemed to cause its directors to breach their
fiduciary duties under applicable law. In addition, nothing contained in this
Agreement shall prohibit the Company from (a) issuing a press release or
otherwise publicly disclosing the terms of any Acquisition Proposal, (b) taking
and disclosing to its stockholders any position, and making related filings with
the SEC, as required by Rules 14e-2 and 14d-9 under the Exchange Act with
respect to any tender offer or (c) taking any action and making any disclosure
to its stockholders which the Board of Directors of the Company determines in
good faith, would likely be required to be taken or made under applicable law
(including, without limitation, laws relating to the fiduciary duties of
directors). In the event the Company receives an Acquisition Proposal, it shall
promptly inform the Purchaser as to the receipt of such Acquisition Proposal,
unless the Board of Directors of the Company determines that giving such notice
could reasonably be deemed to cause its directors to breach their fiduciary
duties under applicable law.
8.9 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. The
Company and the Purchaser shall promptly furnish all information as may be
required for inclusion in the Registration Statement to be filed with the SEC in
connection with the issuance of shares of Common Stock upon the filing of the
Amended and Restated Certificate and the Initial Closing (the "Registration
Statement") and the proxy statement/prospectus which will form a part thereof
(the "Proxy Statement/Prospectus"). The Company shall file with the SEC as soon
as practicable the Registration Statement under the Securities Act. The Company
shall use reasonable efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable. The Company shall use
reasonable efforts to obtain, prior to the effective date of the Registration
Statement, all necessary state securities law or "blue sky" permits or approvals
required to consummate the transactions contemplated by this Agreement. If at
any time prior to the Effective Time, any information pertaining to the Company
or the Purchaser contained in or omitted from the Registration Statement makes
such information false or misleading, the Company or the Purchaser shall
promptly inform the other party and provide such other party with information
necessary to make the statements contained therein not misleading. No amendment
or supplement to the Proxy Statement/Prospectus will be made by the Company or
the Purchaser without the approval of the other party, which approval shall not
be unreasonably withheld.
8.10 D&O INDEMNIFICATION AND INSURANCE.
(a) The Company shall keep in effect in its Certificate of
Incorporation and Bylaws, provisions for exculpation of director and officer
liability and indemnification of the parties identified therein ("Indemnified
Parties") to the fullest extent permitted under the DGCL, which provisions shall
not be amended except as required by applicable law or except to make changes
permitted by law that would enlarge the Indemnified Parties' right to
indemnification.
(b) The Company shall maintain, with respect to matters occurring
at, prior to or subsequent to the Initial Closing, at no expense to the
beneficiaries, directors' and officers', liability insurance ("D&O Insurance")
for the Indemnified Parties, issued by a carrier or carriers assigned a
claims-paying ability rating by A.M. Best & Co. of "A (Excellent)" or higher,
providing at least the same coverage as the D&O Insurance currently maintained
by the Company and containing terms and conditions which are no less favorable
to the beneficiaries, for a period of at least six years from the Initial
Closing. In the event any claim is made against present or former directors,
officers or employees of the Company that is covered or potentially covered by
insurance, the Company shall not do anything that would forfeit, jeopardize,
restrict or limit the insurance coverage available for that claim until the
final disposition thereof.
(c) Notwithstanding anything herein to the contrary, if any
claim, action, suit, proceeding or investigation (whether arising before, at or
after the Initial Closing) is made against any Indemnified Party, on or prior to
the sixth anniversary of the Initial Closing, the provisions of this Section
8.10 shall continue in effect until the final disposition of such claim, action,
suit, proceeding or investigation.
(d) This covenant is intended to be for the benefit of, and shall
be enforceable by, each of the Indemnified Parties and their respective heirs
and legal representatives. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which an Indemnified Party is entitled,
whether pursuant to law, contract or otherwise. The Company shall pay all
expenses, including attorneys' fees, that may be incurred by any Indemnified
Party in enforcing the indemnity and other obligations provided for in this
Section 8.10.
(e) In the event that the Company or its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any Person, then, and in each such case, to the extent necessary to
effectuate the purposes of this Section 8.10, proper provision shall be made so
that for the period ending on the later of (X) the sixth anniversary of the
Initial Closing Date and (Y) the expiration of any statute of limitations
applicable to any claim, action, suit, proceeding or investigation referred to
in this Section 8.10, the successors and assigns of the Company shall succeed to
the obligations set forth in this Section 8.10 and none of the actions described
in clauses (i) or (ii) shall be taken until such provision is made.
8.11 EMPLOYEE BENEFITS. (a) From and after the Initial Closing,
the Company and its respective affiliates will honor in accordance with their
terms all existing employment, severance, consulting and salary continuation
agreements between the Company and any of its current or former officers,
directors, employees or consultants.
(b) The Company agrees that, for a three (3) year period after
the Initial Closing, it shall provide those persons who, prior to the Initial
Closing, were employees of the Company ("Company Employees") with employee plans
and programs which provide benefits that are no less favorable in the aggregate
to those provided to other employees of the Company of comparable status and
seniority. With respect to such benefits, past service, compensation and expense
credits of such Company Employees shall be recognized for all purposes under
such plans (including, but not limited to, participation, eligibility vesting
and calculation benefits), and each employee or fringe benefit plan or program
available to Company Employees as contemplated hereby shall be applied to such
Company Employees.
(c) In the event that the Company or its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any Person, then, and in each such case, to the extent necessary to
effectuate the purposes of this Section 8.11, proper provision shall be made so
that for the period ending on the sixth anniversary of the Initial Closing Date,
the successors and assigns of the Company shall succeed to the obligations set
forth in this Section 8.11 and none of the actions described in clauses (i) or
(ii) shall be taken until such provision is made.
8.12 FEES AND EXPENSES. (a) Whether or not the Initial Closing is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby (including, without limitation, fees
and disbursements of counsel, financial advisors and accountants) shall be borne
by the party incurring such expense; provided, however, that if the Initial
Closing is consummated, the reasonable fees and expenses of counsel to the
Purchaser shall be borne by the Company (or reimbursed if already paid);
provided further, that if this Agreement is terminated pursuant to Section 9.1
as a result of the willful and material misrepresentation by a party or the
willful and material breach by a party of any of its covenants or arrangements
set forth herein, such party shall pay any and all costs and expenses incurred
by the other party in connection with this Agreement and the preparation of the
Proxy Statement/Prospectus and all SEC filing fees.
(b) Notwithstanding the foregoing, provided that the Purchaser
shall not be in breach of its obligations under this Agreement, if (A) the
Company's Board of Directors shall withdraw or modify in a manner adverse to the
Purchaser its approval or recommendation of the proposal to adopt the Amended
and Restated Certificate or to elect the Purchaser's nominees for Director, or
shall have resolved to do any of the foregoing pursuant to Section 8.8 AND (B)
the Purchaser or the Company shall have terminated this Agreement pursuant to
Section 9.1(g) AND (C) within six months of any such termination, the Company
shall have consummated an Acquisition Transaction, then the Company agrees that
it will pay, or reimburse the Purchaser for, all reasonable fees and expenses
incurred by the Purchaser and its affiliates in connection with the transactions
contemplated hereby.
8.13 INCENTIVE STOCK OPTIONS. Set forth on Schedule 8.13 annexed
hereto are the employee stock options referred to herein as the Schedule 8.13
Options.
9. TERMINATION.
9.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time (notwithstanding
approval of the Amended and Restated Certificate by the stockholders of the
Company) prior to the Initial Closing:
(a) by mutual written consent of the Company and the Purchaser;
or
(b) by either the Company or the Purchaser, if the Initial
Closing shall not have occurred on or before 180 days from the date hereof;
provided, that the right to terminate this Agreement under this clause (b) shall
not be available to any party whose misrepresentation in this Agreement or whose
failure to perform any of its covenants and agreements or to satisfy any
obligation under this Agreement has been the cause of or resulted in the failure
of the Reorganization to occur on or before such date; or
(c) by either the Company or the Purchaser, if (i) any federal or
state court of competent jurisdiction or other federal or state governmental or
regulatory body shall have issued any judgment, injunction, order or decree
prohibiting, enjoining or otherwise restraining the transactions contemplated by
this Agreement and such judgment, injunction, order or decree shall have become
final and non appealable (provided, that the party seeking to terminate this
Agreement pursuant to this clause (c) shall have used commercially reasonable
efforts to remove such judgment, injunction, order or decree) or (ii) any
statute, rule, regulation or executive order promulgated or enacted by any
federal or state governmental authority after the date of this Agreement which
prohibits the consummation of the Reorganization shall be in effect; or
(d) by either the Company or the Purchaser, if at the Special
Meeting the (i) Amended and Restated Certificate is not approved by the
stockholders of the Company or (ii) the Purchaser's nominees for election as
Directors of the Company are not elected to terms satisfactory to Purchaser (up
to three years); or
(e) by the Purchaser, if there shall have been a material breach
of any representation, warranty or material covenant or agreement on the part of
the Company, which is not cured after thirty (30) days' written notice by the
Purchaser to the Company, except that the right of the Purchaser to terminate
with respect to the matters described in paragraph (i) of this Section 9.1 shall
be governed thereby; or
(f) by the Company, if there shall have been a material breach of
any representation, warranty or material covenant or agreement on the part of
the Purchaser, which is not cured after thirty (30) days' written notice by the
Company to the Purchaser; or
(g) by either the Purchaser or the Company, if (i) the Board of
Directors of the Company shall withdraw or modify in a manner adverse to the
Purchaser its approval or recommendation of the proposal to approve the Amended
and Restated Certificate at the Special Meeting or shall have resolved to do any
of the foregoing pursuant to Section 8.8 or (ii) any Person or group of Persons
shall have made an Acquisition Proposal that the Board of Directors of the
Company determines in good faith (as contemplated by Section 8.8), that the
failure to accept such Acquisition Proposal could reasonably be deemed to cause
the members of the Board of Directors of the Company to breach their fiduciary
duties under applicable law; or
(h) by the Company, if the fairness opinion referred to in
Section 7.12 shall not have been received by the Company's Board of Directors by
the date set forth therein, or
(i) by the Purchaser, if (i) it shall determine that in the sole
judgment of the Purchaser (A) the Company's probable monetary liability related
to the alleged failure of its Ranger 1 and Ranger 2 products to meet the
requirements of Industry Canada regulation shall exceed $300,000.00, or (B) the
Company's ability to adequately develop its Canadian market will be adversely
affected; or (ii) the Purchaser shall determine in the process of completing its
financial due diligence that the Company's financial condition is not consistent
(in a manner adverse to the Purchaser) with financial information furnished to
the Purchaser; PROVIDED, HOWEVER, that the Purchaser's right to terminate the
Agreement pursuant to this Section 9.1(i) shall expire at 5:00 p.m., Eastern
Time, on August 21, 2000.
9.2 EFFECT OF TERMINATION. In the event of any termination of
this Agreement pursuant to Section 9.1, this Agreement forthwith shall become
void and of no further force or effect, and no party hereto (or any of its
affiliates, directors, officers, agents or representatives) shall have any
liability or obligation hereunder, except in any such case (a) as provided in
Sections 8.2(b) (Confidentiality), 8.7 (Public Announcements) and 8.12 (Fees and
Expenses), which shall survive any such termination and (b) to the extent such
termination results from the breach by such party of any of its representations,
warranties, covenants or agreements contained in this Agreement.
10. INDEMNIFICATION.
(a) Each party agrees to indemnify the other against and hold it
harmless from any and all damages resulting from the breach or inaccuracy of or
failure to comply with, or the existence of any facts resulting in the
inaccuracy of, any of the warranties, representations, conditions, covenants or
agreements of such party contained in this Agreement or in any agreement or
document delivered pursuant hereto or in connection herewith.
(b) In the event that any claim is asserted against any party
hereto, or any party hereto is made a party defendant in any action or
proceeding, and such claim, action or proceeding involves a matter which is the
subject of this indemnification, then such party (an "Indemnified Party") shall
give written notice to the other party hereto (the "Indemnifying Party") of such
claim, action or proceeding, and such Indemnifying Party shall have the right to
join in the defense of said claim, action or proceeding at such Indemnifying
Party's own cost and expense and, if the Indemnifying Party agrees in writing to
be bound by and to promptly pay the full amount of any final judgment from which
no further appeal may be taken and if the Indemnified Party is reasonably
assured of the Indemnifying Party's ability to satisfy such agreement, then at
the option of the Indemnifying Party, such Indemnifying Party may take over the
defense of such claim, action or proceeding, except that, in such case, the
Indemnified Party shall have the right to join in the defense of said claim,
action or proceeding at its own cost and expense.
11. MISCELLANEOUS.
11.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
None of the representations, warranties, covenants or agreements contained in
this Agreement or in any certificate or other instrument delivered pursuant to
this Agreement shall survive the Initial Closing, except for the covenants and
agreements contained in Section 2.2 (Additional Purchases) Sections 8.2(b)
(Confidentiality), 8.5 (Board of Directors), 8.7 (Public Announcements), 8.10
(D&O Indemnification and Insurance), 8.11 (Employee Benefits) and 8.12 (Fees and
Expenses).
11.2 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
provision or rule. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
11.3 SUCCESSORS AND ASSIGNS; NO ASSIGNMENT. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, permitted assigns, heirs, executors and
administrators of the parties hereto. This Agreement may not be assigned by
either party without the prior written consent of the other party.
Notwithstanding the foregoing, Purchaser shall have the right to assign this
Agreement to any entity which succeeds to a majority of the identification,
access control and anti-theft electronic article surveillance systems business
and assets of Purchaser; provided that such assignee shall acknowledge in
writing that it accepts all of the obligations of the Purchaser hereunder as
though the assignee were a party hereto.
11.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including all
exhibits hereto), the Transaction Agreements, and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof. This
Agreement and any term hereof may be amended, waived, or discharged only by a
written instrument signed by the Company and the Purchaser. After the Initial
Closing, and so long as a Continuing Director shall be a Director of the
Company, this Agreement may be amended only with the written consent of a
Continuing Director.
11.5 NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be (i) mailed by
first-class mail, postage prepaid, (ii) delivered by confirmed facsimile number
or (iii) delivered either by hand or by messenger, to the address or facsimile
set forth at the end of this Agreement or at such other address or facsimile
number as shall have been furnished in writing.
11.6 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party upon any breach or default of the
other party under this Agreement shall impair any such right, power or remedy of
such party, nor shall it be construed to be a waiver of any such breach or
default or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any party of any breach or default under this Agreement, or any
waiver on the part of any party of any provisions or conditions of this
Agreement, must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
11.7 FINDER'S FEE. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. The Company agrees to indemnify and hold harmless the Purchaser
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, directors,
employees or representatives is responsible.
11.8 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
11.9 COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other parties; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
IN WITNESS WHEREOF, the undersigned have executed this Securities
Purchase Agreement as of the date first above written.
SENTRY TECHNOLOGY CORPORATION
By: /s/ XXXXXXX X.X. XXXXXXXXXX
------------------------------
Name: Xxxxxxx X.X. Xxxxxxxxxx
Title: President
Address: 000 Xxxxxxxx Xxxx.
Xxxxxxxxx, Xxx Xxxx 00000
Facsimile: (000)-000-0000
DUTCH A&A HOLDING, B.V.:
By: /s/ XXXXX X. XXXXXXX
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Agent
Address: Galvanistraat 24-3840
AH Harderwijk
The Netherlands
Facsimile: 00-00-000-0000
Copies of Notices to the Purchaser:
ATTN: Mr. Xxxxx Xxxxxxx
c/o ID Systems
00 Xxxxxxx Xx. X.
Xxxxxxx, Xxxxxxx
X0X 0X0
- and -
Xxxxxxxx Xxxxxxx, Esq. &
Xxxx Xxxxxxxx
Xxxxx 000
0 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Fax: (610) -668-5455
LIST OF EXHIBITS
Exhibit A - Amended and Restated Certificate of Incorporation
Exhibit B - Distribution Agreement
EXHIBIT A
[Note: Stockholder approval will also be sought for the rescission of
Article SEVENTH]
RESTATED CERTIFICATE OF INCORPORATION
OF
SENTRY TECHNOLOGY CORPORATION
It is hereby certified that:
1. The present name of the corporation (hereinafter called the
"Company") is Sentry Technology Corporation, which is the name under which the
Company was originally incorporated; and the date of filing the original
certificate of incorporation of the Company with the Secretary of State of the
State of Delaware is October 8, 1996.
2. The certificate of incorporation of the Company is hereby amended
by striking out Articles SECOND and FOURTH thereof and by substituting in lieu
thereof new Articles SECOND and FOURTH which are set forth in the Restated
Certificate of Incorporation hereinafter provided for.
3. Each share of Class A Preferred Stock, $0.001 par value ("Class A
Preferred Stock"), shall automatically, and without any action by the holder
thereof, effective as of 5:00 p.m. (Eastern Time) on the date of the filing of
this Certificate with the Department of State of the State of Delaware
("Effective Time"), be converted into five (5) fully-paid and nonassessable
shares of the Common Stock of the Company. The issuance of a certificate or
certificates for shares of Common Stock, if requested by a holder thereof by
reason of the foregoing conversion of shares of Class A Preferred Stock, shall
be made without charge. As of the Effective Time, the holder of any shares of
Class A Preferred Stock shall be treated for all purposes as having become the
holder of such number of shares of Common Stock determined as set forth in this
paragraph 3 at such time and shall have and may exercise all the rights and
powers appertaining thereto.
4. The provisions of the certificate of incorporation of the Company
as heretofore amended and/or supplemented, and as herein amended, are hereby
restated and integrated into the single instrument which is hereinafter set
forth, and which is entitled Restated Certificate of Incorporation of Sentry
Technology Corporation without any further amendment other than the amendment
herein certified and without any discrepancy between the provisions of the
certificate of incorporation as heretofore amended and supplemented and the
provisions of the said single instrument hereinafter set forth.
5. The amendment and the restatement of the restated certificate of
incorporation herein certified have been duly adopted by the stockholders in
accordance with the provisions of Section 242 and of Section 245 of the General
Corporation Law of the State of Delaware.
6. The certificate of incorporation of the Company, as amended and
restated herein, shall at the effective time of this restated certificate of
Incorporation, read as follows:
RESTATED CERTIFICATE OF INCORPORATION
OF
SENTRY TECHNOLOGY CORPORATION
FIRST. The name of the corporation is SENTRY TECHNOLOGY CORPORATION
(the "Company").
SECOND. The address of the Company's registered office in the State of
Delaware is 0000 Xxxxxx Xxxxxx, Xxxx xx Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx,
Xxxxxxxx 00000. The name of the Company's registered agent at such address is
The Corporation Trust Company.
THIRD. The purpose of the Company is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH. Section 1. AUTHORIZED CAPITAL STOCK. The Company is authorized
to issue two classes of capital stock, designated Common Stock and Preferred
Stock. The total number of shares of capital stock that the Company is
authorized to issue is 150,000,000 shares, consisting of 140,000,000 shares of
Common Stock, par value $0.001 per share, and 10,000,000 shares of Preferred
Stock, par value $0.001 per share, of which 400,000 shares are designated Series
B Junior Participating Preferred Stock, the designations, rights and preferences
of which are set forth in Section 4, below.
Section 2. PREFERRED STOCK. The Preferred Stock may be issued in one
or more series. The Board of Directors of the Company (the "Board") is hereby
authorized to issue the shares of Preferred Stock in such series and to fix from
time to time before issuance the number of shares to be included in any such
series and the designation, relative powers, preferences, and rights and
qualifications, limitations, or restrictions of all shares of such series. The
authority of the Board with respect to each such series will include, without
limiting the generality of the foregoing, the determination of any or all of the
following:
(a) the number of shares of any series and the designation to
distinguish the shares of such series from the shares of all other
series;
(b) the voting powers, if any, and whether such voting powers are
full or limited in such series;
(c) the redemption provisions, if any, applicable to such series,
including the redemption price or prices to be paid;
(d) whether dividends, if any, will be cumulative or
noncumulative, the dividend rate of such series, and the dates and
preferences of dividends on such series;
(e) the rights of such series upon the voluntary or involuntary
dissolution of, or upon any distribution of the assets of, the
Company;
(f) the provisions, if any, pursuant to which the shares of such
series are convertible into, or exchangeable for, shares of any other
class or classes or of any other series of the same or any other class
or classes of stock, or any other security, of the Company or any
other corporation or other entity, and the price or prices or the
rates of exchange applicable thereto;
(g) the right, if any, to subscribe for or to purchase any
securities of the Company or any other corporation or other entity;
(h) the provisions, if any, of a sinking fund applicable to such
series; and
(i) any other relative, participating, optional, or other special
powers, preferences, rights, qualifications, limitations, or
restrictions thereof;
all as may be determined from time to time by the Board and stated in the
resolution or resolutions providing for the issuance of such Preferred Stock
(collectively, a "Preferred Stock Designation").
Section 3. COMMON STOCK. Except as may otherwise be provided in a
Preferred Stock Designation, the holders of Common Stock will be entitled to one
vote on each matter submitted to a vote at a meeting of stockholders for each
share of Common Stock held of record by such holder as of the record date for
such meeting.
Section 4. CLASS B JUNIOR PARTICIPATING PREFERRED STOCK. Pursuant to
the authority conferred upon the Board of Directors by the Amended and Restated
Certificate of Incorporation of the said Corporation, the said Board of
Directors, at a meeting duly held on July 12, 1999, adopted the following
resolution creating a series of 400,000 shares of Preferred Stock designated as
"Series B Junior Participating Preferred Stock:"
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Amended and Restated Certificate of Incorporation, a series of Series
B Preferred Stock of the Corporation be and it hereby is created, and
that the designation and amount thereof and the voting powers,
preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series
shall be designated as "Series B Junior Participating Preferred Stock"
and the number of shares constituting such series shall be 400,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) The holders of shares of Series B Junior Participating
Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last day of March,
June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series B Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $0.50 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par
value $0.001 per share, of the Corporation (the "Common Stock") since
the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series B Junior
Participating Preferred Stock. In the event the Corporation shall at
any time after July 13, 1999 (the "Rights Declaration Date") (i)
declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in
each such case the amount to which holders of shares of Series B
Junior Participating Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series B Junior Participating Preferred Stock as provided in
Paragraph (A) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); PROVIDED that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.50 per
share on the Series B Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Junior Participating Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series B Junior Participating Preferred Stock,
unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series B Junior Participating Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series B Junior Participating Preferred Stock in
an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series B Junior Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the
date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series B
Junior Participating Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series B Junior Participating Preferred Stock
shall entitle the holder thereof to 100 votes on all matters submitted
to a vote of the stockholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of
shares of Series B Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series B Junior Participating Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series B Junior
Participating Preferred Stock shall be in arrears in an amount equal
to six (6) quarterly dividends thereon, the occurrence of such
contingency shall xxxx the beginning of a period (herein called a
"default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and
for the current quarterly dividend period on all shares of Series B
Junior Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default
period, all holders of the Series B Junior Participating Preferred
Stock with dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, irrespective of
series, shall have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the holders
of Series B Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii)
of this Section 3(C) or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders, PROVIDED that such
voting right shall not be exercised unless the holders of ten percent
(10%) in number of shares of Series B Preferred Stock outstanding
shall be present in person or by proxy. The absence of a quorum of the
holders of Common Stock shall not affect the exercise by the holders
of Series B Preferred Stock of such voting right. At any meeting at
which the holders of Series B Preferred Stock shall exercise such
voting right initially during an existing default period, they shall
have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to
two (2) Directors or, if such right is exercised at an annual meeting,
to elect two (2) Directors. If the number which may be so elected at
any special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make such
increase in the number of Directors as shall be necessary to permit
the election by them of the required number. After the holders of the
Series B Preferred Stock shall have exercised their right to elect
Directors in any default period and during the continuance of such
period, the number of Directors shall not be increased or decreased
except by vote of the holders of Series B Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series B Junior Participating
Preferred Stock.
(iii) Unless the holders of Series B Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Series B Preferred
Stock outstanding, irrespective of series, may request, the calling of
a special meeting of the holders of Series B Preferred Stock, which
meeting shall thereupon be called by the President, a Vice-President
or the Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Series B Preferred Stock are
entitled to vote pursuant to this Paragraph (C)(iii) shall be given to
each holder of record of Series B Preferred Stock by mailing a copy of
such notice to him or her at his or her last address as the same
appears on the books of the Corporation. Such meeting shall be called
for a time not earlier than 10 days and not later than 50 days after
such order or request or in default of the calling of such meeting
within 50 days after such order or request, such meeting may be called
on similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of
shares of Series B Preferred Stock outstanding. Notwithstanding the
provisions of this Paragraph (C)(iii), no such special meeting shall
be called during the period within 50 days immediately preceding the
date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall
continue to be entitled to elect the whole number of Directors until
the holders of Series B Preferred Stock shall have exercised their
right to elect two (2) Directors voting as a class, after the exercise
of which right (x) the Directors so elected by the holders of Series B
Preferred Stock shall continue in office until their successors shall
have been elected by such holders or until the expiration of the
default period, and (y) any vacancy in the Board of Directors may
(except as provided in Paragraph (C)(ii) of this Section 3) be filled
by vote of a majority of the remaining Directors theretofore elected
by the holders of the class of stock which elected the Director whose
office shall have become vacant. References in this Paragraph (C) to
Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Series B Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the
holders of Series B Preferred Stock as a class shall terminate, and
(z) the number of Directors shall be such number as may be provided
for in the certificate of incorporation or by-laws irrespective of any
increase made pursuant to the provisions of Paragraph (C)(ii) of this
Section 3 (such number being subject, however, to change thereafter in
any manner provided by law or in the certificate of incorporation or
by-laws). Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may be
filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series B Junior
Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action .
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series B Junior Participating Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series B Junior
Participating Preferred Stock, except dividends paid ratably on the
Series B Junior Participating Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series B Junior
Participating Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series B Junior Participating
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series B Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series B Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
Paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series B Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors,
subject to the conditions and restrictions on issuance set forth
herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series
B Junior Participating Preferred Stock shall have received $5.00 per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment (the "Series B Liquidation Preference"). Following the payment
of the full amount of the Series B Liquidation Preference, no
additional distributions shall be made to the holders of shares of
Series B Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount
per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series B Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph (C) below to
reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series B Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series B Junior
Participating Preferred Stock and Common Stock, respectively, holders
of Series B Junior Participating Preferred Stock and holders of shares
of Common Stock shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on
a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series B Liquidation
Preference and the liquidation preferences of all other series of
preferred stock, if any, which rank on a parity with the Series B
Junior Participating Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment Number
in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series B Junior
Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the amount set forth in the preceding sentence with respect
to the exchange or change of shares of Series B Junior Participating
Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series B Junior
Participating Preferred Stock shall not be redeemable. However, the
Company may purchase Series B Preferred Stock in the open market or
pursuant to an offer to a holder or holders of Series B Preferred
Stock.
Section 9. AMENDMENT. The Amended and Restated Certificate of
Incorporation of the Corporation shall not be further amended in any
manner which would materially alter or change the powers, preferences
or special rights of the Series B Junior Participating Preferred Stock
so as to affect them adversely without the affirmative vote of the
holders of a majority or more of the outstanding shares of Series B
Junior Participating Preferred Stock, voting separately as a class.
Section 10. FRACTIONAL SHARES. Series B Junior Participating
Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holder's fractional shares,
to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders
of Series B Junior Participating Preferred Stock.
FIFTH. The Board may make, amend, and repeal the By-Laws of the
Company. Any By-Law made by the Board under the powers conferred hereby may be
amended or repealed by the Board or by the stockholders in the manner provided
in the By-Laws of the Company. Notwithstanding the foregoing and anything
contained in this Amended and Restated Certificate of Incorporation to the
contrary, By-Laws 3, 8, 10, 11, 12, 13, and 39 may not be amended or repealed by
the stockholders, and no provision inconsistent therewith may be adopted by the
stockholders, without the affirmative vote of the holders of at least 80% of the
Voting Stock, voting together as a single class. The Company may in its By-Laws
confer powers upon the Board in addition to the foregoing and in addition to the
powers and authorities expressly conferred upon the Board by applicable law. For
the purposes of this Amended and Restated Certificate of Incorporation, "Voting
Stock" means stock of the Company of any class or series entitled to vote
generally in the election of Directors. Notwithstanding anything contained in
this Amended and Restated Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 80% of the Voting Stock, voting
together as a single class, is required to amend or repeal, or to adopt any
provisions inconsistent with, this Article Fifth.
SIXTH. Subject to the rights of the holders of any series of Preferred
Stock:
(a) any action required or permitted to be taken by the stockholders
of the Company must be effected at a duly called annual or special meeting of
stockholders of the Company and may not be effected by any consent in writing of
such stockholders; and
(b) special meetings of stockholders of the Company may be called only
by (i) the Chairman of the Board (the "Chairman") or (ii) the Secretary of the
Company (the "Secretary") within 10 calendar days after receipt of the written
request of a majority of the total number of Directors which the Company would
have if there were no vacancies (the "Whole Board").
At any annual meeting or special meeting of stockholders of the Company, only
such business will be conducted or considered as has been brought before such
meeting in the manner provided in the By-Laws of the Company. Notwithstanding
anything contained in this Amended and Restated Certificate of Incorporation to
the contrary, the affirmative vote of at least 80% of the Voting Stock, voting
together as a single class, will be required to amend or repeal, or adopt any
provision inconsistent with, this Article Sixth.
SEVENTH. Section 1. NUMBER, ELECTION, AND TERMS OF DIRECTORS. Subject
to the rights, if any, of the holders of any series of Preferred Stock to elect
additional Directors under circumstances specified in a Preferred Stock
Designation, the number of the Directors of the Company will not be less than
three nor more than 12 and will be fixed from time to time in the manner
described in the By-Laws of the Company. The Directors, other than those who may
be elected by the holders of any series of Preferred Stock, will be classified
with respect to the time for which they severally hold office into three
classes, as nearly equal in number as possible, designated Class I, Class II,
and Class III. The Directors first appointed to Class I will hold office for a
term expiring at the first annual meeting of stockholders to be held following
the filing of this Certificate; the Directors first appointed to Class II will
hold office for a term expiring at the second annual meeting of stockholders to
be held following the filing of this Certificate; and the Directors first
appointed to Class III will hold office for a term expiring at the third annual
meeting of stockholders to be held following the filing of this Certificate,
with the members of each class to hold office until their successors are elected
and qualified. At each succeeding annual meeting of the stockholders of the
Company, the successors of the class of Directors whose terms expire at that
meeting will be elected by plurality vote of all votes cast at such meeting to
hold office for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election. Election of Directors of
the Company need not be by written ballot unless requested by the Chairman or by
the holders of a majority of the Voting Stock present in person or represented
by proxy at a meeting of the stockholders at which Directors are to be elected.
Section 2. NOMINATION OF DIRECTOR CANDIDATES. Advance notice of
stockholder nominations for the election of Directors must be given in the
manner provided in the By-Laws of the Company.
Section 3. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Subject to the
rights, if any, of the holders of any series of Preferred Stock to elect
additional Directors under circumstances specified in a Preferred Stock
Designation, newly created directorships resulting from any increase in the
number of Directors and any vacancies on the Board resulting from death,
resignation, disqualification, removal, or other cause will be filled solely by
the affirmative vote of a majority of the remaining Directors then in office,
even though less than a quorum of the Board, or by a sole remaining Director.
Any Director elected in accordance with the preceding sentence will hold office
for the remainder of the full term of the class of Directors in which the new
directorship was created or the vacancy occurred and until such Director's
successor has been elected and qualified. No decrease in the number of Directors
constituting the Board may shorten the term of any incumbent Director.
Section 4. REMOVAL. Subject to the rights, if any, of the holders of
any series of Preferred Stock to elect additional Directors under circumstances
specified in a Preferred Stock Designation, any Director may be removed from
office by the stockholders only for cause and only in the manner provided in
this Section 4. At any annual meeting or special meeting of the stockholders,
the notice of which states that the removal of a Director or Directors is among
the purposes of the meeting, the affirmative vote of the holders of at least 80%
of the Voting Stock, voting together as a single class, may remove such Director
or Directors for cause. Except as may be provided by applicable law, cause for
removal will be deemed to exist only if the Director whose removal is proposed
has been adjudged by a court of competent jurisdiction to be liable to the
Company or its stockholders for misconduct as a result of (a) a breach of such
Director's duty of loyalty to the Company, (b) any act or omission by such
Director not in good faith or which involves a knowing violation of law, or (c)
any transaction from which such Director derived an improper personal benefit,
and such adjudication is no longer subject to direct appeal.
Section 5. AMENDMENT, REPEAL, ETC. Notwithstanding anything contained
in this Amended and Restated Certificate of Incorporation to the contrary, the
affirmative vote of at least 80% of the Voting Stock, voting together as a
single class, is required to amend or repeal, or adopt any provision
inconsistent with, this Article Seventh.
EIGHTH. Section 1. Notwithstanding any other provision of this Amended
and Restated Certificate of Incorporation and except as set forth in Section 2
of this Article EIGHTH, the affirmative vote of at least 80% of the Voting
Stock, voting together as a single class, shall be required:
I. For the adoption of any agreement for the merger or
consolidation of the Company or any Subsidiary (as defined in Section 5
of this Article EIGHTH) with or into any other person (as defined in
Section 5 of this Article EIGHTH).
II. To authorize any sale, lease, transfer or exchange of, or
any mortgage or pledge of or the granting of any other security
interest in, or any other disposition of, all or any substantial part
of the assets of the Company or any Subsidiary to or with any other
person (in a single transaction or in a series of related
transactions).
III. To authorize the issuance or transfer by the Company or
any Subsidiary of any securities of the Company or any Subsidiary
(except securities issued pursuant to a stock option, purchase, bonus
or other plan or arrangement, for natural persons who are directors,
employees, consultants and/or agents of the Company or a Subsidiary, or
securities issued upon exercise of any conversion rights, warrants,
options or rights which shall have been outstanding at the time of
adoption of this Article EIGHTH or which shall have been issued in a
transaction not in contravention of the provisions of this Article
EIGHTH) to any other person in exchange for cash, securities or other
assets or a combination thereof, if, in the case of any of the
foregoing transactions (as of the date of any action taken by the Board
with respect to any such proposed transaction, or as of the record date
for the determination of stockholders entitled to notice of and to vote
on any such proposed transaction or immediately prior to the
consummation of any such proposed transaction), such other person is,
or at any time within the preceding 12 months has been, the beneficial
owner, directly or indirectly, of 20 percent or more of the outstanding
shares of Voting Stock of the Company.
Section 2. The provisions of Section 1 of this Article EIGHTH shall
not apply to (1) any transaction described in such Section 1 if the Board shall
by resolution have approved a memorandum of agreement with such person setting
forth the principal terms of such transaction and such transaction is
substantially consistent therewith, provided that a majority of those directors
voting in favor of such resolution are Continuing Directors (as defined in
Section 5 of this Article EIGHTH), (2) any transaction described in such Section
1 if the other party to such transaction is a Major Subsidiary (as defined in
Section 5 of this Article EIGHTH) or (3) any transaction described in such
Section 1 (other than a merger or consolidation to which the Company would be a
party) if the fair value of the securities, assets or other consideration
proposed to be issued or transferred, in any way disposed of, or received, by
the Company or any Subsidiary in connection with any such transaction or any
series of such transactions which are related is less than $5,000,000.
Section 3. Notwithstanding any other provisions of this Amended and
Restated Certificate of Incorporation and except as set forth in Section 4 of
this Article EIGHTH, the affirmative vote of the holders of at least 80 % of the
Voting Stock, voting together as a single class, shall be required:
I. To authorize a liquidation or dissolution of the Company,
II. To authorize any offer by the Company to purchase shares of its
outstanding Voting Stock (except pursuant to redemption provisions of any
preferred stock Company),
III. To authorize any reclassification of securities of the Company,
any recapitalization or any other transaction in each case designed to decrease
the number of holders of Voting Stock of the Company,
if (as of the date of any action taken by the Board with respect to any such
proposed transaction, or as of the record date for the determination of
stockholders entitled to notice of and to vote on any such proposed transaction
or immediately prior to the consummation of any such proposed transaction) any
other person is the beneficial owner, directly or indirectly, of 5 percent or
more of the outstanding shares of Voting Stock of the Company.
Section 4. The provisions of Section 3 of this Article EIGHTH shall
not apply to any transaction described in such Section 3 if the Board shall by
resolution have approved a memorandum setting forth the principal terms of such
transaction and such transaction is substantially consistent therewith, provided
that a majority of those directors voting in favor of such resolution are
Continuing Directors (as defined in Section 5 of this Article EIGHTH).
Section 5. For the purpose of this Article EIGHTH:
I. Any person shall be deemed to be the "beneficial owner" of
any shares of stock of the Company (i) which it owns, directly or
indirectly, whether of record or not, or which it has the right to
acquire pursuant to any agreement, or upon exercise of conversion
rights, warrants or options, or otherwise, or (ii) which are
beneficially owned, directly or indirectly (including shares deemed
owned through application of clause (i) above), by any other person
which is its affiliate or associate (as defined in this Section 5) or
with which it or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of stock of the Company. The outstanding shares of
any class of stock of the Company shall be deemed to include shares
deemed owned, through application of clauses (i) and (ii) above, but
shall not include any other shares which may be issuable pursuant to
any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise.
II. An "affiliate" of a specified person is any person that,
directly or indirectly, controls or is controlled by, or is under
common control with, the person specified. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect
to any person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of the specified person, whether through the ownership of
voting securities or by contract or otherwise.
III. The term "associates" used to indicate a relationship
with any specified person means (i) any person in which such specified
person has a significant financial interest or as to which such
specified person's relationship is such that such specified person
substantially influences its management and policies or any person
having a significant financial interest in such specified person or
which substantially influences the management and policies of such
specified person, and without limitation to the foregoing, (ii) any
person of which such specified person is an officer, director or
partner or is, directly or indirectly, the beneficial owner of 5
percent or more of any class of equity securities, (iii) any trust or
other estate in which such specified person has a substantial
beneficial interest or as to which such person serves as trustee or in
a similar fiduciary capacity, and (iv) any relative or spouse of such
specified person, or any relative of such spouse, who has the same home
as such specified person or who is a director or officer of such
specified person or any corporation which controls or is controlled by
such specified person.
IV. A "person" is any individual, corporation or other entity.
V. The term "securities" shall include, without limitation,
any stocks, bonds, debentures, notes and evidences of indebtedness, and
any warrants, options and other rights to subscribe to or purchase any
of the foregoing.
VI. A "Subsidiary" is any corporation of which at least a
majority of the outstanding shares of equity stock is owned of record
or beneficially by the Company and/or its Subsidiaries. A "Major
Subsidiary" is any corporation of which at least 80 percent of the
outstanding shares of equity stock is owned of record and beneficially
by the Company and/or its Major Subsidiaries.
VII. The term "Continuing Director" shall mean a person who
was a duly elected and acting director of the Company at the time of
the adoption of this Article EIGHTH or became a duly elected and acting
director of the Company prior to the time that, for the purposes of
Section 2 or Section 4, as the case may be, of this Article EIGHTH,
such other person became a beneficial owner, directly or indirectly, of
5 percent or more of the Voting Stock of the Company, or a person
designated (whether before or after election as a director) to be a
Continuing Director by a majority of the Continuing Directors.
Section 6. A majority of the Continuing Directors shall have the power
and duty to determine for the purposes of this Article EIGHTH, on the basis of
information known to them, whether a proposed transaction is subject to the
provisions of Section 1 or Section 3 of this Article EIGHTH, and in particular
and without limitation, whether (1) any person beneficially owns 5 percent or
more of the outstanding shares of Voting Stock of the Company, (2) any person is
an "affiliate" or "associate" of any other person, (3) any person has an
agreement, arrangement or understanding with any other person, (4) any proposed
transaction involves a substantial part of the assets of the Company or any
Subsidiary, (5) the fair value of securities, assets or other consideration
referred to in Section 2 of this Article EIGHTH is less than $5,000,000, (6) any
series of transactions are related, and (7) the memorandum referred to in
Section 2 or Section 4 of this Article EIGHTH is substantially consistent with
the transaction to which it relates. Any such determination shall be conclusive
and binding for all purposes of this Article EIGHTH.
Section 7. The affirmative vote of stockholders required by this
Article EIGHTH shall be in lieu of any lesser vote or consent of the holders of
the stock of the Company otherwise required by law or in any agreement to which
the Company is a party, and shall be in addition to any voting requirements
imposed by law or any other provisions of the Amended and Restated Certificate
of Incorporation of the Company, including resolutions providing for the
issuance of a class or series of stock adopted by the Board pursuant to
authority vested in it by the provisions of the Amended and Restated Certificate
of Incorporation, in favor of certain classes of stock.
Section 8. No amendment to this Amended and Restated Certificate of
Incorporation, directly or indirectly by merger, consolidation or otherwise,
shall amend, alter, change or repeal any of the provisions of this Article
EIGHTH, unless the amendment effecting such amendment, alteration, change or
repeal shall receive the affirmative vote of the holders of at least 80 percent
of the outstanding shares of stock of the Company entitled to vote in elections
of directors; provided that this Section 8 shall not apply to any such amendment
if such amendment is submitted to the stockholders for adoption with the
unanimous recommendation of the entire Board.
NINTH. To the full extent permitted by the Delaware General
Corporation Law or any other applicable law currently or hereafter in effect, no
Director of the Company will be personally liable to the Company or its
stockholders for or with respect to any acts or omissions in the performance of
his or her duties as a Director of the Company. Any repeal or modification of
this Article Ninth will not adversely affect any right or protection of a
Director of the Company existing prior to such repeal or modification.
TENTH. Each person who is or was or had agreed to become a Director or
officer of the Company, and each such person who is or was serving or who had
agreed to serve at the request of the Board or an officer of the Company as an
employee or agent of the Company or as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust, or other entity,
whether for profit or not for profit (including the heirs, executors,
administrators, or estate of such person), will be indemnified by the Company to
the full extent permitted by the Delaware General Corporation Law or any other
applicable law as currently or hereafter in effect. The right of indemnification
provided in this Article Tenth (a) will not be exclusive of any other rights to
which any person seeking indemnification may otherwise be entitled, including
without limitation pursuant to any contract approved by a majority of the Whole
Board (whether or not the Directors approving such contract are or are to be
parties to such contract or similar contracts), and (b) will be applicable to
matters otherwise within its scope whether or not such matters arose or arise
before or after the adoption of this Article Tenth. Without limiting the
generality or the effect of the foregoing, the Company may adopt By-Laws, or
enter into one or more agreements with any person, which provide for
indemnification greater or different than that provided in this Article Tenth or
the DGCL. Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the amendment or repeal of, or
adoption of any provision inconsistent with, this Article Tenth will require the
affirmative vote of the holders of at least 80% of the Voting Stock, voting
together as a single class. Any amendment or repeal of, or adoption of any
provision inconsistent with, this Article Tenth will not adversely affect any
right or protection existing hereunder prior to such amendment, repeal, or
adoption.
ELEVENTH: Whenever a compromise or arrangement is proposed between the
Company and its creditors or any class of them and/or between the Company and
its stockholders or any class of them, any court of equitable jurisdiction
within the State of Delaware may, on the application in a summary way of the
Company or any creditor or stockholder thereof or on the application of any
receiver or receivers appointed for the Company under the provisions of Section
291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Company under the
provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders, of the Company, as the case may be, to be summoned in such manner
as the said court directs. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders, of the Company, as the case may be, agree to any
compromise or arrangement and to any reorganization of the Company as a
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders, of
the Company, as the case may be, and also on the Company.
TWELFTH: Whenever any provision of this Amended and Restated
Certificate of Incorporation requires the affirmative vote of at least 80% of
the Voting Stock, voting together as a single class, such provision shall not
apply to the amendment or repeal of such provision if such amendment is
submitted to the stockholders for adoption with the approval of the Board of
Directors.
Signed on _________, 20__
------------------------------------
[Name, title of authorized officer]
EXHIBIT B
DISTRIBUTION AGREEMENT
ARTICLE I PARTIES TO THIS AGREEMENT
This Agreement is entered into and effective as of ____________,2000 ("Effective
Date") by and between: Dutch A&A Holding B.V., a Netherlands corporation, with
its principle office located at Xxxxxxxxxxxxx 00 - 0000 XX Xxxxxxxxxx, Xxx
Xxxxxxxxxxx ("DUTCH A&A") and Sentry Technology Corporation, a Delaware
corporation with its principle office located at 000 Xxxxxxxx Xxxx., Xxxxxxxxx,
Xxx Xxxx 00000, X.X.X. ("SENTRY")
ARTICLE II PREMISES OF THIS AGREEMENT
WHEREAS, DUTCH A&A and SENTRY are engaged in the development, manufacture, sale
and/or distribution of various kinds of identification, access control,
anti-theft electronic article surveillance systems, closed circuit television
surveillance systems and accessories;
WHEREAS, DUTCH A&A is concurrently herewith taking an equity stake in SENTRY and
is willing to make DUTCH A&A systems and accessories available to SENTRY for
distribution; and
WHEREAS, SENTRY desires to distribute certain of DUTCH A&A systems and
accessories for resale to Customers (as defined below).
NOW, THEREFORE, by reason of the foregoing premises, and in consideration of the
mutual covenants set forth in this Agreement, the parties agree as follows:
ARTICLE III DEFINITIONS
(a) CLOSED CIRCUIT TELEVISION INTEGRATION SYSTEM ("CCTV-SB"): The term
"CCTV-SB" shall mean systems for use in closed circuit television video capture
manufactured currently or in the future by an entity in the DUTCH A&A Family,
including such systems identified in the Product Schedule attached hereto as
Exhibit __ and other products manufactured by an entity in the DUTCH A&A Family
that provide equivalent functionality.
(b) CUSTOMERS: The term "Customer(s)" shall mean End User(s) Dealers
and/or Distributor(s).
(c) DEALER: The term "Dealer" shall mean any entity that purchases a
Product with the intention of reselling the Product to an End User.
(d) DISTRIBUTOR: The term "Distributor" shall mean any entity that
purchases a Product with the intention of reselling the Product to another
Dealer, Distributor or End User.
(e) DUTCH A&A FAMILY: The term "DUTCH A&A Family" shall mean DUTCH A&A
and all parents, subsidiaries, divisions and affiliates of DUTCH A&A, including
Interlabel and CSI.
(f) DUTCH A&A PRODUCTS: The term "DUTCH A&A Product(s)" shall mean RF,
EM, DR, PAC, and RFID SYSTEMS, TAGS and CCTV-SB.
(g) ELECTROMAGNETIC ("EM") SYSTEMS: The term EM shall mean the
electromagnetic systems and accessories manufactured currently or in the future
by an entity in the DUTCH A&A Family, including such systems identified in the
Product Schedule attached hereto as Exhibit __ and other products manufactured
by an entity in the DUTCH A&A Family that provide equivalent functionality.
(h) END USER: The term "End User" shall mean any entity that uses a
Product for the Product's intended purpose.
(i) RADIO FREQUENCY IDENTIFICATION ("RFID") SYSTEMS: The term RFID
SYSTEMS shall mean the systems used for the detection of intelligent tags or
labels using an antenna reader and accessories manufactured currently or in the
future by an entity in the DUTCH A&A Family, including such systems identified
in the Product Schedule attached hereto as Exhibit __ and other products
manufactured by an entity in the DUTCH A&A Family that provide equivalent
functionality.
(j) PRODUCTS: The term "Product(s)" shall mean DUTCH A&A Products and
SENTRY Products.
(k) PROXIMITY ACCESS CONTROL ("PAC") SYSTEMS: The term PAC SYSTEMS
shall mean the proximity access control systems and accessories manufactured
currently or in the future by an entity in the DUTCH A&A Family, including such
systems identified in the Product Schedule attached hereto as Exhibit __ and
other products manufactured by an entity in the DUTCH A&A Family that provide
equivalent functionality.
(l) RADIO FREQUENCY ("RF") SYSTEMS: The term RF SYSTEMS shall mean the
radio frequency systems and accessories manufactured currently or in the future
by an entity in the DUTCH A&A Family, including such systems identified in the
Product Schedule attached hereto as Exhibit __ and other products manufactured
by an entity in the DUTCH A&A Family that provide equivalent functionality.
(m) SENTRY ELECTRONIC ARTICLE SURVEILLANCE ("EAS") SYSTEMS: The term
SENTRY EAS SYSTEMS shall mean:
(i) electromagnetic systems and accessories manufactured
currently or in the future by SENTRY, including such systems
identified in the Product Schedule attached hereto as Exhibit __ and
other products manufactured by SENTRY that provide equivalent
functionality; and
(ii) tag deactivation and reactivation systems and accessories
manufactured currently or in the future by SENTRY, including such
systems identified in the Product Schedule attached hereto as Exhibit
__ and other products manufactured by SENTRY that provide equivalent
functionality.
(n) SentryVision(TM) SYSTEMS: The term "SentryVision SYSTEMS" shall
mean travelling closed circuit television surveillance systems manufactured
currently or in the future by an entity in the SENTRY Family, including such
systems identified in the Product Schedule attached hereto as Exhibit __ and
other products manufactured by an entity in the SENTRY that provide equivalent
functionality.
(o) SENTRY PRODUCTS: The term "SENTRY Products" shall mean SENTRY EAS
SYSTEMS and SentryVision SYSTEMS.
(p) TAG DEACTIVATION/REACTIVATION ("DR") SYSTEMS: The term DR SYSTEMS
shall mean the tag deactivation and reactivation systems and accessories
manufactured currently or in the future by an entity in the DUTCH A&A Family,
including such systems identified in the Product Schedule attached hereto as
Exhibit __ and other products manufactured by an entity in the DUTCH A&A Family
that provide equivalent functionality.
(q) TAGS: The term TAGS shall mean permanent, reusable and disposable
RF, EM, hard and universal tags, labels, intelligent paper labels and etched
circuits manufactured currently or in the future by an entity in the DUTCH A&A
Family, including such systems identified in the Product Schedule attached
hereto as Exhibit __ and other products manufactured by an entity in the DUTCH
A&A Family that provide equivalent functionality.
(r) TERM: The term "Term" shall have the meaning set forth in SECTION
9 hereof.
ARTICLE IV GENERAL TERMS AND CONDITIONS SECTION
SECTION 1.0 SCOPE OF THIS AGREEMENT
1.1 SCOPE: Each Party agrees to sell, and the other Party agrees to purchase,
Products from for resale upon the terms and conditions set forth in this
Agreement.
1.2 NON-EXCLUSIVE: Each Party acknowledges that its right to resell the Products
under this Agreement is non-exclusive, and that the Party granting the right to
sell Products reserves the right to sell and distribute any of its products to
any customers in the world, and to appoint any third Party to do so. Further,
nothing herein shall be deemed to preclude either Party from selling its own or
third Party systems and accessories that are competitive with the Products.
1.3 STATUS AS INDEPENDENT CONTRACTOR: The relationship established between DUTCH
A&A and SENTRY by this Agreement is that of a vendor to its vendee, and vise
versa, and nothing herein contained shall be deemed to establish or otherwise
create a relationship of principal and agent between DUTCH A&A and SENTRY. Each
Party acting as a distributor of the Products of the other Party represents that
it is an independent contractor who will not be deemed an agent for any purpose
whatsoever and neither Party nor any of its agents or employees will have any
right or authority to assume or create any obligation of any kind, whether
express or implied, on behalf of the other Party.
1.4 DISCONTINUATION/CHANGES TO PRODUCTS: Each Party may, in its sole discretion,
discontinue the sale of any of the Products and any parts/accessories thereto
(except where continued availability is required by law) and make such changes
affecting their form, fit or function as it, in its sole discretion, determines,
by giving the other Party prior written notice thereof but without incurring any
liability to such Party therefor. Each Party will provide such notice at least
sixty (60) days in advance, and agrees that for any outstanding orders, it will
provide Products that are greater than or equal to the discontinued Product in
form, fit and function at the same or lesser price. Notwithstanding the
foregoing, DUTCH A&A shall make available to SENTRY all DUTCH A&A Products and
improvements that any entity within the DUTCH A&A Family sells to any Customer
or any other entity in the DUTCH A&A Family, and SENTRY shall make available to
DUTCH A&A all SENTRY Products and improvements that SENTRY sells to any
Customer.
1.5 UPDATES TO PRODUCT SCHEDULE:
(a) The Product Schedule, which is attached hereto as Exhibit ___ and
which DUTCH A&A warrants includes a listing of all current Products and prices
to be charged SENTRY for each Product, is a part of this Agreement. DUTCH A&A
shall update in writing the Product Schedule to reflect new, modified and/or
discontinued systems and accessories offered by DUTCH A&A within ten (10) days
of any such change in product offering. DUTCH A&A shall also update in writing
the Product Schedule to reflect any change in the prices. Any updated Product
Schedule shall become effective after sixty (60) business days of SENTRY's
receipt thereof, except that price decreases shall become effective immediately.
DUTCH A&A shall fill all orders placed by SENTRY prior to the effective date of
an updated Product Schedule based on the prior Product Schedule.
(b) The Product Schedule, which is attached hereto as Exhibit ___ and
which SENTRY warrants includes a listing of all current SENTRY Products and
prices to be charged DUTCH A&A for each SENTRY Product, is a part of this
Agreement. SENTRY shall update in writing the Product Schedule to reflect new,
modified and/or discontinued systems and accessories offered by SENTRY within
ten (10) days of any such change in product offering. SENTRY shall also update
in writing the Product Schedule to reflect any change in the prices. Any updated
Product Schedule shall become effective after sixty (60) business days of DUTCH
A&A's receipt thereof, except that price decreases shall become effective
immediately. SENTRY shall fill all orders placed by DUTCH A&A prior to the
effective date of an updated Product Schedule based on the prior Product
Schedule.
1.6 OBLIGATIONS OF DUTCH A&A: During the term of this Agreement, it will be the
obligation and duty of DUTCH A&A, in addition to other duties found in this
Agreement, to:
(a) Provide SENTRY promptly with all technical information, data and
quotations, which are or which in the future may become available, in order to
assist SENTRY in marketing, distribution and sales of DUTCH A&A Products.
(b) Provide access to and encourage DUTCH A&A dealers and distributors
to carry and accept orders for SENTRY Products.
(c) Assist SENTRY by giving SENTRY all necessary documents, sales
manuals and price lists, which shall remain the property of DUTCH A&A (unless
provided for distribution to Customers or potential customers).
(d) DUTCH A&A shall make available to SENTRY for sale all improvements
to DUTCH A&A Products created for marketing that are made during the term of
this Agreement.
1.7 OBLIGATIONS OF SENTRY: During the term of this Agreement, it will be the
obligation and duty of SENTRY, in addition to other duties found in this
Agreement, to:
(a) Provide DUTCH A&A promptly with all technical information, data
and quotations which are or which in the future may become available, in order
to assist DUTCH A&A in marketing, distribution and sales of SENTRY Products.
(b) Assist DUTCH A&A by giving DUTCH A&A all necessary documents,
sales manuals and price lists pertaining to SENTRY Products, which shall remain
the property of SENTRY (unless provided for distribution to Customers or
potential customers).
(c) SENTRY shall make available to DUTCH A&A for sale all improvements
to SENTRY Products created for marketing which are made during the term of this
Agreement.
(d) Provide installation, maintenance and support services on behalf
of DUTCH A&A for sales of DUTCH A&A Products made by DUTCH A&A at prices and
terms to be agreed upon in writing between the parties.
SECTION 2.0 SALE OF THE PRODUCTS
2.1 SALE OF RF, EM AND DR SYSTEMS
(a) DUTCH A&A hereby agrees to sell RF, EM and DR SYSTEMS to SENTRY
during the Term and grants to SENTRY the right and license to market, distribute
and sell such RF, EM and DR SYSTEMS to Customers in North and South America
using antennae shapes specified by DUTCH A&A (provided that the detection
quality of the antennae shapes provided shall be no less than that of the
antennae shapes provided by DUTCH A&A to others in the DUTCH A&A family of
companies at the corresponding price levels), at prices to be determined in the
sole discretion of SENTRY. DUTCH A&A shall charge SENTRY for RF, EM and DR
SYSTEMS the lowest price charged by any entity in the DUTCH A&A Family to
another entity in the DUTCH A&A Family at the time SENTRY places the relevant
order.
(b) DUTCH A&A hereby agrees to sell RF, EM and DR Systems to SENTRY
during the Term and grants to SENTRY the rights, and license to market,
distribute and sell such RF, EM and DR Systems to Dealers or Distributors
anywhere in the world, at prices to be determined in the sole discretion of
SENTRY, provided that SENTRY modifies the antenna shape and design and DUTCH A&A
modifies the p.c. board design of such Systems. DUTCH A&A shall charge SENTRY
for such RF, EM and DR Systems the lowest price charged by any entity in the
DUTCH A&A Family to another entity in the DUTCH A&A Family at the time SENTRY
places the relevant order. In the event that Sentry elects to purchase such
modified antennae shape and modified p.c. board design systems from DUTCH A&A,
Sentry agrees that it will place its orders in quantities which meet DUTCH A&A's
order requirements in place from time to time for purchases of that type by
buyers within or without the DUTCH A&A family of companies.
(c) Where such RF, EM and/or DM SYSTEMS sold by DUTCH A&A to SENTRY
constitute electronic components for use in antennae, DUTCH A&A hereby grants
SENTRY the right and license to incorporate and install such components in
SENTRY antennae and market, distribute and sell such antennae to Customers in
North and South America and Dealers or Distributors anywhere in the world, via
any medium, at prices to be determined in the sole discretion of SENTRY,
provided that DUTCH A&A modifies the p.c. board design to be included in such
systems. DUTCH A&A shall charge SENTRY for such components, the lowest price
charged by any entity in the DUTCH A&A Family to another entity in the DUTCH A&A
Family at the time SENTRY places the relevant order for those components. In the
event that Sentry elects to purchase such components for incorporation in Sentry
antennae, Sentry agrees that it will place its orders in quantities which meet
DUTCH A&A's order requirements in place from time to time for purchases of that
type by buyers within or without the DUTCH A&A family of companies.
(d) At Sentry's request, DUTCH A&A shall provide SENTRY with RF, EM
and DR SYSTEMS for sale in North and South America bearing a SENTRY label
(including the SENTRY name trademark, logo, address and/or telephone numbers) to
be supplied to DUTCH A&A by SENTRY at Sentry's expense, and not bearing any
third Party or DUTCH A&A name, trademark, logo, address and telephone numbers or
other indicia of source of such Products.
2.2 SALE OF PAC AND RFID SYSTEMS
(a) DUTCH A&A hereby agrees to sell PAC and RFID SYSTEMS to SENTRY
during the Term, and grants to SENTRY:
(1) the right and license to market, distribute and sell such
PAC and RFID SYSTEMS to End Users in the United States and its
territories, via any medium, and at prices to be determined in the sole
discretion of SENTRY.
(2) the right and license to market, distribute and sell such
PAC and RFID SYSTEMS to Dealers in the United States and its
territories, via any medium, and at prices to be determined in the sole
discretion of SENTRY, provided that such Dealers sell such PAC and RFID
SYSTEMS only in connection with a sale of cameras, camera systems or
Sentry's SentryVision(TM), or equivalent product.
(3) the right and license to market, distribute and sell PAC
and RFID SYSTEMS to Dealers or Distributors outside of the United
States and its territories, via any medium and at prices to be
determined in the sole discretion of SENTRY, provided that such Dealers
or Distributors sell such PAC and RFID SYSTEMS only in connection with
a sale of cameras or camera systems.
(b) DUTCH A&A shall charge SENTRY for PAC and RFID SYSTEMS the lowest
price DUTCH A&A charges any Distributor in the relevant market (i.e., either the
U.S. and its territories or outside of the U.S. and its territories) to which
DUTCH A&A is shipping such Products at the time SENTRY places the relevant
order.
(c) PAC and RFID SYSTEMS sold by DUTCH A&A to SENTRY may retain such
indicia of the DUTCH A&A brand as is typically included on such Products when
sold to other resellers. DUTCH A&A will also include on each such PAC and RFID
SYSTEMS a label, provided by SENTRY at SENTRY's expense, bearing the SENTRY
name, logo, address and telephone number(s), or other indicia of source of the
Products), the label being prominently placed on the Product by DUTCH A&A in a
position as agreed to by the parties.
2.3 SALE OF TAGS
(a) DUTCH A&A hereby agrees to sell TAGS to SENTRY during the Term and
grants to SENTRY the right and license to market, distribute and sell such TAGS
to Customers in the United States and Mexico and Distributors or Dealers
worldwide which Distributors or Dealers are purchasers of Sentry Products, via
any medium, and at prices to be determined in the sole discretion of SENTRY;
provided, however, that Sentry shall not market, sell or distribute such tags to
manufacturers of goods participating in source tagging programs, provided
further, however, that Sentry shall be permitted to market, sell or distribute
such tags to end-users in the United States involved in tagging goods purchased
by them and distributed through their internal distribution channels.
(b) DUTCH A&A shall charge SENTRY for the TAGS the lowest price any
entity in the DUTCH A&A Family charges another entity in the DUTCH A&A Family as
specified in the Product Schedule at the time SENTRY places the relevant order.
(c) DUTCH A&A hereby grants to SENTRY during the term the right and
license to manufacture and assemble and have manufactured and assembled TAGS
using etched circuits designed or provided by DUTCH A&A and to market,
distribute and sell such TAGS to Customers worldwide, via any medium, and at
prices to be determined in the sole discretion of SENTRY.
(d) SENTRY acknowledges that DUTCH A&A may not be able to immediately
provide SENTRY with RF labels, however, DUTCH A&A shall use reasonable
commercial efforts to make RF labels available to SENTRY as soon as possible.
2.4 SALE OF CCTV-SB
(a) DUTCH A&A hereby agrees to sell CCTV-SB to SENTRY during the Term
and grants to SENTRY the right and license to market, distribute and sell
CCTV-SB designed specifically for SENTRY with their own label on it to Customers
in the United States and to Dealers or Distributors worldwide, via any medium
and at prices determined in the sole discretion of SENTRY.
(b) DUTCH A&A shall charge SENTRY for the CCTV-SB the lowest price
charged by an entity of the DUTCH A&A Family to another entity in the DUTCH A&A
Family, as specified in the Product Schedule at the time SENTRY places the
relevant order.
2.5 SALE OF SENTRY PRODUCTS
(a) SENTRY hereby agrees to sell SENTRY Products to DUTCH A&A during
the Term and grants to DUTCH A&A the right and license to market, distribute and
sell such SENTRY Products to Customers in any country in which SENTRY has no
[existing] Distributor or Dealer, as identified in Exhibit __ hereto, at prices
to be determined in the sole discretion of DUTCH A&A. SENTRY shall charge DUTCH
A&A for SENTRY Products the lowest price charged by SENTRY to its Distributors
or Dealers at the time DUTCH A&A places the relevant order. All such SENTRY
Products shall be sold to and by DUTCH A&A solely with SENTRY's name,
trademarks, logos, address, telephone number(s) and other indicia of source,
without any reference to DUTCH A&A.
(b) SENTRY shall have the right in its sole discretion to establish
new Distributors or new Dealers in countries anywhere in the world.
SECTION 3.0 INTELLECTUAL PROPERTY
3.1 TRADEMARKS: Each Party acknowledges the validity of trade names and
trademarks ("Trademarks")of the other Party and that each Party shall NOT, as a
result of this Agreement, have any ownership right to or interest in any trade
names or trademarks owned, used or claimed now or in the future by the other
Party. Notwithstanding the foregoing, DUTCH A&A grants SENTRY, for the Term, the
right to use DUTCH A&A's relevant Trademarks in conjunction with the marketing,
distribution and sale of the DUTCH A&A Products as provided for herein, and
SENTRY grants DUTCH A&A, for the Term, the right to use SENTRY's relevant
Trademarks in conjunction with the marketing, distribution and sale of SENTRY
Products as provided for herein.
3.2 PATENTS AND OTHER RIGHTS:
(a) SENTRY acknowledges that certain of the DUTCH A&A Products may be
covered by DUTCH A&A domestic and/or foreign patents and other intellectual
property ("DUTCH A&A IP Rights"), and that SENTRY shall not, as a result of this
Agreement, have any ownership right or interest in such DUTCH A&A IP Rights.
Notwithstanding the foregoing, DUTCH A&A grants to SENTRY for the Term hereof a
paid-up, royalty-free, non-exclusive license to use and sell DUTCH A&A Products
embodying the DUTCH A&A IP Rights as provided for herein.
(b) DUTCH A&A acknowledges that certain of the SENTRY Products may be
covered by SENTRY domestic and/or foreign patents and other intellectual
property (" SENTRY IP Rights"), and that DUTCH A&A shall not, as a result of
this Agreement, have any ownership right or interest in such SENTRY IP Rights.
Notwithstanding the foregoing, SENTRY grants to DUTCH A&A for the Term hereof a
paid-up, royalty-free, non-exclusive license to use and sell SENTRY Products
embodying the SENTRY IP Rights as provided for herein
SECTION 4.0 SHIPMENTS
4.1 SHIPMENTS: Each Party shall ship Products to the other purchasing Party FOB
a destination selected by the selling Party, who shall bear all shipping costs
incident to shipment of the Products. The selling Party shall select the method
of shipment and the carrier.
4.2 TITLE AND RISK OF LOSS: Title to all of the Products sold by either party to
the other shall pass upon delivery of the products at the FOB destination.
4.3 ALLOCATION/TIME OF DELIVERY: Except as noted in SECTION 2.3(e), each Party
shall make Products available to the other Party and fill orders in such
quantity and in such time frame as the Party owning the Products provides to its
other customers. Notwithstanding the foregoing, each Party agrees to fill all
orders within [thirty (30)] business days from receipt, provided that if a
selling Party cannot fill an order within such time, then the Party will notify
the other Party in writing within five (5) business days of receipt of the order
of an estimated delivery date. The Party ordering such Products may cancel
without liability all orders that are unfilled and for which the selling Party
provides such notice. Each Party will make best effort, to provide forecast and
scheduled delivery dates to the other on a periodic basis.
4.4 SEPARATE TRANSACTION: Each order for the Products under this Agreement shall
be deemed a separate transaction and each shipment of the Products by will
constitute a separate sale.
4.5 STOP SHIPMENTS/ORDERS: Each Party selling Products to the purchasing Party
may, in its sole discretion, upon written notice to the other Party, cancel any
orders previously accepted by the selling Party or delay the delivery of any of
the Products covered thereby if the purchasing Party defaults in any of its
obligations under this Agreement. Each Party may, in its sole discretion, upon
written notice to the other Party, cancel any open orders for which Products
covered thereby have not been shipped if such other Party defaults in any of its
obligations under this Agreement.
SECTION 5.0 CREDIT; PAYMENT AND INDEBTEDNESS
5.1 MAINTENANCE OF CREDIT LINE: SENTRY may maintain a credit line to support its
purchases of the Products and to pay any indebtedness to DUTCH A&A when due.
DUTCH A&A may, in its sole discretion, either generally or with respect to any
specific SENTRY order, vary, change or limit the amount or duration of credit
allowed to SENTRY. SENTRY will make available to DUTCH A&A such statements of
its financial condition as DUTCH A&A may, from time to time, reasonably request.
5.2 PAYMENT TERM: Unless otherwise agreed to in writing by the Parties, payment
terms are net thirty (30) days from the date of invoice subject to any
applicable credit limits determined by DUTCH A&A, as provided for in SECTION
5.1.
SECTION 6.0 REPRESENTATIONS AND WARRANTIES
6.1 WARRANTIES:
(a) DUTCH A&A guarantees to SENTRY and to Customers of SENTRY that
DUTCH A&A Products sold by DUTCH A&A hereunder will be free from defects in
materials and workmanship for a period of ninety (90) days from the date of
installation of DUTCH A&A Products sold to Customers, with the exception of
CCTV-SB, which shall be guaranteed for a period of one (1) year. This guarantee
is only valid for DUTCH A&A Products that are correctly installed in accordance
with DUTCH A&A's instructions for installation and that are installed for use.
DUTCH A&A does not guarantee against damage that is due to insufficient DUTCH
A&A Product maintenance, DUTCH A&A Product changes made without the written
consent of DUTCH A&A or Product repairs that are done incorrectly.
Notwithstanding anything contained herein to the contrary, the foregoing is the
only warranty or representation, and the sole basis for liability, respecting
quality, performance, defects, repair, delivery and replacement of the DUTCH A&A
Products. SENTRY shall not warrant or represent that DUTCH A&A warrants or
guarantees any DUTCH A&A Product except as provided herein. Additionally, in the
event of a defect in material or workmanship in DUTCH A&A Product sold
hereunder, DUTCH A&A will repair or replace the same pursuant to subparagraph
(b) below. Subject to SECTION 6.3, DUTCH A&A's liability (except as to title)
arising out of the sale, use or operation of DUTCH A&A Products, whether by
reason of warranty, contract, negligence or otherwise (including claims for
consequential or incidental damages), shall not in any event exceed the cost of
furnishing a replacement for the defective DUTCH A&A Product as herein provided.
(b) For DUTCH A&A Products subject to the foregoing guarantee, DUTCH
A&A will repair the defective DUTCH A&A Products and, if necessary, replace
components, free of charge. SENTRY shall return the parts to be repaired or
replaced by DUTCH A&A. The transport costs to DUTCH A&A will be paid by SENTRY
and return costs will be paid by DUTCH A&A.
(c) SENTRY guarantees to DUTCH A&A and to Customers of DUTCH A&A that
SENTRY Products sold by SENTRY hereunder will be free from defects in materials
and workmanship for a period of ninety (90) days from the date of installation
of SENTRY Products sold to Customers, with the exception of SENTRYVISION
SYSTEMS, which shall be guaranteed for (1) year. This guarantee is only valid
for Products that are correctly installed in accordance with SENTRY's
instructions for installation and that are installed for use. SENTRY does not
guarantee against damage that is due to insufficient SENTRY Product maintenance,
SENTRY Product changes made without the written consent of SENTRY or SENTRY
Product repairs that are done incorrectly. Notwithstanding anything contained
herein to the contrary, the foregoing is the only warranty or representation,
and the sole basis for liability, respecting quality, performance, defects,
repair, delivery and replacement of the SENTRY Products. DUTCH A&A shall not
warrant or represent that SENTRY warrants or guarantees any SENTRY Product
except as provided herein. Additionally, in the event of a defect in material or
workmanship in SENTRY Product sold hereunder, SENTRY will repair or replace the
same pursuant to subparagraph (d) below. Subject to SECTION 6.3, SENTRY's
liability (except as to title) arising out of the sale, use or operation of
SENTRY Products, whether by reason of warranty, contract, negligence or
otherwise (including claims for consequential or incidental damages), shall not
in any event exceed the cost of furnishing a replacement for the defective
SENTRY Product as herein provided.
(d) For SENTRY Products subject to the foregoing guarantee, SENTRY
will repair the defective SENTRY Products and, if necessary, replace components,
free of charge. DUTCH A&A shall return the parts to be repaired or replaced by
SENTRY. The transport costs to SENTRY will be paid by DUTCH A&A and return costs
will be paid by SENTRY.
6.2 MUTUAL WARRANTIES: Each Party represents and warrants to the other that (i)
it has the right and power to enter into and fully perform the obligations it
has undertaken in this Agreement; (ii) it is not under any obligations,
contractual or otherwise, to any other entity that might conflict, interfere, or
be inconsistent with any of the provisions of this Agreement; and (iii) it shall
comply with all federal, state and local laws, rules and regulations necessary
for it to perform its obligations under this Agreement.
6.3 INTELLECTUAL PROPERTY INDEMNIFICATION:
(a) DUTCH A&A agrees to protect, defend, hold harmless and indemnify
SENTRY and its Customers from and against any and all liabilities, damages and
actions (including reasonable attorney's fees) arising out of any claim that the
DUTCH A&A Products infringe any patent, trademark, copyright or other
intellectual property right of third parties. Such indemnity, however, is
specifically exclusive of any such claims which arise or result from
unauthorized alteration of the DUTCH A&A Products as furnished by DUTCH A&A; use
of the DUTCH A&A Products furnished by DUTCH A&A in the manner for which the
same were neither designed nor contemplated; or a patent, trademark or copyright
in which SENTRY or an affiliate or subsidiary of SENTRY has any direct or
indirect interest by license or otherwise. This indemnification and hold
harmless provision shall extend only to damages and costs assessed against
SENTRY embodied in a final judgment by a court of competent jurisdiction holding
that such DUTCH A&A Products constitute a patent, trademark or copyright
infringement or damages and costs incurred by SENTRY as a result of a settlement
entered into with the prior written consent of DUTCH A&A. DUTCH A&A will be
promptly notified by SENTRY of any suit or threat of suit as to which DUTCH A&A
may have obligations under the above provisions and be given reasonable
opportunity to defend the same. SENTRY shall reasonably cooperate with DUTCH A&A
with regard to the defense of any suit or threatened suit and DUTCH A&A shall
have, at its sole expense, authority to settle or otherwise dispose of any such
suit or threatened suit, and to appeal any judgment which may be entered.
(b) If, in any such suit, an injunction is issued against the further
use of said DUTCH A&A Product, or any part thereof, DUTCH A&A will, at its
expense and option, (i) procure for SENTRY and its Customers the right to
continue using said DUTCH A&A Product, (ii) replace the same with a
non-infringing DUTCH A&A Product providing equivalent or better functionality
and performance, (iii) modify it so that it becomes non-infringing, or (iv)
remove the DUTCH A&A Product and refund the price paid to DUTCH A&A for such
DUTCH A&A Product. In the case of replacement or modification of the DUTCH A&A
Product pursuant to clause (ii) m or (iii) above, the modified or replaced DUTCH
A&A Product shall have substantially the same performance characteristics as the
infringing DUTCH A&A Products.
(c) SENTRY agrees to protect, defend, hold harmless and indemnify
DUTCH A&A and its Customers from and against any and all liabilities, damages
and actions (including reasonable attorney's fees) arising out of any claim that
the SENTRY Products infringe any patent, trademark, copyright or other
intellectual property right of third parties. Such indemnity, however, is
specifically exclusive of any such claims which arise or result from
unauthorized alteration of the SENTRY Products as furnished by SENTRY; use of
the SENTRY Products furnished by SENTRY in the manner for which the same were
neither designed nor contemplated; or a patent, trademark or copyright in which
DUTCH A&A or an affiliate or subsidiary of DUTCH A&A has any direct or indirect
interest by license or otherwise. This indemnification and hold harmless
provision shall extend only to damages and costs assessed against DUTCH A&A
embodied in a final judgment by a court of competent jurisdiction holding that
such SENTRY Products constitute a patent, trademark or copyright infringement or
damages and costs incurred by DUTCH A&A as a result of a settlement entered into
with the prior written consent of SENTRY. SENTRY will be promptly notified by
DUTCH A&A of any suit or threat of suit as to which SENTRY may have obligations
under the above provisions and be given reasonable opportunity to defend the
same. DUTCH A&A shall reasonably cooperate with SENTRY with regard to the
defense of any suit or threatened suit and SENTRY shall have, at its sole
expense, authority to settle or otherwise dispose of any such suit or threatened
suit, and to appeal any judgment which may be entered.
(d) If, in any such suit, an injunction is issued against the further
use of said SENTRY Product, or any part thereof, SENTRY will, at its expense and
option, (i) procure for DUTCH A&A and its Customers the right to continue using
said SENTRY Product, (ii) replace the same with a non-infringing SENTRY Product
providing equivalent or better functionality and performance, (iii) modify it so
that it becomes non-infringing, or (iv) remove the SENTRY Product and refund the
price paid to SENTRY for such SENTRY Product. In the case of replacement or
modification of the Product pursuant to clause (ii) m or (iii) above, the
modified or replaced SENTRY Product shall have substantially the same
performance characteristics as the infringing SENTRY Products.
SECTION 7.0 PRODUCT INDEMNITIES
7.1 MUTUAL: Subject to the foregoing, each Party selling a Product to the other
Party shall indemnify and hold harmless the other Party and its officers,
directors and employees from and against any claims, suits, liabilities, losses,
fines, penalties, damages and expenses (including reasonable attorneys' and
experts' fees and costs) for personal injury or property damage arising solely
from or incident to the selling Party's Products, without causation due to a
Product of the purchasing Party, and/or the purchasing Party's breach of its
obligations or responsibilities under this Agreement.
7.2 INSURANCE: Each Party shall provide to the other Party a current Certificate
of Insurance in an amount not less than one million U.S. dollars (US$1,000,000)
evidencing such Party's product liability insurance which Certificate names the
other Party as an additional insured under said policy. Said policy will provide
that such named Party will be given ten (10) days' written notice of termination
of said policy. In the event that a Party's insurance carrier does not defend
and indemnify any third Party action pursuant to any obligation said insurance
carrier may have undertaken as a result of its issuance of such Certificate of
Insurance, or in the event any third Party claim exceeds the insurance limits
set forth in this paragraph, the Party holding the policy agrees to protect,
defend, hold harmless and indemnify the other Party against any and all
liabilities, damages and actions, directly and solely arising out of any
personal injury or property damage to a third Party from its use of the Products
purchased hereunder.
SECTION 8.0 LIMITATION ON LIABILITY
EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 6.0 AND 7.0, THE LIABILITY OF EITHER
PARTY, IF ANY, AND THE OTHER PARTY'S SOLE AND EXCLUSIVE REMEDY FOR DAMAGES FOR
ANY CLAIM OF ANY KIND WHATSOEVER WITH RESPECT TO ANY ORDER FOR, OR DELIVERY OF,
THE PRODUCTS OR WITH RESPECT TO ANY OF THE PRODUCTS COVERED THEREBY, AND
REGARDLESS OF THE LEGAL THEORY OR THE DELIVERY OR NON-DELIVERY OF THE PRODUCTS,
SHALL NOT BE GREATER THAN THE ACTUAL PURCHASE PRICE OF THE PRODUCTS WITH RESPECT
TO WHICH SUCH CLAIM IS MADE, WITH THE EXCEPTION OF INTEREST OR LATE PENALTIES
DUE IN RESPECT OF PAYMENT FOR PRODUCTS SHIPPED AND DELIVERED TO SENTRY. UNDER NO
CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING, BUT NOT
LIMITED TO, COMPENSATION, REIMBURSEMENT OR DAMAGES ON ACCOUNT OF THE LOSS OF
PRESENT OR PROSPECTIVE PROFITS, EXPENDITURES, INVESTMENTS OR COMMITMENTS,
WHETHER MADE IN THE ESTABLISHMENT, DEVELOPMENT OR MAINTENANCE OF BUSINESS
REPUTATION OR GOODWILL, FOR LOSS OF DATA, COST OF SUBSTITUTE PRODUCTS, COST OF
CAPITAL, AND THE CLAIMS OF ANY THIRD PARTY, OR FOR ANY OTHER REASON WHATSOEVER.
SECTION 9.0 TERM AND TERMINATION
9.1 TERM: This Agreement shall begin on the Effective Date and continue for a
period of two years, expiring on the second anniversary of the Effective Date
unless earlier terminated for cause ("Term"). If DUTCH A&A has not taken a total
of 51% or greater equity interest in SENTRY at the conclusion of the initial
two-year Term, then the Term shall automatically be extended for an additional
two years, which shall be considered part of the Term.
9.2 TERMINATION FOR CAUSE: Either Party may terminate this Agreement by giving
the other notice if such other Party: a) defaults in the performance of any of
its obligations under any of the terms or conditions of this Agreement, which
default is not remedied within thirty (30) days after written notice thereof;
or, b) defaults in the performance of an of its obligations under the terms and
conditions of this Agreement which default by its nature, cannot be remedied;
or, c) engages directly or indirectly in any attempt to defraud the Party
issuing such notice; or, d) is unable to pay all of its debts as they become due
or becomes insolvent, or makes an assignment for the benefit of its creditors;
or, e) is liquidated or dissolved or if any proceedings are commenced by, for or
against it under any bankruptcy, insolvency, reorganization of debts or debtors
relief law, or law providing for the appointment of a receiver or trustee in
bankruptcy.
9.3 EXCESS INVENTORY: Notwithstanding anything to the contrary, upon the
termination or expiration of this Agreement, each Party shall have the right to
market, distribute and sell all Products that such Party purchased under this
Agreement prior to such termination or expiration.
9.4 SURVIVING OBLIGATIONS AND LIMITATIONS: Neither the termination nor
expiration of this Agreement nor the termination of any of the agreements
referred to in this Section shall release either Party from the obligation to
pay any monies that may be owing to the other Party, release either Party from
the obligation to fill any accepted orders or operate to discharge any other
liability that had been incurred by either Party prior to any such termination
or expiration. Sections 6, 7, 9.3, 9.4, 11.4, 11.5, 11.7 hereof shall survive
termination or expiration of this Agreement. Any other provision herein which by
its nature is indicated or intended to extend beyond the expiration or
termination of this Agreement shall survive any expiration or termination of
this Agreement.
SECTION 10.0 NOTICES
10.1 CHANGE IN NAME OR ADDRESS: Each Party shall give the other prompt notice in
writing of any change in the: (a) name of the Party, or, (b) address of the
Party principal office from that first set forth above.
10.2 METHOD OF TRANSMISSION: Any notices given under this Agreement shall be in
writing and will be deemed to have been sufficiently given when delivered by
hand or sent by facsimile transmission (which is acknowledged by the recipient),
overnight courier service or by certified or registered mail, postage and other
charges prepaid, to the parties at the addresses first above written or as
subsequently changed by notice duly given. The date of mailing any written
notice will be deemed the date on which such notice is given unless otherwise
specified in the notice.
SECTION 11.0 GENERAL
11.1 EXPORT: Neither Party purchasing Products hereunder shall export the
Products covered by this Agreement in violation of U.S. export laws and
regulations. Where a purchasing Party ships the Products overseas after
receiving them from the other Party, such purchasing Party will be solely
responsible for compliance with and the obtaining of any required export
licenses. Where DUTCH A&A ships Products overseas to SENTRY or SENTRY's
Customer(s), DUTCH A&A shall be solely responsible for compliance with and the
obtaining of any required export license.
11.2 ASSIGNMENT: Neither Party may assign or otherwise transfer this Agreement
or any interest or right hereunder or delegate the performance of any of its
obligations hereunder to any third Party without the prior written consent of
the other Party, which consent will not be unreasonably withheld, except that
(1) DUTCH A&A may assign its accounts receivable generated by this Agreement
upon commercially reasonable written notice thereof to SENTRY, (2) either Party
may assign this Agreement in connection with the sale of such Party, and (3)
DUTCH A&A shall have the right to assign this Agreement to any entity which
succeeds to a majority of the identification, access control and anti-theft
electronic article surveillance systems business and assets of DUTCH A&A. Any
such unauthorized attempted assignment, transfer or delegation without the prior
written consent of the other, will be deemed null and void.
11.3 WAIVERS: Waiver by either Party of any default, or either Party's failure
to enforce any of the terms and conditions of this Agreement shall not in any
way affect, limit or waive such Party's right thereafter to enforce and compel
strict performance of every term and condition hereof.
11.4 NON-EXCLUSIVENESS; REMEDIES: Any specific right or remedy provided in this
Agreement shall not be exclusive but will be cumulative of all other rights and
remedies set forth herein and allowed at law.
11.5 CONFIDENTIALITY: Each Party acknowledges that in the course of the parties
performing their obligations hereunder each Party may come into contact with and
receive certain confidential information regarding the other Party, including
such Party's current and future business and technology (the "Confidential
Information"). Each Party will use commercially reasonable efforts to maintain
the confidentiality of, and prevent the unauthorized use or disclosure of, any
Confidential Information of the other which comes into its possession, or the
possession of its respective employees, agents, and contractors (provided that
this provision shall not apply to information that: (a) is already known to the
Party receiving the information at the time of its disclosure, free of any
obligation to keep it confidential; (b) is or becomes publicly known through no
wrongful act of the Party receiving the information; (c) is received from a
third Party without similar restrictions and without breach of this Agreement;
or (d) is independently developed by recipient by persons without access to the
Confidential Information and without reference to any Confidential Information).
Notwithstanding the foregoing, each Party may disclose the other's Confidential
Information to the extent required by law, court order, regulation or government
agency, provided such disclosing Party gives the other Party prior written
notice of such anticipated disclosure as soon as reasonably possible.
11.6 HEADINGS: The headings of Articles and Sections in this Agreement are for
convenience and reference only, and they shall in no way define, limit, or
describe the scope of the provisions or be considered in the interpretation,
construction or enforcement hereof.
11.7 GOVERNING LAW AND VENUE: This Agreement shall be interpreted, construed and
enforced in accordance with the local law of the Country of the Netherlands. If
DUTCH A&A initiates any litigation against SENTRY, it shall only bring such
action or suit in the federal or state court with appropriate jurisdiction over
the subject matter established or sitting in the Country of the Netherlands. If
SENTRY initiates any litigation against DUTCH A&A, it shall only bring such
action or suit in the federal or state court with appropriate jurisdiction over
the subject matter established or sitting in the Country of the Netherlands. The
parties shall not raise in connection therewith, and hereby waive, and any
defenses based upon the venue, the inconvenience of the forum, the lack of
personal jurisdiction, or the like in any such action or suit brought in such
states.
11.8 INVALIDITY: If and to the extent that any term or condition of this
Agreement is specifically determined by any court to be in whole or in part
invalid or unenforceable, then this Agreement shall be immediately terminated
upon such determination. However, such termination will not operate to discharge
either Party from the obligation to pay the other Party any sum due such other
Party or discharge any liability that had been incurred prior thereto.
11.9 INCORPORATION/ ENTIRETY OF AGREEMENT: This Agreement supersedes, terminates
and otherwise renders null and void any and all prior written and/or oral
agreements between SENTRY and DUTCH A&A with respect to the matters herein
expressly set forth, except that nothing herein contained shall be construed as
intended to relieve or release either Party from its obligation to make payment
of any monies which either Party may owe to the other Party. This Agreement
represents and incorporates the entire understanding of the parties hereto with
respect to the matters herein expressly set forth and each Party acknowledges
that there are no warranties, representations, covenants or understandings of
any kind, nature or description whatsoever made by either Party to the other,
except as are herein expressly set forth. This Agreement may be modified only by
a written instrument signed by the parties to this Agreement, which instrument
makes specific reference to this Agreement and the changes to be made hereto.
11.10 FORCE MAJEURE: NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY DELAY IN
THE PERFORMANCE OF ANY OF ITS OBLIGATIONS HEREUNDER DUE TO ACTS OF GOD, ACTS OF
CIVIL OR MILITARY AUTHORITIES, FIRES, LABOR DISTURBANCES, FLOODS, EPIDEMICS,
GOVERNMENTAL RULES OR REGULATIONS, WAR, RIOT, DELAYS IN TRANSPORTATION OR
SHORTAGES IN RAW MATERIALS OR OTHER PRODUCTS. THIS SECTION SHALL NOT RELIEVE OR
RELEASE EITHER PARTY FROM ITS OBLIGATION TO MAKE PAYMENT WHEN DUE OF ANY MONIES
WHICH EITHER PARTY MAY OWE TO THE OTHER.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first above written.
DUTCH A&A HOLDING B.V. SENTRY TECHNOLOGY CORPORATION
By: _______________________________ By:
Name:_______________________________ Name:
Title:______________________________ Title:
