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FILED BY GENERAL ELECTRIC COMPANY
PURSUANT TO RULE 425 UNDER THE
SECURITIES ACT OF 1933
SUBJECT COMPANY: INTERLOGIX, INC.
COMMISSION FILE NO. 0- 24900
THIS ANNOUNCEMENT SHALL NOT CONSTITUTE AN OFFER OF ANY SECURITIES FOR SALE. GE
WILL PREPARE AND FILE A REGISTRATION STATEMENT ON FORM S-4 AND SCHEDULE TO AND
THE PRELIMINARY PROSPECTUS, SUPPLEMENTS, FINAL PROSPECTUS AND OTHER EXCHANGE
OFFER DOCUMENTS AND INTERLOGIX MAY FILE A RELATED SOLICITATION STATEMENT. COPIES
OF THESE DOCUMENTS WILL BE PROVIDED TO STOCKHOLDERS OF INTERLOGIX CORPORATION.
IN ADDITION, THE REGISTRATION STATEMENT AND OTHER RELEVANT DOCUMENTS CONCERNING
THE TRANSACTION WILL BE FILED WITH THE SECURITIES EXCHANGE COMMISSION AND COPIES
WILL BE AVAILABLE FREE OF CHARGE FROM THE COMMISSION'S WEBSITE (WWW.SEC.GOV) AND
FROM GE INDUSTRIAL SYSTEMS AND INTERLOGIX. THESE DOCUMENTS WILL CONTAIN
IMPORTANT INFORMATION, AND INVESTORS ARE URGED TO READ THESE DOCUMENTS ONCE THEY
BECOME AVAILABLE. INVESTORS SHOULD READ THE REGISTRATION STATEMENT CAREFULLY
WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY INVESTMENT DECISIONS.
AGREEMENT AND PLAN OF MERGER
by and among
GENERAL ELECTRIC COMPANY
MARGARET ACQUISITION, INC.
and
INTERLOGIX, INC.
December 17, 2001
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TABLE OF CONTENTS
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PAGE
ARTICLE I THE OFFER AND MERGER............................................................................2
SECTION 1.1. THE OFFER.......................................................................................2
SECTION 1.2. COMPANY ACTIONS.................................................................................4
SECTION 1.3. DIRECTORS.......................................................................................6
SECTION 1.4. THE MERGER......................................................................................7
SECTION 1.5. EFFECTIVE TIME..................................................................................7
SECTION 1.6. CLOSING.........................................................................................7
SECTION 1.7. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.............................................8
SECTION 1.8. STOCKHOLDERS' MEETING...........................................................................8
SECTION 1.9. MERGER WITHOUT MEETING OF STOCKHOLDERS..........................................................9
ARTICLE II CONVERSION OF SECURITIES........................................................................9
SECTION 2.1. CONVERSION OF CAPITAL STOCK.....................................................................9
SECTION 2.2. EXCHANGE OF CERTIFICATES.......................................................................10
SECTION 2.3. DISSENTING SHARES..............................................................................12
SECTION 2.4. COMPANY OPTION PLANS...........................................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................13
SECTION 3.1. CORPORATE ORGANIZATION.........................................................................13
SECTION 3.2. CERTIFICATE OF INCORPORATION AND BY-LAWS.......................................................14
SECTION 3.3. CAPITALIZATION.................................................................................15
SECTION 3.4. AUTHORITY......................................................................................15
SECTION 3.5. CONSENTS AND APPROVALS; NO VIOLATIONS..........................................................16
SECTION 3.6. SEC DOCUMENTS; UNDISCLOSED LIABILITIES.........................................................17
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS...........................................................18
SECTION 3.8. LEGAL PROCEEDINGS..............................................................................18
SECTION 3.9. COMPLIANCE WITH APPLICABLE LAW.................................................................18
SECTION 3.10. COMPANY INFORMATION............................................................................19
SECTION 3.11. PENSION AND BENEFIT PLANS, ERISA...............................................................19
SECTION 3.12. ENVIRONMENTAL MATTERS; HEALTH AND SAFETY.......................................................21
SECTION 3.13. PROPERTIES.....................................................................................22
SECTION 3.14. TAX RETURNS AND TAX PAYMENTS...................................................................23
SECTION 3.15. INTELLECTUAL PROPERTY..........................................................................24
SECTION 3.16. INTERESTED PARTY TRANSACTIONS..................................................................25
SECTION 3.17. TAKEOVER STATUTES; RIGHTS PLAN.................................................................25
SECTION 3.18. OPINION OF FINANCIAL ADVISOR...................................................................26
SECTION 3.19. BROKER'S FEES..................................................................................26
SECTION 3.20. CONTRACTS......................................................................................26
SECTION 3.21. PRODUCT LIABILITY; WARRANTIES..................................................................27
SECTION 3.22. INSURANCE......................................................................................27
SECTION 3.23. EMPLOYEE AND LABOR RELATIONS...................................................................28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.........................................29
SECTION 4.1. CORPORATE ORGANIZATION.........................................................................29
SECTION 4.2. CAPITALIZATION.................................................................................29
SECTION 4.3. AUTHORITY......................................................................................29
SECTION 4.4. CONSENTS AND APPROVALS; NO VIOLATIONS..........................................................30
SECTION 4.5. SEC DOCUMENTS; UNDISCLOSED LIABILITIES.........................................................30
SECTION 4.6. PARENT OR PURCHASER INFORMATION................................................................31
SECTION 4.7. FINANCING......................................................................................31
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SECTION 4.8. STOCK OWNERSHIP................................................................................31
SECTION 4.9. PURCHASER CAPITALIZATION.......................................................................31
SECTION 4.10. PURCHASER'S OPERATION..........................................................................32
SECTION 4.11. BROKER'S FEES..................................................................................32
SECTION 4.12. TAX MATTERS....................................................................................32
ARTICLE V COVENANTS......................................................................................32
SECTION 5.1. CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE EFFECTIVE TIME.................................32
SECTION 5.2. NO SOLICITATION................................................................................34
SECTION 5.3. INTENTIONALLY OMITTED..........................................................................36
SECTION 5.4. FINANCING......................................................................................36
SECTION 5.5. PUBLICITY......................................................................................36
SECTION 5.6. NOTIFICATION OF CERTAIN MATTERS................................................................36
SECTION 5.7. ACCESS TO INFORMATION..........................................................................36
SECTION 5.8. FURTHER ASSURANCES.............................................................................37
SECTION 5.9. EMPLOYEE BENEFIT PLANS.........................................................................38
SECTION 5.10. INDEMNIFICATION................................................................................39
SECTION 5.11. ADDITIONAL AGREEMENTS..........................................................................40
SECTION 5.12. SECTION 16 MATTERS.............................................................................40
SECTION 5.13. NO REDEMPTION OF RIGHTS PLAN...................................................................41
SECTION 5.14. AFFILIATE LETTERS..............................................................................41
ARTICLE VI CONDITIONS.....................................................................................41
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.....................................41
SECTION 6.2. CONDITIONS OF OBLIGATIONS OF PARENT AND PURCHASER TO EFFECT THE MERGER.........................42
ARTICLE VII TERMINATION....................................................................................42
SECTION 7.1. TERMINATION....................................................................................42
SECTION 7.2. EFFECT OF TERMINATION..........................................................................44
SECTION 7.3. TERMINATION FEE; EXPENSES......................................................................44
ARTICLE VIII DEFINITIONS....................................................................................45
SECTION 8.1. DEFINITIONS....................................................................................45
SECTION 8.2. OTHER DEFINED TERMS............................................................................47
ARTICLE IX MISCELLANEOUS..................................................................................49
SECTION 9.1. AMENDMENTAND MODIFICATION......................................................................49
SECTION 9.2. EXTENSION; WAIVER..............................................................................49
SECTION 9.3. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES..................................................50
SECTION 9.4. NOTICES........................................................................................50
SECTION 9.5. COUNTERPARTS...................................................................................51
SECTION 9.6. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES....................................................51
SECTION 9.7. SEVERABILITY...................................................................................51
SECTION 9.8. WAIVER OF JURY TRIAL...........................................................................51
SECTION 9.9. GOVERNING LAW..................................................................................51
SECTION 9.10. ASSIGNMENT.....................................................................................52
SECTION 9.11. HEADINGS.......................................................................................52
SECTION 9.12. ENFORCEMENT....................................................................................52
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of December 17,
2001, by and among General Electric Company, a New York corporation ("PARENT"),
Margaret Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary
of Parent (the "PURCHASER"), and Interlogix, Inc., a Delaware corporation (the
"COMPANY").
WHEREAS, the Board of Directors of Parent, the Board of Directors of
Purchaser, and the Board of Directors of the Company, have approved, and
determined that it is advisable and in the best interests of their respective
companies and stockholders to consummate, the transactions provided for herein;
and
WHEREAS, to facilitate a merger between the Company and Purchaser that
qualifies as a tax-free reorganization under Section 368(a) of the Code, Parent
and the Purchaser have proposed acquiring all of the outstanding Common Stock,
par value $.01 per share, of the Company (the "SHARES" or "COMPANY COMMON
STOCK") at a price (such price, or such higher price per Share as may be paid in
the Offer (as defined herein), being referred to herein as the "OFFER PRICE") of
$38.86 per Share, consisting of (i) $19.43, in cash, and (ii) that number of
shares of common stock, par value $0.06, of Parent ("PARENT COMMON STOCK") equal
to the Exchange Ratio (as defined herein); and
WHEREAS, after the acquisition of the Shares described in the preceding
clause and pursuant to the plan specified in this Agreement, the Company will
merge with and into Purchaser (the "MERGER") with Purchaser surviving the
Merger; and
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger; and
WHEREAS, Parent desires to make certain agreements in connection with the
Offer; and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition to Parent's and Purchaser's willingness to enter into this
Agreement, Parent and Purchaser have entered into a Voting Agreement, dated as
of the date hereof and the form of which is attached as Exhibit A hereto (the
"VOTING AGREEMENT") pursuant to which the stockholder named therein (the
"STOCKHOLDER") has agreed, among other things, to tender all shares into the
Offer and to not withdraw any such shares and to vote all Shares subject to such
Voting Agreement in favor of the Merger and this Agreement and against any
Takeover Proposal (as defined herein), subject to and on the conditions set
forth therein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
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ARTICLE I
THE OFFER AND MERGER
Section 1.1. THE OFFER. (a) Provided this Agreement shall not have been
terminated in accordance with Section 7.1 and so long as none of the events set
forth on Annex A shall have occurred and be continuing, as promptly as
practicable and in any event within 10 Business Days after the date hereof,
Purchaser shall, and Parent shall cause Purchaser to, as the first step in
completing the Merger, commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), an offer (the
"OFFER") to purchase all shares of the issued and outstanding Company Common
Stock together with the associated rights issued pursuant to the Rights Plan (as
defined herein) (the "COMPANY RIGHTS") for the Offer Price, subject only to the
conditions set forth in Annex A hereto; PROVIDED, HOWEVER, that Parent may
designate another wholly owned, direct subsidiary of Parent as the bidder
(within the meaning of Rule 14d-1(g)(2) under the Exchange Act) in the Offer, in
which case reference herein to Purchaser shall be deemed to apply to such
subsidiary, as appropriate. Except where the context otherwise requires, all
references herein to Shares or Company Common Stock shall include the associated
Company Rights. The Company shall not tender Shares held by it or by any of its
subsidiaries pursuant to the Offer. The Purchaser shall, and Parent shall cause
the Purchaser to, on the terms and subject to the prior satisfaction or waiver
of the conditions of the Offer, accept for payment and pay for Shares tendered
as soon as it is legally permitted to do so under applicable law and
regulations. The obligations of the Purchaser to consummate the Offer and to
accept for payment and to pay for any Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in Annex A hereto. Notwithstanding anything to the contrary
set forth herein, no certificates or scrip representing fractional shares of
Parent Common Stock shall be issued in connection with the Offer, and in lieu
thereof each tendering stockholder who would otherwise be entitled to a
fractional share of Parent Common Stock in the Offer (after aggregating all
fractional shares of Parent Common Stock that otherwise would be received by
such stockholder) will be paid an amount in cash (rounded up to the nearest
whole cent) equal to the product obtained by multiplying (x) the fractional
share interest to which such stockholder would otherwise be entitled by (y) the
closing price for a share of Parent Common Stock as reported on the New York
Stock Exchange, Inc. (as reported in THE WALL STREET JOURNAL) on the Acceptance
Date.
(b) The Offer shall be made by means of an offer to purchase (the "OFFER
TO PURCHASE") containing the terms set forth in this Agreement and the
conditions set forth in Annex A hereto and providing for an initial expiration
date (the "EXPIRATION DATE") of twenty Business Days (as defined in Rule 14d-1
under the Exchange Act) from the date of commencement of the Offer. Without the
prior written consent of the Company, Purchaser shall not, and Parent shall
cause the Purchaser not to, decrease the Offer Price, change the form of
consideration to be paid, decrease the number of Shares sought, amend the
conditions to the Offer set forth in Annex A or impose conditions to the Offer
in addition to those set forth in Annex A. Notwithstanding the foregoing,
without the consent of the Company, the Purchaser shall be entitled to and
shall, and Parent shall cause the Purchaser to, extend the Offer at any time for
the shortest time periods that it reasonably believes are necessary, if at the
initial Expiration Date, or any extension thereof, any condition to the Offer is
not satisfied or waived, provided that (i) no single extension shall exceed 10
Business Days and (ii) Purchaser shall not be required to extend the Offer
beyond the
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Outside Date (as defined herein). Notwithstanding the foregoing, Purchaser may,
without the consent of the Company, (i) extend the Offer for one or more periods
of not more than 10 Business Days as required by any rule or regulation of the
SEC applicable to the Offer and (ii) if the Minimum Condition (as defined
herein) has been met but less than 90% of the outstanding Shares on a
fully-diluted basis (as defined in Annex A) shall have been validly tendered
pursuant to the Offer and not withdrawn as of the scheduled or extended
expiration date, extend the Offer after the acceptance of Shares thereunder for
a further period of time by means of a subsequent offering period under Rule
14d-11 promulgated under the Exchange Act for an aggregate period of not more
than 20 Business Days beyond the latest expiration date that would otherwise be
permitted under clause (i) of this sentence. In addition, the Offer Price may be
increased and the Offer may be extended to the extent required by law or the
United States Securities and Exchange Commission (the "SEC") in connection with
such increase in each case without the consent of the Company.
(c) As soon as practicable after the date of this Agreement, Parent shall
prepare and file with the SEC under the Securities Act of 1933, as amended, and
the SEC's rules and regulations promulgated thereunder (the "SECURITIES ACT") a
registration statement on Form S-4 (the "REGISTRATION STATEMENT") to register
the offer and sale of Parent Common Stock pursuant to the Offer. The
Registration Statement will include a preliminary prospectus containing the
information required under Rule 14d-4(b) promulgated under the Exchange Act. The
Company shall provide Parent and the Purchaser all information reasonably
requested by Parent or the Purchaser for inclusion in the Offer Documents (as
defined herein) and any exhibits or annexes thereto. As soon as practicable, but
not later than the date of commencement of the Offer, Parent shall (i) file with
the SEC a Tender Offer Statement on Schedule TO with respect to the Offer, which
will comply in all material respects with the provisions of, and satisfy in all
material respects the requirements of, such Schedule TO and all applicable
federal securities laws, and will contain or incorporate by reference all or
part of the Registration Statement and the form of the related letter of
transmittal (such documents, together with the preliminary or final prospectus
included in the Registration Statement and any supplements or amendments
thereto, collectively the "OFFER DOCUMENTS") and (ii) cause the Offer Documents
to be disseminated to holders of Shares. Parent and the Company each agree
promptly to correct any information provided by it for use in the Registration
Statement or the Offer Documents if and to the extent that it shall be, or shall
have become false or misleading in any material respect. Parent agrees to take
all steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws. Parent shall use all
reasonable efforts to have the Registration Statement declared effective under
the Securities Act as promptly as practicable after its filing and to maintain
such effectiveness for so long as shall be required for the issuance of Parent
Common Stock pursuant to the Offer. Following the time the Registration
Statement is declared effective, Parent shall file the final prospectus included
therein under Rule 424(b) promulgated pursuant to the Securities Act.
(d) Parent shall include as exhibits to the Registration Statement tax
opinions of Dechert and Gibson Dunn & Crutcher LLP, in form and substance
reasonably satisfactory to Parent and to the Company, on the basis of customary
facts, representations, warranties and covenants of Parent, the Purchaser and
the Company and assumptions set forth in such opinions (including, without
limitation assumptions that (i) the Minimum Condition will be satisfied and
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(ii) the Merger will be completed promptly following the Offer), to the effect
that the Offer and the Merger will be treated for United States federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (together with the Treasury
Regulations promulgated thereunder, the "CODE").
(e) No filing of, or amendment or supplement to, or correspondence to the
SEC or its staff with respect to, the Registration Statement, the Schedule TO or
the Offer Documents will be made by the Company, Parent or the Purchaser,
without providing the other party and its counsel a reasonable opportunity to
review and comment thereon. In addition, Parent shall, and shall cause the
Purchaser to, provide the Company and its counsel in writing with any comments
that Parent, Purchaser or their counsel may receive from the SEC or its staff
with respect to the Offer Documents promptly after receipt of such comments and
with copies of any written responses and telephonic notification of any verbal
responses by Parent, Purchaser or their counsel. Parent will advise the Company
promptly after it receives notice that the Registration Statement and any
supplement or amendment that has been filed have become effective, of the
issuance of any stop order, or of the suspension of the qualification of the
Parent Common Stock issuable in connection with the Offer for offering or sale
in any jurisdiction. If at any time prior to the time of consummation of the
Offer, any information relating to the Company or Parent, or any of their
respective affiliates, officers or directors, should be discovered by the
Company or Parent and which should be set forth in an amendment or supplement to
the Registration Statement so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party that discovers such information shall promptly
notify the other party and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the stockholders of the Company.
(f) Parent shall issue or provide to Purchaser all of the shares of
Parent Common Stock necessary in connection with the exchange of any shares of
Company Common Stock to satisfy Purchaser's obligations pursuant to the Offer
and the Merger. Parent shall provide or cause to be provided to Purchaser all of
the funds necessary in connection with the purchase of any shares of Company
Common Stock to satisfy Purchaser's obligations pursuant to the Offer and the
Merger.
Section 1.2. COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer and
represents that its Board of Directors, at a meeting duly called and held, has
(i) unanimously adopted resolutions approving and declaring advisable this
Agreement (including all terms and conditions set forth herein) and the
transactions contemplated hereby, including the Offer and the Merger and the
Voting Agreement and all of the transactions contemplated thereby (collectively,
the "TRANSACTIONS"), determining that the Merger is advisable and that the terms
of the Offer and the Merger are fair to, and in the best interests of, the
Company's stockholders, (ii) unanimously resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares thereunder to
the Purchaser and adopt this Agreement and the Merger; PROVIDED, that such
recommendation may be withdrawn, modified or amended by the Company's Board of
Directors and (iii) taken all action necessary so that the Company's Rights
Agreement, dated as of
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November 27, 1996, between the Company and Wells Fargo Bank, N.A., as rights
agent, as amended (as so amended, the "RIGHTS PLAN"), is and, through the
Effective Time (as defined herein), will be inapplicable to Parent and the
Purchaser, this Agreement, and the Transactions. The Company represents that
Section 203 of the Delaware General Corporation Law (the "DGCL") is inapplicable
to the Transactions. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of its Board of Directors described in clauses
(i) and (ii) of the immediately preceding sentence.
(b) Concurrently with the commencement of the Offer or as promptly
thereafter as practicable, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto and including the exhibits thereto, the
"SCHEDULE 14D-9"), which shall contain the recommendation referred to in clause
(ii) of Section 1.2 (a) hereof unless such recommendation has been withdrawn, or
as such recommendation has been modified or amended, in each case in accordance
with the provisions of this Agreement. Parent and the Purchaser shall provide
the Company all information reasonably requested by the Company for inclusion in
the Schedule 14D-9 and any exhibits or annexes thereto. The Schedule 14D-9 shall
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by Parent or the Purchaser for inclusion in the Schedule 14D-9. The
Company further shall take all steps necessary to cause the Schedule 14D-9 to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws, and shall mail
such Schedule 14D-9 to the stockholders of the Company promptly after
commencement of the Offer, together with the initial mailing of the Offer to
Purchase. Each of the Company, on the one hand, and Parent and the Purchaser, on
the other hand, shall promptly correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect and the Company further shall take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal securities laws. The Company shall provide
Parent, the Purchaser and their counsel a reasonable opportunity to review and
comment upon the Schedule 14D-9 and any correction or amendment thereto prior to
the filing thereof with the SEC. In addition, the Company shall provide Parent,
the Purchaser and their counsel in writing with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt of such comments and with copies of any written responses
and telephonic notification of any verbal responses by the Company or its
counsel.
(c) In connection with the Offer, the Company shall promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
promptly furnish Purchaser with such additional information, including updated
lists of stockholders, mailing labels and security position listings, and such
other information and assistance as the Purchaser or its agents may reasonably
request in
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communicating the Offer to the stockholders of the Company. Except for such
steps as are necessary to disseminate the Offer Documents and subject to the
requirements of applicable law, Parent shall, and shall cause the Purchaser and
each of Purchaser's and Parent's respective affiliates, associates, employees,
agents and advisors to, hold in confidence the information contained in any of
such labels and lists and the additional information referred to in the
preceding sentence, shall use such information only in connection with the Offer
and the Merger, and, if this Agreement is terminated, shall upon request of the
Company deliver or cause to be delivered to the Company all copies of such
information then in its possession or control or the possession or control of
its agents or representatives.
Section 1.3. DIRECTORS. Effective upon the Acceptance Date of Shares
pursuant to the Offer, and from time to time thereafter as Shares are acquired
by Purchaser, Parent or their respective affiliates, Purchaser shall be entitled
to designate upon written notice to the Company for appointment or election such
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as will give Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of Directors of
the Company equal to that number of directors which equals the product of (i)
the total number of directors on the Board of Directors of the Company (giving
effect to the directors appointed or elected pursuant to this sentence and
including current directors serving as officers of the Company) and (ii) the
percentage that the aggregate number of Shares beneficially owned by Parent,
Purchaser or any of their respective affiliates (including for purposes of this
Section 1.3 such Shares as are accepted for payment pursuant to the Offer, but
excluding Shares held by the Company or any of its subsidiaries) bears to the
total number of shares of Company Common Stock then issued and outstanding. At
such times, if requested by Purchaser, and subject to applicable law and the
rules of the Nasdaq National Market, the Company will use its best efforts to
cause each committee of the Board of Directors of the Company and the Board of
Directors of each subsidiary of the Company to include persons designated by
Purchaser constituting the same percentage of each such committee and the Board
of Directors of each subsidiary of the Company as Purchaser's designees are of
the Board of Directors of the Company. The Company shall, upon request by
Purchaser, promptly increase the size of the Board of Directors of the Company
and/or exercise its best efforts to secure the resignations of such number of
Directors as is necessary to enable Purchaser's designees to be elected to the
Board of Directors of the Company in accordance with the terms of this Section
1.3 and subject to applicable law, shall cause Purchaser's designees to be so
elected; PROVIDED, HOWEVER, that if Purchaser's designees are appointed or
elected to the Board of Directors of the Company, until the Effective Time, the
Board of Directors of the Company shall have at least two directors who are
directors on the date hereof and who are neither officers of the Company nor
designees, affiliates or associates (within the meaning of the federal
securities laws) of Parent or the Purchaser prior to the date hereof (one or
more of such directors, the "INDEPENDENT DIRECTORS"); PROVIDED FURTHER, that if
less than two Independent Directors remain, the remaining Independent Directors
(if any) or if no Independent Directors remain, the other directors shall
designate persons to fill the vacancies who shall not be either officers of the
Company or designees, shareholders, affiliates or associates of Parent, and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to applicable law, the Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.3 and shall include in the Schedule 14D-9 mailed to stockholders of the
Company promptly after the commencement of the Offer (or an
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amendment thereof or an information statement pursuant to Rule 14f-1 if
Purchaser has not theretofore designated directors) such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 1.3. Parent and Purchaser will supply the Company and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, during the period
after the election or appointment of directors designated by Purchaser pursuant
to this Section 1.3 but prior to the Effective Time, the Board of Directors of
the Company shall to the fullest extent permitted by law delegate to a committee
of the Board of Directors of the Company comprised solely of the Independent
Directors (the "COMMITTEE"), the sole responsibility for (i) the amendment or
termination of this Agreement (in either case in accordance with this Agreement)
on behalf of the Company, (ii) the waiver of any of the Company's rights or
remedies hereunder, (iii) the extension of the time for performance of Parent's
or Purchaser's obligations hereunder, or (iv) the assertion or enforcement of
the Company's rights under this Agreement.
Section 1.4. THE MERGER. Subject to the terms and conditions of this
Agreement and the provisions of the DGCL, at the Effective Time, the Company and
the Purchaser shall consummate as part of the plan specified in this Agreement a
merger (the "MERGER") pursuant to which (a) the Company shall be merged with and
into the Purchaser and the separate corporate existence of the Company shall
thereupon cease, (b) the Purchaser shall be the successor or surviving
corporation in the Merger (the "SURVIVING CORPORATION") under the name "Margaret
Acquisition, Inc." and shall continue to be governed by the laws of the State of
Delaware, and (c) the separate corporate existence of the Purchaser with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger. At the Effective Time, (x) the certificate of incorporation of
the Purchaser (the "PURCHASER CERTIFICATE OF INCORPORATION") as in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation, and (y) the by-laws of the Purchaser
(the "PURCHASER BY-LAWS"), as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Purchaser Certificate of Incorporation and the Purchaser
by-laws. The Merger shall have the effects set forth in the DGCL.
Section 1.5. EFFECTIVE TIME. Parent shall, and shall cause the Purchaser
to, and the Company shall cause an appropriate Certificate of Ownership and
Merger or Certificate of Merger, as the case may be (the "CERTIFICATE OF
MERGER") to be executed and filed on the date of the Closing (as defined herein)
(or on such other date as Parent and the Company may agree) with the Secretary
of State of the State of Delaware (the "SECRETARY OF STATE") as provided in the
DGCL. The Merger shall become effective on the date on which the Certificate of
Merger has been duly filed with the Secretary of State or such later time as is
agreed upon by the parties and specified in the Certificate of Merger, and such
time is hereinafter referred to as the "EFFECTIVE TIME."
Section 1.6. CLOSING. The closing of the Merger (the "CLOSING") shall
take place at 10:00 a.m., on a date to be specified by the parties, which shall
be as soon as practicable, but in no event later than the second Business Day,
after satisfaction or waiver of all of the conditions set forth in Article VI
hereof (the "CLOSING DATE"), at the offices of Dechert, 1717 Arch Street,
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Philadelphia, Pennsylvania 19103, unless another date or place is agreed to in
writing by the parties hereto.
Section 1.7. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of the Purchaser and the officers of the Company immediately prior to
the Effective Time, shall, from and after the Effective Time, be the directors
and officers, respectively, of the Surviving Corporation until their successors
shall have been duly elected or appointed or qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and By-laws.
Section 1.8. STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "SPECIAL MEETING") as soon as practicable
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon the Merger and this Agreement;
(ii) in conjunction with Parent, prepare a registration statement
on Form S-4 to register the issuance and sale of Parent Common Stock in
connection with the Merger (the "MERGER REGISTRATION STATEMENT"), which
will include a form of proxy statement/prospectus to be mailed to the
stockholders of the Company in connection with the Special Meeting (the
"PROXY STATEMENT/PROSPECTUS") and use its reasonable efforts (x) to
respond promptly to any comments made by the SEC with respect to the
preliminary proxy statement (y) to cause the Merger Registration
Statement to be declared effective and cause a definitive Proxy
Statement/Prospectus to be mailed to its stockholders and (z) to obtain
the necessary approvals of the Merger and this Agreement by its
stockholders; and
(iii) include in the Proxy Statement/Prospectus the recommendation
of the Board of Directors that stockholders of the Company vote in favor
of the approval of the Merger and the adoption of this Agreement, unless
such recommendation has been withdrawn, or as such recommendation has
been modified or amended, in each case in accordance with the provisions
of this Agreement.
(b) Parent shall, in conjunction with the Company, prepare and file the
Merger Registration Statement and provide the Company with the information
concerning Parent and Purchaser required to be included in the Merger
Registration Statement and the Proxy Statement/Prospectus. Parent shall vote, or
cause to be voted, all of the Shares then owned by it, the Purchaser or any of
Parent's or Purchaser's respective subsidiaries and affiliates in favor of the
approval of the Merger and the adoption of this Agreement.
(c) Parent shall provide to the Company and its counsel a reasonable
opportunity to review and comment upon the Merger Registration Statement prior
to the filing thereof with the SEC. In addition, Parent shall provide to the
Company and its counsel in writing with any comments the Parent or its counsel
may receive from the SEC or its staff with
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respect to the Merger Registration Statement promptly after receipt of such
comments and with copies of any written responses and telephonic notification of
any verbal responses by the Parent or its counsel. No filing of, or amendment or
supplement to, or written correspondence to the SEC or its staff with respect
to, the Merger Registration Statement will be made by Parent without providing
the Company and its counsel a reasonable opportunity to review and comment
thereon.
Section 1.9. MERGER WITHOUT MEETING OF STOCKHOLDERS. In the event that
Parent, the Purchaser or any other Subsidiary of Parent, shall acquire at least
ninety percent (90%) (on a fully-diluted basis) of the then-outstanding shares
of Company Common Stock pursuant to the Offer or otherwise, each of the parties
hereto shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition, without a
meeting of stockholders of the Company, in accordance with Section 253 (in lieu
of Section 251) of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1. CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or the holders of any shares of common stock, par
value $.0l per share, of the Purchaser (the "PURCHASER COMMON STOCK"):
(a) PURCHASER COMMON STOCK. Each issued and outstanding share of the
Purchaser Common Stock shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, $.0l par value per share, of
the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. All shares of
Company Common Stock that are owned by the Company as treasury stock, all shares
of Company Common Stock owned by any subsidiary of the Company and any shares of
Company Common Stock owned by Parent, the Purchaser or any other wholly owned
subsidiary of Parent shall be automatically canceled and retired and shall cease
to exist and no consideration shall be delivered in exchange therefor.
(c) CONVERSION OF SHARES. Each issued and outstanding share of Company
Common Stock (other than Shares to be canceled in accordance with Section 2.1(b)
hereof and any Dissenting Shares (as defined herein)), shall be converted into
the right to receive an amount of cash and whole shares of Parent Common Stock
equal to the Offer Price payable to the holder thereof, without interest (the
"MERGER CONSIDERATION"). For purposes of calculating the Merger Consideration
(other than cash in lieu of fractional shares of Parent Common Stock), the value
of each share of Parent Common Stock shall be the Average Share Price. All such
shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall cease
to have any rights with respect thereto, except the right
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to receive the Merger Consideration therefor upon the surrender of such
certificate in accordance with Section 2.2 hereof, without interest.
(d) SHARE NUMBER ADJUSTMENTS. In the event that, subsequent to the date
of this Agreement but prior to the Effective Time, the Company changes the
number of shares of Company Common Stock, or Parent changes the number of shares
of Parent Common Stock, issued and outstanding as a result of a stock split,
reclassification stock combination, stock dividend, recapitalization,
redenomination of share capital or other similar transaction (or in the case of
the Company, issuance of stock pursuant to the Rights Plan), the number of
shares of Parent Common Stock paid in the Offer and the Merger and other items
dependent thereon shall be appropriately adjusted.
Section 2.2. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Closing, Parent and Purchaser shall
designate a bank or trust company (the "EXCHANGE AGENT") reasonably acceptable
to the Company to make the payments of the funds and shares of Parent Common
Stock to which holders of shares of Company Common Stock shall become entitled
pursuant to Section 2.1(c) hereof. At the Closing, Parent shall deposit with the
Exchange Agent (i) cash in the amount necessary for the payment of the aggregate
cash Merger Consideration payable pursuant to Section 2.1, and (ii) the shares
of Parent Common Stock necessary for payment of the aggregate stock Merger
Consideration payable pursuant to Section 2.1. All funds deposited with the
Exchange Agent shall be invested by the Exchange Agent in (i) direct obligations
of the United States of America, (ii) obligations for which the full faith and
credit of the United States of America is pledged to provide for the payment of
principal and interest, (iii) commercial paper rated the highest quality by
either Moody's Investors Service, Inc., or Standard and Poor's Ratings Services,
or (iv) money market funds investing solely in a combination of the foregoing.
Any net profit resulting from, or interest or income produced by, such
investments will be payable to Purchaser or Parent, as Parent directs.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time but in no
event more than three Business Days thereafter, Parent shall cause the Exchange
Agent to mail to each holder of record of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "CERTIFICATES"), whose shares were converted pursuant
to Section 2.1 hereof into the right to receive the Merger Consideration, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed and
completed in accordance with the instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration
(subject to subsection (g), below) for each share of Company Common Stock
formerly represented by such Certificate, and the Certificate so surrendered
shall forthwith be canceled. If payment of the Merger Consideration is to be
made to a person other than the person in whose name the surrendered Certificate
is registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper
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form for transfer and that the person requesting such payment shall have paid
any transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration as contemplated by this Article II.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared, made or paid after the Effective Time with respect
to shares of Parent Common Stock with a record date on or after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock issuable upon surrender of such Certificate
and no cash payment in lieu of a fractional share of Parent Common Stock shall
be paid to any such holder pursuant to Section 2.2(g) until the holder of record
of such Certificate shall surrender such Certificate in accordance with this
Section 2.2. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing shares of Parent Common Stock issuable as Merger
Consideration, without interest, (i) at the time of such surrender, the amount
of dividends or other distributions, if any, with a record date on or after the
Effective Time which theretofore became payable, but which were not paid by
reason of the immediately preceding sentence, with respect to such shares of
Parent Common Stock and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date on or after the Effective
Time but prior to surrender and a payment date subsequent to surrender payable
with respect to such shares of Parent Common Stock. Dividends or other
distributions with a record date on or after the Effective Time but prior to
surrender of Certificates by holders thereof payable in respect of shares of
Parent Common Stock held by the Exchange Agent shall be held in trust by the
Exchange Agent for the benefit of such holders of Certificates, subject to the
provisions of Section 2.2(e) hereof.
(d) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.
At the Effective Time, the stock transfer books of the Company shall be closed
and thereafter there shall be no further registration of transfers of shares of
Company Common Stock on the records of the Company. From and after the Effective
Time, the holders of Certificates evidencing ownership of shares of Company
Common Stock outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares, except as otherwise provided for
herein or by applicable law. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article II.
(e) TERMINATION OF FUND; NO LIABILITY. At any time following 180 calendar
days after the Effective Time, the Surviving Corporation shall be entitled to
require the Exchange Agent to deliver to it any funds (including any interest
received with respect thereto) and any shares of Parent Common Stock that had
been made available to the Exchange Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
only to the Surviving Corporation (subject to abandoned property, escheat or
other similar laws) as general creditors thereof with respect to the payment of
any Merger Consideration that may be payable upon surrender of any Certificates
such stockholder holds, as
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determined pursuant to this Agreement, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) WITHHOLDING TAXES. If so specified in the Offer Documents or the
Proxy Statement/Prospectus, Parent, the Purchaser, the Surviving Corporation and
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable to a holder of Shares pursuant to the Offer or
Merger such amounts as Parent, the Purchaser, the Surviving Corporation or the
Exchange Agent is required to deduct and withhold with respect to the making of
such payment under the Code or any provision of state, local or foreign tax law.
To the extent amounts are so withheld by Parent, the Purchaser, the Surviving
Corporation or the Exchange Agent, the withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Shares in
respect of which the deduction and withholding was made.
(g) FRACTIONAL SHARES. No certificate or scrip representing fractional
Parent Common Stock will be issued in the Merger upon the surrender for exchange
of Certificates, and such fractional Parent Common Stock will not entitle the
owner thereof to vote or to any rights of a holder of Parent Common Stock. In
lieu of any such fractional share of Parent Common Stock, each holder of
Certificates who would otherwise have been entitled to a fraction of a share of
Parent Common Stock in exchange for such Certificate (after taking into account
all Certificates delivered by such holder) pursuant to this Section 2.2(g) shall
receive from the Exchange Agent, as applicable, a cash payment rounded up to the
nearest whole cent, determined by multiplying (A) the fractional share interest
to which such holder would otherwise be entitled by (B) the closing price of the
Parent Common Stock on the New York Stock Exchange, Inc. (as reported in THE
WALL STREET JOURNAL) on the Trading Day immediately preceding the Effective
Time.
Section 2.3. DISSENTING SHARES. Notwithstanding any provision of this
Agreement to the contrary, if and to the extent required by the DGCL, shares of
Company Common Stock which are issued and outstanding immediately prior to the
Effective Time and which are held by holders of such shares of Company Common
Stock who have properly exercised appraisal rights with respect thereto (the
"DISSENTING COMMON STOCK") in accordance with Section 262 of the DGCL, shall not
be converted into the right to receive the Merger Consideration, and holders of
such shares of Dissenting Common Stock shall be entitled to receive payment of
the appraised value of such shares of Dissenting Common Stock in accordance with
the provisions of Section 262 of the DGCL unless and until such holders fail to
perfect or effectively withdraw or otherwise lose their rights to appraisal and
payment under the DGCL. If, after the Effective Time, any such holder fails to
perfect or effectively withdraws or loses such right, such shares of Dissenting
Common Stock shall thereupon be treated as if they had been converted into and
to have become exchangeable for, at the Effective Time, the right to receive the
Merger Consideration, without any interest thereon. The Company shall give
Parent prompt notice of any demands received by the Company for appraisals of
shares of Dissenting Common Stock. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to any demands for
appraisals or offer to settle or settle any such demands, and Parent
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shall have the right to participate in all negotiations and proceedings with
respect to such demands.
Section 2.4. COMPANY OPTION PLANS.
(a) Effective upon Closing, each unexercised option to acquire Company
Common Stock (a "Company Stock Option") issued and outstanding under the
Company's 2000 Stock Incentive Plan, the SLC Technologies, Inc. Option Plan, the
ITI Technologies, Inc. Long-Term Stock Incentive Plan (1992), as amended and
restated as of May 13, 1998, and any other stock option plan or agreement of the
Company (the "Company Option Plans") will, on the Closing Date, be converted
into an option (a "Converted Option") to acquire, that number of shares of
Common Stock of the Parent that is equal, rounded up to the nearest whole share,
to the product of twice the Exchange Ratio multiplied by the number of shares
that could have been acquired upon exercise of such Company Stock Option
(without regard to actual restrictions) had such Company Stock Option been
exercised immediately before Closing, with an exercise price equal to (x) the
exercise price of the Company Stock Option divided by (y) twice the Exchange
Ratio.
(b) Between the date of this Agreement and Closing, the Company's Board
of Directors, or the appropriate Committee thereof, will, at Parent's request,
take such action as may be necessary, consistent with the authority reserved to
that Board of Directors or Committee in the relevant Company Stock Option Plan,
to give effect to the conversion contemplated by Section 2.4(a), including
making any permitted determination regarding the vesting of any or all Company
Stock Options, or conforming the administrative rules and procedures applicable
to such Company Stock Options to those specified in Parent's stock option plans,
including, without limitation, the procedures applicable in the event of an
option holder's death, disability or other termination of employment, provided
that such changes do not materially adversely affect the intrinsic value of any
Company Stock Option so amended.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as
follows:
Section 3.1. CORPORATE ORGANIZATION.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite
corporate power and authority necessary to own or lease all of its properties
and assets and to carry on its business as it is now being conducted. The
Company is duly licensed or qualified to do business in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not reasonably be expected to have a Material Adverse Effect (as defined
below) on the Company ("COMPANY MATERIAL ADVERSE EFFECT"). As used in this
Agreement, the term "MATERIAL ADVERSE EFFECT" means, an event, change, effect or
occurrence which, individually or together with any other event, change, effect
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or occurrence, has a material adverse effect on the business, properties, net
assets or results of operations or financial condition of such party and its
subsidiaries taken as a whole or a material adverse effect on the party's
ability to consummate the transactions contemplated hereby.
(b) Set forth in Section 3.1(b) of the disclosure schedule of the Company
delivered to Parent concurrently herewith (the "COMPANY DISCLOSURE SCHEDULE") is
a list of all subsidiaries of the Company together with the jurisdiction of
organization of each such subsidiary and the percentage of each such
subsidiary's outstanding capital stock or other ownership interests owned,
directly or indirectly, by the Company. Each of the Company's subsidiaries is a
corporation or entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has the requisite
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not reasonably be expected to have a Company Material
Adverse Effect. Each of the Company and its subsidiaries (as defined below) is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not reasonably be expected to have a Company Material Adverse Effect.
Except as set forth in Section 3.1(b) of the Company Disclosure Schedule or in
the SEC Documents (as hereinafter defined), neither the Company nor any of its
subsidiaries directly or indirectly owns any equity or similar interest in, or
any interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity (other than its wholly-owned subsidiaries), (i)
with respect to which interest the Company or a subsidiary has invested (and
currently owns) or is required to invest $5 million or more, or (ii) which is a
publicly-traded entity unless such interest is held for investment by the
Company or its subsidiary and comprises less than five percent of the
outstanding stock of such entity. As used in this Agreement, the word
"SUBSIDIARY" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, of
which at least a majority of the securities or other interests having by their
terms voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly beneficially owned or controlled by such
party or by any one or more of its subsidiaries, or by such party and one or
more of its subsidiaries.
Section 3.2. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore made available to Parent a complete and correct copy of its
certificate of incorporation (the "CERTIFICATE OF INCORPORATION") and by-laws
(the "BYLAWS") as amended to date (the "COMPANY CHARTER DOCUMENTS"), and will
make available to Parent, as promptly as practicable, the certificates of
incorporation and by-laws (or equivalent organizational documents) of each of
its subsidiaries (the "SUBSIDIARY DOCUMENTS"). All such Company Charter
Documents and Subsidiary Documents are in full force and effect. Neither the
Company nor any of its subsidiaries is in violation of any of the provisions of
the Company Charter Documents or the Subsidiary Documents, respectively, except
for violations that do not and are not reasonably likely to materially interfere
with the operations of such entity.
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Section 3.3. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 60,000,000 shares of Company Common Stock. At the close of
business on November 30, 2001, there were 19,569,072 Shares issued and
outstanding. As of November 30, 2001, there were 2,732,111 Shares issuable upon
the exercise of outstanding Options pursuant to the Stock Plans and 142,639
Shares reserved for issuance for future grants pursuant to the Stock Plans.
Except as set forth in Section 3.3(a) of the Company Disclosure Schedule, all of
the issued and outstanding Shares have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights. Except as set
forth in Section 3.3(a) of the Company Disclosure Schedule and as permitted by
Section 5.1, since November 30, 2001, the Company has not issued any shares of
its capital stock or any securities convertible into or exercisable for any
shares of its capital stock, other than pursuant to the exercise of Options
referred to above. Except (i) pursuant to the Rights Plan, or (ii) as set forth
above or in Section 3.3(a) of the Company Disclosure Schedule, or (iii) as
otherwise contemplated or permitted by Section 5.1(a) hereof, as of the date of
this Agreement there are not and, as of the Effective Time there will not be,
any shares of capital stock issued and outstanding or any subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any securities of the Company, including any
securities representing the right to purchase or otherwise receive any Company
Common Stock other than the Options referred to above.
(b) Except as set forth in Section 3.3(b) of the Company Disclosure
Schedule, the Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of its subsidiaries, free and clear
of any liens, charges, encumbrances, adverse rights or claims and security
interests whatsoever ("LIENS") that would reasonably be expected to have a
Company Material Adverse Effect, and all of such shares are duly authorized and
validly issued and are fully paid and nonassessable. None of the Company's
subsidiaries has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any security of such subsidiary, including any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such subsidiary.
Section 3.4. AUTHORITY. (a) The Company has all necessary corporate power
and authority to execute and deliver this Agreement and subject to obtaining the
approval of holders of a majority of the Shares of Company Common Stock prior to
the consummation of the Merger in accordance with Section 251 of the DGCL, if so
required, to perform its obligations hereunder and to consummate the
Transactions. The execution, delivery and performance by the Company of this
Agreement, and the consummation by it of the Transactions, have been duly
authorized by its Board of Directors, and, except for obtaining the approval of
its stockholders as contemplated by Section 1.8 hereof, if required by the DGCL,
no other corporate action on the part of the Company is necessary to authorize
the execution and delivery by the Company of this Agreement and the consummation
by it of the Transactions. This Agreement has been duly executed and delivered
by the Company and, assuming due and valid authorization, execution and delivery
hereof by the other parties hereto, constitutes a valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except that such enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (ii) is subject to general principles of equity.
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(b) The Board of Directors of the Company has approved and taken all
corporate action required to be taken by the Board of Directors for the
consummation of the Transactions by the Company. As of the date hereof, the
Company's Board of Directors has adopted resolutions (i) unanimously approving
and declaring advisable this Agreement (including all terms and conditions set
forth herein) and the Transactions, determining that the Merger is advisable and
that the terms of the Offer and the Merger are fair to, and in the best
interests of, the Company's stockholders, and (ii) unanimously recommending that
the stockholders of the Company accept the Offer, tender their Shares thereunder
to the Purchaser and adopt this Agreement and the Merger.
Section 3.5. CONSENTS AND APPROVALS; NO VIOLATIONS. (a) Except for (i)
the consents and approvals set forth in Section 3.5(a) of the Company Disclosure
Schedule, (ii) the filing with the SEC of the Offer Documents and, if necessary,
of a Proxy Statement/Prospectus in definitive form relating to the Special
Meeting, (iii) the filing of the Certificate of Merger with the Secretary of
State pursuant to the DGCL, (iv) if necessary, the approval of the Merger and
the adoption of this Agreement by the requisite votes of the stockholders of the
Company, (v) filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Exchange Act, state
securities or "blue sky" laws, the New York Stock Exchange, Inc. and the Nasdaq
National Market, (vi) the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and (vii) filings and consents under non-U.S. laws and regulations
intended to prohibit, restrict or regulate actions or transactions having the
purpose or effect of monopolization, restraint of trade, harm to competition or
effectuating foreign investment ("FOREIGN ANTITRUST LAWS"), no consents or
approvals of, or filings, declarations or registrations with, any federal, state
or local court, administrative or regulatory agency or commission or other
governmental entity or instrumentality, domestic or foreign (each a
"GOVERNMENTAL ENTITY"), are necessary for the consummation by the Company of the
Transactions, other than such other consents, approvals, filings, declarations
or registrations that, if not obtained, made or given, would not reasonably be
expected to materially delay the Company's performance of its material
obligations under this Agreement.
(b) Except as set forth in Section 3.5(b) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company
nor the consummation by the Company of the Transactions, nor compliance by the
Company with any of the terms or provisions hereof, will (i) conflict with or
violate any provision of the Company Charter Documents or any of the Subsidiary
Documents or (ii) assuming that the authorization hereof by the Company's
stockholders are duly obtained in accordance with the DGCL, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Company or any of its subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with, result in the
loss of any material benefit under, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of the Company or any of its
subsidiaries under, any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or any of its subsidiaries
is a party, or by which they or any of their respective properties or assets may
be bound or affected.
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Section 3.6. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. The Company has
filed all required reports, schedules, forms and registration statements with
the SEC since January 1, 1998 (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "SEC Documents"). As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents (including any and all financial statements included therein) as of
such dates contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the Company's subsidiaries is required to file periodic
reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
consolidated financial statements of the Company included in the SEC Documents
(the "SEC FINANCIAL STATEMENTS") comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited consolidated quarterly statements, (i) as
permitted by Form 10-Q of the SEC, (ii) as may be indicated in footnotes thereto
or in the SEC Documents and (iii) that they are subject to normal and recurring
year-end adjustments none of which has been or will be material) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments none of which has been or will
be material). Total Consolidated Net Indebtedness of the Company as of December
14, 2001, was not more than $213 million. "Total Consolidated Net Indebtedness"
means (a) all obligations for borrowed money; (b) all obligations to pay
deferred purchase price of property or services excluding trade account payables
in the ordinary course of business and (excluding contingent payment obligations
under the Contingent Payment Agreement dated January 15, 1999, as amended, by
and among Marius ven der Watt, JRAM Trust, Universal Technologies Insurance
Company Limited, International Technologies Insurance Company Limited, EMTMLT
1998 Trust, Impac Technologies, Inc. and SLC Technologies, Inc.); (c) all
obligations evidenced by notes, bonds, debentures, or other similar instruments;
(d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to acquired property; (e) capital lease
obligations; and (f) all reimbursement obligations contingent or otherwise,
under a drawn acceptance, letter of credit or a similar facility, less cash and
cash equivalents. Except as set forth in Section 3.6 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has incurred any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) whether or not required, if known, to be reflected or reserved
against on a consolidated balance sheet of the Company prepared in accordance
with GAAP or the notes thereto except (i) as and to the extent set forth on the
audited balance sheet of the Company and its subsidiaries as of December 31,
2000 (including the notes thereto), (ii) as incurred in connection with the
Transactions, (iii) as incurred after December 31, 2000 in the ordinary course
of business consistent with past practice, (iv) as described in the SEC
Documents filed since December 31, 2000 but prior to the date of this Agreement
or (v) as would not reasonably be expected to be material and adverse to the
Company and its subsidiaries taken as a whole.
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Section 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the SEC Documents filed prior to the date hereof or as set forth in Section 3.7
of the Company Disclosure Schedule and except as permitted by Section 5.1
hereof, since September 29, 2001, the Company and its subsidiaries have carried
on and operated their respective businesses in all material respects in the
ordinary course of business consistent with past practice, and there has not
occurred: (a) any events which have had a Company Material Adverse Effect, (b)
any change by the Company in its accounting principles, (c) any revaluation of
any of the Company's or any subsidiary's assets, including, without limitation,
writing off notes or accounts receivable other than in the ordinary course of
business and consistent with past practice, (d) any sale, pledge, disposition of
or encumbrance upon a material amount of property of the Company or of any
subsidiary, except in the ordinary course of business and consistent with past
practice, (e) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any class of
capital stock, (f) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (g) any granting by the Company or any of its subsidiaries to any
executive officer of the Company of any increase in compensation, except for
normal increases in the ordinary course of business consistent with past
practice, (h) any granting by the Company or any of its subsidiaries to any such
executive officer of any increase in severance or termination pay, except as was
required under any employment, severance or termination agreements in effect as
of September 1, 2001, copies of which have been made available to Purchaser, (i)
any entry by the Company or any of its subsidiaries into any employment,
severance or termination agreement with any such executive officer, (j) any
establishment or increase of benefits under any plan that would constitute an
Employee Benefit Plan (as defined herein), (k) any material Tax (as defined
herein) election inconsistent with past practices or the settlement or
compromise of any material Tax liability or (l) any damage, destruction or loss
of any material asset not covered by insurance and which materially affects the
use or value thereof.
Section 3.8. LEGAL PROCEEDINGS.
(a) Except as disclosed in the SEC Documents or in Section 3.8 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
a party to any, and there are no pending material legal, administrative,
arbitral or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against the Company or any of its subsidiaries or
challenging the validity or propriety of the Transactions.
(b) Except as set forth in the SEC Documents or in Section 3.8 of the
Company Disclosure Schedule, there is no injunction, order, judgment, decree or
regulatory restriction imposed upon the Company, any of its subsidiaries or the
assets of the Company or any of its subsidiaries that would reasonably be
expected to have a Company Material Adverse Effect or interface with the
Company's ability to consummate the Transactions.
Section 3.9. COMPLIANCE WITH APPLICABLE LAW. The Company and each of its
subsidiaries hold all material licenses, franchises, permits, certificates,
approvals, and authorizations necessary for the lawful conduct of their
respective businesses as presently conducted (collectively, the "COMPANY
PERMITS"). The Company and its subsidiaries are in compliance with the terms of
the Company Permits in all material respects, except as described
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in the SEC Documents. Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, the Company and its subsidiaries are in compliance in all
material respects with all applicable laws, statutes, orders, rules and
regulations of any Governmental Entity ("LAWS") relating to the Company or any
of its subsidiaries or by which any of their properties is bound or affected. As
of the date of this Agreement, except as disclosed in the SEC Documents, no
action, demand, requirement or investigation of the Company or any of its
subsidiaries by any Governmental Entity is pending or, to the knowledge of the
Company, threatened other than those the outcome of which individually or in the
aggregate would not reasonably be expected to have a Company Material Adverse
Effect.
Section 3.10. COMPANY INFORMATION. The information relating to the
Company and its subsidiaries to be provided by the Company to be contained in
the Proxy Statement/Prospectus, if any, or the Offer Documents, or in any other
document filed with any other Governmental Entity in connection herewith at the
respective times filed with the SEC or such other Governmental Entity and first
published, sent or given to stockholders of the Company and, in addition, in the
case of the Proxy Statement/Prospectus, at the date it or any amendment or
supplement is mailed to holders of the Shares, at the time of the Special
Meeting and at the Effective Time, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances in which they are made, not misleading.
The Schedule 14D-9 will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder (except
that no representation is made by the Company to such portions thereof that
relate only to Parent or any of its subsidiaries or to statements made therein
based on information supplied by Parent or the Purchaser for inclusion therein).
Section 3.11. PENSION AND BENEFIT PLANS, ERISA.
(a) Section 3.11(a) of the Company Disclosure Schedule lists (i) all
"employee benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any other material
employee benefit arrangements or payroll practices, whether oral or written and
whether subject to ERISA or not, including without limitation severance pay,
sick leave, vacation pay, salary continuation for disability, consulting or
other compensation or employment agreements, retirement, deferred compensation,
bonus, stock purchase, hospitalization, medical insurance, life insurance, and
scholarship programs available to employees of the Company (all of the foregoing
referred to herein as "EMPLOYEE BENEFIT PLANS"); (ii) all "employee pension
plans," as defined in Section 3(2) of ERISA maintained by or for the Company or
for employees of the Company by any employer (an "ERISA AFFILIATE") that
together with the Company would be deemed a "single employer" within the meaning
of section 414(b), 414(c) or 414(m) of the Code or to which the Company or any
ERISA Affiliate (as defined herein) contributed or is obligated to contribute
thereunder (all of the foregoing referred to herein as "PENSION PLANS"). True
and complete copies of the following documents with respect to each of the
Employee Benefit Plans and Pension Plans have been made available to Parent by
the Company: (i) any plans and related trust documents, and amendments thereto;
(ii) the most recent Forms 5500; (iii) the last IRS determination letter; and
(iv) summary plan descriptions.
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(b) No Pension Plan is, or has been during any period for which any
relevant statute of limitations remains open, subject to section 412 of the
Code, or Title IV of ERISA. No Employee Benefit Plan is, or has been during any
period for which any relevant statute of limitations remains open, subject to
Section 4063 or Section 4064 of ERISA. No ERISA Affiliate has incurred any
liability under Title IV of ERISA, including, without limitation any liability
under Section 4062, 4063 or 4064 of ERISA, or any withdrawal liability, within
the meaning of Section 4201 of ERISA to any multiemployer pension plan, within
the meaning of Section 3(37) of ERISA nor does the Company or any ERISA
Affiliate have any potential withdrawal liability arising from a transaction
described in Section 4204 of ERISA, which could reasonably be expected to become
a liability of the Company, any of its subsidiaries, the Parent or the Surviving
Corporation.
(c) The Pension Plans intended to qualify under Section 401 of the Code
and the trusts maintained pursuant thereto are exempt from federal income
taxation under Section 501 of the Code, and nothing has occurred with respect to
the operation of the Pension Plans which could reasonably be expected to cause
the loss of such qualification or exemption or the imposition of any liability,
penalty, or Taxes (as defined herein) under ERISA or the Code. There is no
material violation of ERISA with respect to the filing of applicable reports,
documents, and notices regarding the Employee Benefit Plans with the Secretary
of Labor and the Secretary of the Treasury or the furnishing of such documents
to the participants or beneficiaries of the Employee Benefit Plans.
(d) There are no actions, suits, investigations, arbitrations, or
proceedings pending against any Employee Benefit Plan or Pension Plan, against
the assets of any of the trusts under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of any Employee Benefit Plan or Pension
Plan with respect to the operation of such plans (other than routine benefit
claims), and the Company is not aware of any facts that could form the basis for
any such action, suit, investigation, arbitration, or proceeding.
(e) All amendments and actions required to bring the Employee Benefit
Plans and Pension Plans into conformity in all respects with all of the
applicable provisions of ERISA and other applicable Laws have been made or
taken.
(f) Any bonding required with respect to any Employee Benefit Plan or
Pension Plan in accordance with applicable provisions of ERISA has been obtained
and is in full force and effect.
(g) The Employee Benefit Plans and Pension Plans have been maintained, in
all material respects, in accordance with their terms and with all provisions of
ERISA (including regulations thereunder) and other applicable Laws, and neither
the Company nor any "party in interest" or any "disqualified person" with
respect to the Employee Benefit Plans has engaged in a "prohibited transaction"
within the meaning of Section 4975 of the Code or Section 406 of ERISA. The
Company maintains no retiree life and retiree health insurance plans which: (i)
are Employee Benefit Plans; (ii) are "welfare benefit plans" within the meaning
of Section 3(l) of ERISA; or (iii) provide for continuing benefits or coverage
for any participant or any beneficiary of a participant except as may be
required under Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA")
and at the sole expense of the participant or the participant's
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beneficiary. The Company has complied with the notice and continuation
requirements of the Code, COBRA, and Part 6 of Subtitle B of Title I of ERISA
and the regulations thereunder.
(h) Except as set forth in the SEC Documents or in Section 3.11(h) of the
Company Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the Transactions will: (i) result in any
payment becoming due to any employee of the Company; (ii) increase any benefits
otherwise payable under any Employee Benefit Plan or Pension Plan; or (iii)
result in the acceleration of the time of payment of any such benefits. The
Company does not have any contract, plan, or commitment, to create any
additional Employee Benefit Plans or Pension Plans.
(i) Except as set forth in Section 3.11(i) of the Company Disclosure
Schedule, no stock or other security issued by the Company, or any ERISA
Affiliate, forms or has formed a part of the assets of any Employee Benefit Plan
or Pension Plan. With respect to any period for which any contribution or other
payment to or in respect of any Employee Benefit Plan or Pension Plan is not yet
due or owing, the Company has made due and sufficient current accruals for such
contributions and other payments in accordance with GAAP, and such current
accruals through September 29, 2001, are duly and fully provided for in the SEC
Financial Statements for the period then ended. All of the plans listed on
Schedule 3.11(a) of the Company Disclosure Schedule have been operated and
maintained in material compliance with the laws of the jurisdictions in which
such plans are maintained, and accrued liabilities and corresponding assets for
such plans are accurately reflected on the SEC Financial Statements of the
Company.
Section 3.12. ENVIRONMENTAL MATTERS; HEALTH AND SAFETY.
Except as set forth in Section 3.12(a) of the Company Disclosure
Schedule:
(a) (i) The Company and each of its subsidiaries is and has been in
all material respects in compliance with all Environmental Laws (as defined
herein) and all Health and Safety Requirements (as defined herein) except for
such non-compliance which would not reasonably be expected to have a Company
Material Adverse Effect;
(ii) The Company and each of its subsidiaries has obtained all
permits, approvals, and authorizations required under Environmental Laws
(hereinafter "ENVIRONMENTAL PERMITS"), and is and has been in compliance
with all requirements in such Environmental Permits, except when the
failure to have such permits or non-compliance would not reasonably be
expected to have a Company Material Adverse Effect;
(iii) There are no present or past actions or activities or events
including without limitation the use, storage, or Releases (as defined
herein), of any Hazardous Materials (as defined herein) by the Company or
its subsidiaries, that forms the basis of any obligation under
Environmental Laws for the Company or its subsidiaries to investigate,
remediate or respond to such use, storage and Releases, which obligation
would reasonably be expected to have a Company Material Adverse Effect;
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(iv) No Lien has been placed upon any real property owned or
leased by the Company or any of its subsidiaries under any Environmental
Law which would reasonably be expected to have a Company Material Adverse
Effect;
(v) There has been no environmental, investigation, study, audit,
or review in the Company's or any of its subsidiaries' possession
conducted in relation to any current operations or properties of the
Company or any of its subsidiaries or any other operations or properties
or facilities now or previously owned or leased by Company or its
subsidiaries, which have not been made available to Parent and which
identify a violation of environmental Law or Release of Hazardous
Materials which would reasonably be expected to have a Company Material
Adverse Effect;
(vi) No Environmental Law imposes any obligation upon the Company
or any of its subsidiaries as a result of or as a condition to any of the
Transactions (A) to modify or transfer any Environmental Permits, (B) to
file any notice or other submission with a Governmental Entity informing
them of the Transactions, or (C) to modify or provide notice under any
settlement agreement, consent order or consent decree; which would
reasonably be expected to have a Company Material Adverse Effect;
(vii) Neither the Company nor any of its subsidiaries has entered
into or agreed to enter into, any consent decree or order in respect of
its business or any property owned or leased by it, and it is not subject
to any court order mandating the Company or its subsidiaries to comply
with or impose any obligation upon the Company or any of its subsidiaries
to address the presence of Hazardous Materials, under any Environmental
Laws in respect of its business or properties which would reasonably be
expected to have a Company Material Adverse Effect; and
(viii) Neither the Company nor any of its subsidiaries has entered
into or is a party to or, to the knowledge of the Company, subject to any
consent decree or order with any environmental authority in respect of
its business or any property owned or leased by it, or relating to
compliance with or addressing the presence of Hazardous Materials under
any Environmental Laws in respect of its business or properties which
decree or order would reasonably be expected to have a Company Material
Adverse Effect.
(b) No action, claim or proceeding for any violation or liability by the
Company or any of its subsidiaries under any Environmental Laws or Environmental
Permits has been commenced or to the knowledge of the Company, is threatened by
any Governmental Authority against the Company or any of its subsidiaries,
except for any actions, claims or proceedings that would not reasonably be
expected to have a Company Material Adverse Effect.
Section 3.13. PROPERTIES. Except as disclosed in the SEC Documents, each
of the Company and its subsidiaries (i) has good and marketable title to all of
its material properties (real, personal or intangible) and assets which are
reflected on the latest balance sheet included in such SEC Documents as being
owned by the Company or one of its subsidiaries or acquired after the date
thereof which are, individually or in the aggregate, material to the Company's
business on a consolidated basis (except properties sold or otherwise disposed
of since the date thereof in
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the ordinary course of business), free and clear of (A) all Liens except (1)
statutory liens securing payments not yet due and (2) such imperfections or
irregularities of title or other Liens (other than real property mortgages or
deeds of trust) as do not materially affect the use of the properties or assets
subject thereto or affected thereby or otherwise materially impair business
operations at such properties, and (B) all real property mortgages and deeds of
trust except that secured indebtedness that is properly reflected in the latest
SEC Financial Statements, and (ii) is the lessee or sublessee of all leasehold
estates listed in the SEC Documents or acquired after the date thereof and is in
possession of the properties purported to be leased thereunder, and each such
lease is valid without material default thereunder by the lessee (or event which
with notice or lapse of time, or both, would constitute a material default) or,
to the Company's knowledge, the lessor.
Section 3.14. TAX RETURNS AND TAX PAYMENTS. Except as disclosed in
Section 3.14 of the Company Disclosure Schedule, the Company and its
subsidiaries have timely filed (or, as to subsidiaries, the Company has timely
filed on behalf of such subsidiaries) all material Tax Returns (as defined
below) required to be filed by it. Except as disclosed in Section 3.14 of the
Company Disclosure Schedule, all such tax returns are correct and complete in
all material respects. Except as disclosed in Section 3.14 of the Company
Disclosure Schedule, the Company and its subsidiaries have timely paid (or, as
to subsidiaries, the Company has timely paid on behalf of such subsidiaries) all
Taxes (as defined below) shown to be due on such Tax Returns and has provided
(or, as to subsidiaries, the Company has made provision on behalf of such
subsidiaries), in accordance with GAAP, reserves in its most recent SEC
Financial Statements for any Taxes that have not been paid (exclusive of
reserves representing differences in timing between tax and book income),
whether or not shown as being due on any Tax Returns. Neither the Company nor
any of its subsidiaries has made any request for waivers of the time to assess
any U.S. Taxes or any material non-U.S. Taxes that are pending or outstanding.
No claim for unpaid Taxes has been asserted against the Company or any of its
subsidiaries in writing by a Tax authority which, if resolved in a manner
unfavorable to the Company or any of its subsidiaries, as the case may be, would
reasonably be expected to result in a Company Material Adverse Effect. There are
no Liens for Taxes upon the assets of the Company or any Subsidiary that would
reasonably be expected to result in a Company Material Adverse Effect except for
Liens for Taxes not yet due and payable or for Taxes that are being disputed in
good faith by appropriate proceedings, with respect to which Liens adequate
reserves have been taken. Except as disclosed in Section 3.14 of the Company
Disclosure Schedule, no audit of any Tax Return of the Company or any of its
subsidiaries is being conducted by a Tax authority. Neither the Company nor any
of its subsidiaries has made an election under Section 341(f) of the Code.
Except as disclosed in Section 3.14 of the Company Disclosure Schedule, none of
the Company and its subsidiaries has made any payments, is obligated to make any
payments, or is party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under Code Section
280G or Code Section 162(m). None of the Company and its subsidiaries is party
to any Tax allocation or sharing agreement. None of the Company and its
subsidiaries will be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any: (A) change in method
of accounting for a taxable period ending on or prior to the Closing Date under
Code Section 481(c) (or any corresponding or similar provision of state, local
or foreign income Tax law); (B) "closing agreement" as described in Code Section
7121 (or any corresponding or similar provision of state, local or foreign
income
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Tax law) executed on or prior to the Closing Date; (C) material deferred
intercompany gains or any material excess loss accounts described in Treasury
Regulations under Code Section 1502 (or any corresponding or similar provision
of state, local or foreign income Tax law); (D) installment sale or open
transaction disposition made on or prior to the Closing Date; or (E) material
prepaid amounts received on or prior to the Closing Date. The Company and its
subsidiaries have not joined in filing a consolidated return as members of a
consolidated group that included the corporation that distributed the stock of
SLC Technologies, Inc. in a spin-off on October 10, 1997 (the "SPIN-OFF") for
any tax year of that group beginning after December 31, 1997. The Internal
Revenue Service has issued a private letter ruling (the "Ruling") that the
Spin-Off was tax-free pursuant to Section 355 of the Code. The Internal Revenue
Service has issued a supplemental private letter ruling that the merger of SLC
Technologies, Inc. into the Company, which occurred in May, 2000, would satisfy
certain of the representations made in connection with the Ruling and that the
provisions of the Ruling that the Spin-Off was tax-free to the distributing
corporation and its shareholders under Section 355 of the Code would remain in
full force and effect upon and following completion of the merger. All factual
representations made pursuant to each such ruling request were correct and
accurate in all material respects when made and thereafter no material facts
represented therein have changed. Except as disclosed in Section 3.14 of the
Company Disclosure Schedule, neither the Company nor its U.S. subsidiaries has a
permanent establishment or tax presence outside of its country of incorporation
or organization. Neither the Company nor any of its subsidiaries have taken any
action or failed to take any action that would cause the Offer and the Merger to
fail to qualify as a tax-free reorganization under Section 368(a) of the Code,
and no facts exist that would cause the Offer and the Merger to fail to so
qualify.
As used herein, "Taxes" shall mean all taxes of any kind, including, without
limitation, those on or measured by or referred to as income, gross receipts,
sales, use, ad valorem, franchise, profits, license, value added, property or
windfall profits taxes, customs, duties or similar fees, assessments or charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts imposed by any governmental entity, domestic or
foreign. As used herein, "Tax Return" shall mean any return, report or statement
required to be filed with any governmental entity with respect to Taxes.
Section 3.15. INTELLECTUAL PROPERTY.
(a) As used herein, the term "INTELLECTUAL PROPERTY" shall mean all
patents, patent applications, statutory invention registrations, inventions and
other industrial property rights; trademarks, service marks, trade names, trade
dress, logos, and other source identified, including registrations and
applications for the registration thereof; copyrights (including without
limitation, computer software programs); Internet domain name registrations;
Internet web sites, web content, and registrations and applications for
registrations thereof; confidential and proprietary information, including
know-how and trade secret rights, technologies, techniques and processes;
computer software, programs and databases in any form, all versions, updates,
corrections, enhancements, replacements, and modifications thereof, and all
documentation related thereto; and rights of privacy, publicity and endorsement,
in each case under the laws of any jurisdiction in the world, and including
rights under and with respect to all applications, registrations, continuations,
divisions, renewals, extensions and reissues of the foregoing. As used herein,
"COMPANY INTELLECTUAL PROPERTY" shall mean the Intellectual Property used in
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connection with the business of the Company or any of its subsidiaries or owned
or held for use by the Company or any of its subsidiaries.
(b) Except as set forth in Section 3.15(b) of the Company Disclosure
Schedule, the Company and/or each of its subsidiaries owns, or is licensed or
otherwise possesses sufficient rights to use and transfer such rights as it has
in and to all the Company Intellectual Property, except as would not reasonably
be expected to have a Company Material Adverse Effect. The use of the Company
Intellectual Property by the Company and its subsidiaries does not constitute an
infringement or misappropriation of any valid third party Intellectual Property
right in existence as of the date hereof, except as would not reasonably be
expected to have a Company Material Adverse Effect. Except as set forth in
Section 3.15(b) of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries has received any written notice from any Person since May 2,
2000 that the use of any of the Company Intellectual Property or the operation
of the Company's or its subsidiaries' businesses infringes, dilutes (in the case
of trademarks), or otherwise violates the Intellectual Property of such person.
(c) Except as set forth in Section 3.15(c) of the Company Disclosure
Schedule or as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, (i) no written claims,
charges, or demands are currently pending or, to the knowledge of the Company,
threatened by any person with respect to the Company Intellectual Property, and
(ii) there are no pending claims by the Company or any subsidiary alleging or
asserting that any third party has violated, misappropriated or infringed any of
the Company Intellectual Property nor, to the Company's knowledge, is there any
basis for such a claim.
(d) Except as would not reasonably be expected to have a Company Material
Adverse Effect, to the knowledge of the Company, none of the trade secrets,
know-how or other confidential or proprietary information of the Company or any
subsidiary has been disclosed to any person unless such disclosure was
necessary, and was made pursuant to an appropriate confidentiality agreement.
(e) Except as set forth in Section 3.15(e) of the Company Disclosure
Schedule or as would not reasonably be expected to have a Company Material
Adverse Effect, to the Company's knowledge, the information technology assets of
the Company, including without limitation all computer software, hardware,
firmware and telecommunications systems, are adequate for the operation of the
Company's and subsidiaries' businesses taken as a whole as currently conducted.
Section 3.16. INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 3.16 of the Company Disclosure Schedule or the SEC Documents or for
events as to which the amounts involved do not exceed $60,000, since the
Company's proxy statement dated April 12, 2001, no event has occurred that would
be required to be reported as a Certain Relationship or Related Transaction
pursuant to Item 404 of Regulation S-K promulgated by the SEC.
Section 3.17. TAKEOVER STATUTES; RIGHTS PLAN. The Company has taken all
actions such that no restrictive provision of any "fair price," "moratorium,"
"control share acquisition," "interested shareholder" or other similar
anti-takeover statute or regulation (including, without
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limitation, Section 203 of the DGCL) (each a "TAKEOVER STATUTE") or restrictive
provision of any applicable anti-takeover provision in the governing documents
of the Company is, or at the Expiration Date or at the Effective Time will be,
applicable to the Company, Parent, the Purchaser, the Shares, the Offer, the
Merger or any other Transaction. After giving effect to the amendment to the
Rights Plan effective as of the date hereof, the Rights Plan is inapplicable to
the Transactions.
Section 3.18. OPINION OF FINANCIAL ADVISOR. The Company's Board of
Directors has received the opinion of UBS Warburg LLC ("UBS"), financial advisor
to the Company's Board of Directors, to the effect that, as of the date of such
opinion, the consideration to be received in the Offer and the Merger by the
holders of Shares is fair to the holders of Shares, (other than the Stockholders
and its affiliates), from a financial point of view (the "FAIRNESS OPINION").
The Company hereby represents and warrants that it has been authorized by UBS to
permit the inclusion of the Fairness Opinion and/or references thereto, subject
to prior review and consent by UBS (such consent not to be unreasonably
withheld) in the Offer Documents, the Schedule 14D-9 and any Proxy
Statement/Prospectus.
Section 3.19. BROKER'S FEES. Except as set forth in Section 3.19 of the
Company Disclosure Schedule, neither the Company nor any subsidiary of the
Company nor any of their respective officers or directors on behalf of the
Company or such subsidiaries has employed any financial advisor, broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated hereby. The Company
has delivered to Parent a current copy of the engagement letter with UBS, which
engagement letter describes the fee payable to UBS.
Section 3.20. CONTRACTS.
(a) Set forth in Section 3.20(a) of the Company Disclosure Schedule is a
list of (i) each written customer or supply contract or agreement of the Company
or any subsidiary of the Company currently in effect that involve consideration
in fiscal year 2000 in excess of $3,000,000 or that are reasonably likely to
involve consideration in fiscal year 2001 in excess of $3,000,000 or (ii) each
written contract or agreement (other than customer or supply contracts or
agreements) of the Company or any subsidiary of the Company currently in effect
that involve consideration (whether or not measured in cash) of greater than
$5,000,000 (each a "MATERIAL CONTRACT").
(b) Neither the Company nor any of its subsidiaries is in default under
any Material Contract or other agreement, nor does any condition exist that,
with notice or lapse of time or both, would constitute a default thereunder,
except for such defaults under any agreement other than a material Contract as
in the aggregate would not reasonably be expected to have a Company Material
Adverse Effect. Except as disclosed in Section 3.20(b) of the Company Disclosure
Schedule, to the knowledge of the Company, no other party to any Material
Contract or such other agreement is in default thereunder, nor does any
condition exist that with notice or lapse of time or both would constitute a
default thereunder, except for such defaults under any agreement other than a
Material Contract as in the aggregate would not reasonably be expected to have a
Company Material Adverse Effect. Except as separately identified in Section
3.20(b) of the Company Disclosure Schedule, no approval or consent of any person
is needed in order
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that any Material Contract continue in full force and effect following the
consummation of the Transactions, except with respect to such agreements the
default of which in the aggregate would not reasonably be expected to have a
Company Material Adverse Effect. The Company has no knowledge of a claim,
actual, pending or threatened, by any governmental agency, prime contractor,
subcontractor, or supplier with respect to any contract, purchase order or
agreement to which the Company or any of its subsidiaries is a party, except for
such claims as in the aggregate would not reasonably be expected to have a
Company Material Adverse Effect.
(c) Section 3.20(c) of the Company Disclosure Schedule lists the top ten
suppliers (by dollar amount) of the Company for calendar year 2001 and top ten
customers (by dollar amount) of the Security and Life Safety Group, Key
Management Group, and Enterprise Technologies Group business segments of the
Company and its subsidiaries for calendar year 2001.
(d) Section 3.20(d) of the Company Disclosure Schedule lists each
material agreement preventing the Company or any of its subsidiaries from
competing in any line of business.
Section 3.21. PRODUCT LIABILITY; WARRANTIES.
(a) Except as disclosed in Section 3.21 of the Company Disclosure
Schedule, there are no claims asserted or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries related to the safety
of the products of the Company or any of its subsidiaries that could reasonably
be expected to have a Company Material Adverse Effect.
(b) All products of the Company and of each Company subsidiary
manufactured, processed, assembled, distributed, shipped or sold and any
services rendered in the conduct of the business of the Company or any Company
subsidiary have been in conformity with all applicable contractual commitments
and all express or implied warranties, except where the failure to be in
conformity could not reasonably be expected to have a Company Material Adverse
Effect. All warranties of the Company and each Company subsidiary are in
conformity with the labeling and other requirements of applicable Laws, except
where any failure to be in conformity, either individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect.
Section 3.22. INSURANCE. All material insurance policies of the Company
and the Company subsidiaries (the "INSURANCE POLICIES") are in full force and
effect and provide insurance in such amounts and against such risks as are
customary for companies of similar size in the same business as the Company and
its subsidiaries. Neither the Company nor any of its subsidiaries is in material
breach or default, and neither the Company nor any of its subsidiaries have
taken any action or failed to take any action which, with notice or the lapse of
time, would constitute such a breach or default, or permit termination or
modification of any of the Insurance Policies. No notice of cancellation or
termination has been received by the Company with respect to any such Insurance
Policy. With respect to each of the legal proceedings set forth in Section 3.8
in the Company Disclosure Schedule and the SEC Documents, no carrier of any
Insurance Policy has asserted any denial of coverage. The Transactions will not
cause the
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Insurance Policies not to remain in full force and effect, and the Insurance
Policies will not in any way be affected by, and will not terminate or lapse by
reason of, any of the Transactions.
Section 3.23. EMPLOYEE AND LABOR RELATIONS.
(a) Except as set forth in Section 3.23(a) of the Company Disclosure
Schedule, there is no (x) U.S. employment, retention, extension, continuation,
severance, commitment, or other similar contract, or (y) material non-U.S.
employment, retention, extension, continuation, severance, commitment, or other
similar contract affecting any employee, officer, or director of the Company
pursuant to which the Company has any liability.
(b) Except as set forth in Section 3.23(b)(i) of the Company Disclosure
Schedule, no labor organization or group of employees has been recognized or
certified as representatives to the Company for any current or former employees
of the Company. No labor organization or group of employees of the Company has
made a pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority. Except as set forth in Section 3.23(b)(ii) of
the Company Disclosure Schedule, there are no strikes, work stoppages,
slowdowns, lockouts, arbitrations, grievances, or other labor disputes pending
or threatened in writing against or involving the Company. There has been no
"mass layoff" or "plant closing" as defined by the Worker Adjustment Retraining
Notification Act or any similar state or local "plant closing" law with respect
to the Company within the six months prior to the date hereof or within the six
months prior to the Expiration Date.
(c) Except as set forth in Section 3.23(c) of the Company Disclosure
Schedule, there are no material pending allegations that the Company or any of
its subsidiaries has violated, any provision of federal, state, local or foreign
law or any governmental rule or regulation, or any order, ruling, decree,
judgment or arbitration award of any court, arbitrator or any governmental,
quasi-governmental or regulatory agency regarding the terms and conditions of
employment of employees, former employees or prospective employees or other
labor related matters, including, without limitation, laws, rules, regulations,
orders, rulings, decrees, judgments and/or arbitration awards relating to
discrimination, fair labor standards, occupational health and safety,
immigration and naturalization, worker's compensation, the National Labor
Relations Act, the Family and Medical Leave Act, the Americans with Disabilities
Act, the Age Discrimination in Employment Act, wrongful discharge or violation
of the personal rights of employees, former employees or prospective employees.
No present or former director, officer, employee or agent of the Company has
asserted any claim against the Company (whether under federal, state, local or
foreign law), under any employment agreement or otherwise, on account of or for:
(i) overtime pay, other than overtime pay for the current payroll period; (ii)
wages or salary for any period other than the current payroll period; (iii)
vacation, time off or pay in lieu of vacation or time off, other than vacation
or time off (or pay in lieu thereof) that has been accrued in the ordinary
course of business in accordance with existing policies and is reflected on the
SEC Financial Statements; or (iv) any violation of any statute, ordinance or
regulation relating to payment of wages and fringe benefits, minimum wages or
maximum work hours except, in the case of each of clauses (i) through (iv)
above, where such claim would not reasonably be expected to have a Company
Material Adverse Effect.
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(d) Section 3.23(d) of the Company Disclosure Schedule lists all current
employees of the Company with a base salary of $100,000 or more and the job
title of each such employee.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and warrant to the
Company as follows:
Section 4.1. CORPORATE ORGANIZATION. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has the requisite corporate power
and authority necessary to own or lease all of its properties and assets and to
carry on its business as it is now being conducted. Each of Parent's
subsidiaries is a corporation or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization and
has the requisite corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
except as would not reasonably be expected to have a Material Adverse Effect on
the Parent (a "PARENT MATERIAL ADVERSE EFFECT"). Each of Parent and Purchaser is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not reasonably be expected to prevent or materially delay consummation of
the Transactions.
Section 4.2. CAPITALIZATION. The Parent Common Stock to be delivered as
part of the Offer Price and Merger Consideration has been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement, will
have been validly issued and will be fully paid and nonassessable, will be
listed on the New York Stock Exchange, Inc., and the issuance thereof is not
subject to any preemptive or other similar right.
Section 4.3. AUTHORITY. Each of Parent and Purchaser has all necessary
corporate power and authority to execute and deliver this Agreement and to
consummate the Transactions. The execution, delivery and performance by Parent
and Purchaser of this Agreement, and the consummation of the Transactions have
been duly authorized and approved by their Boards of Directors and by Parent as
the sole stockholder of Purchaser, and no other corporate action on the part of
Parent and Purchaser is necessary to authorize the execution and delivery by
Parent and Purchaser of this Agreement and the consummation by them of the
Transactions. This Agreement has been duly executed and delivered by Parent and
Purchaser, and, assuming due and valid authorization, execution and delivery
hereof by the Company, is a valid and binding obligation of each of Parent and
Purchaser, enforceable against each of them in accordance with its terms, except
that such enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (ii) is subject to general principles of equity.
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Section 4.4. CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for (i) the filing with the SEC of the Offer Documents and the
Proxy Statement/Prospectus, if any, (ii) the filing of the Certificate of Merger
with the Secretary of State and the Proxy Statement/Prospectus, if any pursuant
to the DGCL, and (iii) filings, permits, authorizations, consents and approvals
as may be required under, and other applicable requirements of, the Exchange
Act, the Securities Act, the HSR Act and Foreign Antitrust Laws and state
securities or blue sky laws, no consents or approvals of, or filings,
declarations or registrations with, any Governmental Entity or the New York
Stock Exchange, Inc. are necessary for the consummation by Parent and Purchaser
of the Transactions, other than such other consents, approvals, filings,
declarations or registrations that, if not obtained, made or given, would not
reasonably be expected to materially delay Parent's or Purchaser's performance
of their respective material obligations under this Agreement or to have a
Parent Material Adverse Effect.
(b) Neither the execution and delivery of this Agreement by Parent or
Purchaser, nor the consummation by Parent or Purchaser of the Transactions, nor
compliance by Parent or Purchaser with any of the terms or provisions hereof,
will (i) conflict with or violate any provision of the certificate of
incorporation or bylaws of Parent or any of the similar organizational documents
of Purchaser of any of Parent's or Purchaser's Subsidiaries or (ii) assuming
that the authorizations, consents and approvals referred to in Section 4.4(a)
are obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Parent or any of its
subsidiaries or any of their respective properties or assets, or (y) violate,
conflict with, result in the loss of any material benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Parent or Purchaser or any of their respective subsidiaries under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which Parent, Purchaser or any of their respective subsidiaries is a party, or
by which they or any of their respective properties or assets may be bound or
affected, except, in the case of clause (ii) above, for such violations,
conflicts, breaches, defaults, losses, terminations of rights thereof,
accelerations or Lien creations which would not reasonably be expected to have a
Parent Material Adverse Effect.
Section 4.5. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. Parent has filed all
required reports, schedules, forms and registration statements with the SEC
since January 1, 1998 (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the "PARENT
SEC DOCUMENTS") which are all reports, schedules, forms and statements (other
than preliminary material) that Parent was required to file with the SEC. As of
their respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the Parent SEC Documents
(including any and all financial statements included therein) as of such dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The
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consolidated financial statements of the Parent included in the Parent SEC
Documents (the "PARENT SEC FINANCIAL STATEMENTS") comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial position
of the Parent and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited quarterly statements, to normal
year-end audit adjustments). Since December 31, 2000, neither the Parent nor any
of its subsidiaries, has incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required, if known, to be
reflected or reserved against on a consolidated balance sheet of the Parent
prepared in accordance with GAAP except (i) as and to the extent set forth on
the audited balance sheet of the Parent and its subsidiaries as of December 31,
2000 (including the notes thereto), (ii) as incurred in connection with the
Transactions, (iii) as incurred after December 31, 2000 in the ordinary course
of business and consistent with past practice, (iv) as described in the SEC
Documents filed since December 31, 2000, or (v) as would not, individually or in
the aggregate, have a Parent Material Adverse Effect.
Section 4.6. PARENT OR PURCHASER INFORMATION. The information relating to
Parent and its subsidiaries to be provided by Parent to be contained in the
Offer Documents and the Registration/Prospectus Statement, if any, or in any
other document filed with any other Governmental Entity in connection herewith,
at the respective time filed with the SEC or such other Governmental Entity and,
in addition, in the case of the Proxy Statement/Prospectus, if any, at the date
it or any amendment or supplement is mailed to holders of the Shares, at the
time of the Special Meeting and at the Effective Time, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances in which they are
made, not misleading. The Offer Documents and the Proxy Statement/Prospectus, if
any (except that no representation is made as to such portions thereof that
relate only to the Company or any of its subsidiaries or to statements made
therein based on information supplied by the Company for inclusion therein) will
comply in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder and the Securities Act and the rules and
regulations thereunder, respectively.
Section 4.7. FINANCING. Parent and the Purchaser collectively have and
will have at the Expiration Date and at the Effective Time, and Parent will make
available to the Purchaser, sufficient funds to enable the Purchaser to pay that
portion of the Offer Price and Merger Consideration to be paid for all
outstanding Shares purchased pursuant to the Offer or converted into cash and
Parent Common Stock pursuant to the Merger, to perform Parent's and the
Purchaser's obligations under this Agreement and to pay all fees and expenses
related to the Transactions payable by them.
Section 4.8. STOCK OWNERSHIP. As of the date hereof, neither Parent nor
the Purchaser beneficially owns any Shares.
Section 4.9. PURCHASER CAPITALIZATION. The authorized capital stock of
the Purchaser consists of 1,000 shares of common stock, par value $0.01 per
share, of which 500 shares have
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been validly issued, are fully paid and nonassessable and are owned by Parent
free and clear of any Liens.
Section 4.10. PURCHASER'S OPERATION. Purchaser was formed solely for the
purpose of engaging in the Transactions and has not engaged in any business
activities or conducted any operations other than in connection with the
Transactions.
Section 4.11. BROKER'S FEES. Except as disclosed in Section 4.11 of the
Parent Disclosure Schedule, neither Parent nor any subsidiary of Parent nor any
of its respective officers or directors on behalf of Parent or such subsidiaries
has employed any financial advisor, broker or finder in a manner that would
result in any liability of the Company for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated hereby.
Section 4.12. TAX MATTERS. Neither the Parent nor any of its subsidiaries
have taken any action or failed to take any action that would cause the Offer
and the Merger to fail to qualify as a tax-free reorganization under Section
368(a) of the Code, and no facts exist that would cause the Offer and the Merger
to fail to so qualify.
ARTICLE V
COVENANTS
Section 5.1. CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE EFFECTIVE
TIME. Except as set forth in Section 5.1 of the Company Disclosure Schedule, as
contemplated or permitted by this Agreement, or as required by applicable law,
rule or regulation, during the period from the date of this Agreement to the
Effective Time, unless Parent otherwise agrees in writing, the Company shall,
and shall cause its subsidiaries to, in all material respects, (i) conduct its
business in the ordinary course consistent with past practice and (ii) use all
reasonable efforts to maintain and preserve intact its business organization and
the good will of those having business relationships with it and retain the
services of its present officers and key employees; and (iii) keep in full force
and effect all Insurance Policies maintained by the Company and its subsidiaries
in effect on the date hereof other than changes made in the ordinary course.
Without limiting the generality of the foregoing, and except as set forth in
Section 5.1 of the Company Disclosure Schedule, as expressly contemplated or
permitted by this Agreement, or as required by applicable law, rule or
regulation, during the period from the date of this Agreement to the Effective
Time, the Company shall not, and shall not permit any of its subsidiaries to,
without the prior written consent of Parent:
(a) issue, sell, grant, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of its capital stock or any securities
or rights convertible into, exchangeable for, or evidencing the right to
subscribe for any shares of its capital stock, or any rights, warrants, options,
calls, commitments or any other agreements of any character to purchase or
acquire any shares of its capital stock or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for, any shares of
its capital stock; PROVIDED that the Company may grant options to employees
hired after the date hereof to the extent available for grant under
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the Company's 2000 Stock Incentive Plan as it is in effect on the date hereof;
PROVIDED, FURTHER, that such additional options provide that the consummation of
the Transactions shall not be an event that accelerates the vesting thereof, or
(B) any other securities in respect of, in lieu of, or in substitution for, any
shares of its capital stock outstanding on the date hereof other than pursuant
to (x) the exercise of stock options or warrants or conversion rights
outstanding as of the date hereof and (y) acquisitions and investments permitted
by paragraph (d) hereof; (ii) redeem, purchase or otherwise acquire, or propose
to redeem, purchase or otherwise acquire, any of its outstanding shares of
capital stock; or (iii) split, combine, subdivide or reclassify any shares of
its capital stock or declare, set aside for payment or pay any dividend, or make
any other distribution in respect of any shares of its capital stock or
otherwise make any payments to its stockholders in their capacity as such; or
(iv) amend or waive any of its rights under, or accelerate the vesting under,
any provision of the Stock Plans or any agreement evidencing any outstanding
stock option, warrant or other right to acquire capital stock of the Company or
any restricted stock purchase agreement or any related contract except as
required pursuant to employment arrangements in place of the date of this
Agreement.
(b) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or guarantee any such
indebtedness;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of its
properties or assets to any individual, corporation or other entity other than a
direct or indirect wholly owned subsidiary, or cancel, release or assign any
indebtedness in excess of $5 million to any such person or any claims held by
any such person, except (i) sales of inventory in the ordinary course of
business consistent with past practice, (ii) pursuant to contracts or agreements
in force at the date of this Agreement complete copies of which have been made
available to Parent or (iii) disposition of obsolete or worthless assets; (iv)
sales of assets not in excess of $5 million in the aggregate; or (v) pursuant to
plans disclosed in writing prior to the execution of this Agreement to Parent
and the Purchaser;
(d) (i) make any acquisition or investment either by purchase of stock or
securities, merger or consolidation, contributions to capital, property
transfers, or purchases of any property or assets of any other individual,
corporation or other entity other than a direct or indirect wholly owned
subsidiary of the Company, (ii) enter into, terminate or amend any Material
Contract or agreement other than in the ordinary course of business consistent
with past practices, or (iii) make any capital expenditures and purchases of
fixed assets during the period prior to the Effective Date in the aggregate in
excess of $10 million for the Company and its subsidiaries taken as a whole;
(e) increase in any manner the compensation of any of its directors,
officers or employees or enter into, establish, amend or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other welfare,
stock option or other equity, pension, retirement, vacation, severance, deferred
compensation or other compensation or benefit plan, policy, agreement, trust,
fund or arrangement with, for or in respect of, any stockholder, officer,
director, other employee, agent, consultant or Affiliate other than (i) as
required pursuant to the terms of agreements in effect on the date of this
Agreement (complete copies of which have been made available to Parent), and
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(ii) increases in salaries, wages and benefits of employees or officers of the
Company made in the ordinary course of business and in a manner consistent with
past practice;
(f) make any material Tax election or settle or compromise any material
United States federal, state, local or non-U.S. tax liability or agree to an
extension of a statute of limitations in which case the consent of Parent shall
not be unreasonably withheld;
(g) take any action to change accounting policies except for changes
required by GAAP;
(h) make any commitment to take any of the actions prohibited by this
Section 5.1; or
(i) amend the Company Charter Documents or the Subsidiary Documents.
Section 5.2. NO SOLICITATION.
(a) The Company shall immediately cease, and shall cause its officers,
directors, employees, investment bankers, attorneys, accountants and other
representatives to cease, any discussions or negotiations with any parties that
may be ongoing with respect to a Takeover Proposal (as hereinafter defined) and
use its best efforts to obtain the return from all such parties or cause the
destruction of all copies of confidential information provided to such parties
by the Company or its representatives that are still in the possession of such
parties. From the date hereof until the Effective Time, the Company shall not,
and shall cause its subsidiaries not to, and shall cause its officers,
directors, employees, investment bankers, attorneys, accountants and other
representatives not to, directly or indirectly (i) solicit or knowingly
encourage the initiation of (including by way of furnishing information that has
not been previously publicly disseminated) any inquiries or proposals that
constitute, or may reasonably be expected to lead to, any Takeover Proposal or
(ii) participate in any discussions regarding, or furnish to any person any
non-public information with respect to, or assist or facilitate any Takeover
Proposal; PROVIDED, HOWEVER, that if, prior to the Effective Time and following
the receipt of a Takeover Proposal that was made in circumstances not otherwise
involving a breach of this Agreement, the Board of Directors of the Company
determines in good faith, after considering applicable provisions of state law
and after consultation with outside counsel, that a failure to do so would
reasonably be expected to constitute a breach by it of its fiduciary duties to
its shareholders under applicable law, the Company may, in response to such
Takeover Proposal and subject to compliance with Section 5.2(b), (x) furnish
information with respect to the Company to the party making such Takeover
Proposal pursuant to a customary confidentiality agreement (but no less
favorable to the Company than the confidentiality agreement entered into with
Parent), provided that (i) such confidentiality agreement must include a
provision prohibiting solicitation of key employees of the Company or its
subsidiaries, such provision lasting at least one year, and may not include any
provision calling for an exclusive right to negotiate with the Company and (ii)
the Company advises Parent of all such nonpublic information delivered to such
person concurrently with its delivery to the requesting party, and (y)
participate in negotiations with such party regarding such Takeover Proposal,
and (z) prior to the Acceptance Date, following receipt of an unsolicited, bona
fide Takeover Proposal from a third party which is a Superior Proposal, enter
into an agreement with such third
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party and terminate this Agreement pursuant to Section 7.1(c)(ii) hereof, if
after duly considering the advice of outside counsel, the Board of Directors of
the Company determines in good faith that failure to do so would reasonably be
expected to breach its fiduciary duties to the Company's stockholders under
applicable law.
(b) In addition to the obligations of the Company set forth in paragraph
(a) of this Section 5.2, and subject to the terms of any confidentiality
agreement signed prior to the date hereof, the Company shall promptly advise
Parent orally and in writing, and in no event later than 48 hours after receipt,
if any proposal, offer, inquiry, or other contact is received by, any
information is requested from, or any discussions or negotiations are sought to
be initiated or continued with, the Company in respect of any Takeover Proposal,
and shall, in any such notice to Parent, indicate the identity of the person
making such proposal, offer, inquiry, or other contact and the terms and
conditions of any proposals or offers or the nature of any inquiries or
contacts, and thereafter shall keep Parent informed, on a reasonably current
basis, of all material developments affecting the status and terms of any such
proposals or offers or the status of any such discussions or negotiations. The
Company shall not release any person from, or waive any provision of, any
confidentiality or standstill agreement entered into as of the date of this
Agreement.
(c) (i) For purposes of this Agreement, "TAKEOVER PROPOSAL" means any
inquiry, proposal or offer from any person (other than Parent and its
subsidiaries, affiliates, and representatives) relating to any (A) direct or
indirect acquisition or purchase of assets of the Company and its subsidiaries
equal to 15% or more of the Company's consolidated assets or to which 15% or
more of the Company's revenues of earnings on a consolidated basis are
attributable, or (B) any direct or indirect acquisition of 15% or more of any
class of equity securities of the Company, (C) any tender offer or exchange
offer that if consummated would result in any person beneficially owning 15% or
more of any class of equity securities of the Company or, (D) any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any
assets of the Company and its subsidiaries equal to 15% or more of the Company's
consolidated assets or to which 15% or more of the Company's revenues or
earnings on a consolidated basis are attributable, other than the transactions
contemplated by this Agreement.
(ii) "SUPERIOR PROPOSAL" means a bona fide written proposal obtained
not in breach of this Agreement to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, all of the equity securities
of the Company or substantially all of the assets of the Company made by a third
party on terms and conditions which the Board of Directors of the Company
determines in its good faith and reasonable judgment after consultation with its
financial advisor and outside counsel to be more favorable (other than in
immaterial respects) from a financial point of view than the Offer or the Merger
and the Transactions, taking into account at the time of determination any
changes to the terms of this Agreement that as of that time had been proposed by
Parent and the ability of the Person making such Superior Proposal to consummate
such Takeover Proposal (based upon, among other things, the availability of
financing and the expectation of obtaining required regulatory approvals).
(d) COMMUNICATION OF RESTRICTIONS. The Company shall use its reasonable
best efforts to ensure that the officers, directors and employees of the Company
and of each
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subsidiary of the Company and any investment banker or other advisor or
representative retained by the Company are aware of the restrictions described
in this Section 5.2, and the failure of such officers, directors, employees,
investment bankers or other advisors or representatives to comply with the
provisions hereof shall be deemed to be a breach by the Company of this
Agreement, unless such person or entity is acting outside the scope of their
authority.
(e) AGREEMENT WITH OTHERS. Nothing in this Section 5.2 shall (i) permit
the Company to terminate this Agreement or (ii) permit the Company to enter into
any written agreement with respect to a Takeover Proposal during the term of
this Agreement (it being agreed that during the term of this Agreement the
Company shall not enter into any written agreement with any person that provides
for, or in any way facilitates, a Takeover Proposal, other than a
confidentiality agreement in the form referred to above), it being understood
that Section 7.1(c) (ii) sets forth the sole right of the Company to terminate
this Agreement in the circumstances specified in Section 5.2(a).
Section 5.3. Intentionally Omitted.
Section 5.4. FINANCING. On the date hereof and at all times on or prior
to the consummation of the Offer, Parent and the Purchaser shall have sufficient
funds available (through cash on hand and existing credit arrangements) to
purchase all of the Shares outstanding on a fully diluted basis and to pay all
fees and expenses related to the Transactions.
Section 5.5. PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release reasonably acceptable
to Parent and the Company. Thereafter, except as may be required by law or by
any listing agreement with Nasdaq or a national securities exchange as
determined in the good faith judgment of the party wanting to make such release,
neither the Company, Parent nor any of their respective Affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Offer, the Merger, this Agreement or the other Transactions without the
prior consultation of the other party.
Section 5.6. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence of any event the occurrence, or
non-occurrence of which would cause any representation or warranty made by the
party delivering the notice contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (ii)
any material failure of the party delivering the notice to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
this Section 5.6 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.7. ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable laws relating to the
exchange of information, the Company shall, and shall cause each of its
subsidiaries to, afford to the officers, employees, accountants, counsel and
other representatives of the Parent, during normal business hours during the
period prior to the Effective Time, reasonable access to all its
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properties (PROVIDED, HOWEVER, that if in the process of confirmatory due
diligence information received by Parent regarding an existing environmental
event, circumstance or condition that would reasonably be likely to be material
and adverse to the Company, then with the prior written consent of the Company
(such consent not to be unreasonably withheld) (it being understood that neither
Parent nor the Purchaser believes that such an environmental event, circumstance
or condition exists that would reasonably be likely to be material and adverse
to the Company), Parent and its representatives may conduct "Phase II" or other
environmental testing or sampling; PROVIDED, HOWEVER, that if permitted to do
sampling or testing, Parent's representatives shall not unreasonably interfere
with or otherwise disrupt the business or operations of the Company or any of
its subsidiaries while conducting such testing or sampling), books, contracts,
commitments and records, and to its officers, employees, accountants, counsel
and other representatives and, during such period, the Company shall, and shall
cause its subsidiaries to, make available to the Parent (i) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of Federal securities laws
(other than reports or documents which the Company is not permitted to disclose
under applicable law) and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request. Neither the Company
nor any of its subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of its customers, jeopardize the work product privilege of the entity
in possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) The information provided pursuant to Section 5.7(a) will be used
solely for the purpose of the Transactions, and unless and until the Merger is
consummated, solely in accordance with the Confidentiality Agreement between
Parent and the Company, dated September 25, 2001.
Section 5.8. FURTHER ASSURANCES.
(a) Subject to the terms and conditions of this Agreement, each of Parent
and the Company shall, and shall cause its subsidiaries to, use all reasonable
efforts (i) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be imposed on
such party or its subsidiaries with respect to the Transactions and, subject to
the conditions set forth in Article VI hereof, to consummate the Transactions as
promptly as practicable and (ii) to obtain (and to cooperate with the other
party to obtain) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by the Company or Parent or any of their respective
subsidiaries in connection with the Offer and the Merger and the other
Transactions, and to comply with the terms and conditions of any such consent,
authorization, order or approval.
(b) Without limiting the foregoing, the Company and Parent shall duly
file with the FTC and the Antitrust Division of the Department of Justice the
notification and report form (the "HSR FILING") required under the HSR Act with
respect to the Transactions as
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promptly as practical, but in no event later than the seventh Business Day
following the date hereof. The HSR Filings shall be in substantial compliance
with the requirements of the HSR Act. Each party shall cooperate with the other
party to the extent necessary to assist the other party in the preparation of
its HSR Filing, to request early termination of the waiting period required by
the HSR Act and, if requested, to promptly amend or furnish additional
information thereunder. Each of Parent and the Company shall as promptly as
practicable, comply with the Foreign Antitrust Laws. Parent and the Company
shall furnish to each other all such information as is necessary to prepare any
such registration, declaration or filing. Parent and the Company each shall pay
the filing fees with respect to the HSR Filing filed by it and any other such
registration, declaration or filing. Parent and the Company shall keep each
other apprised of the status of any communications with, and any inquiries or
requests for additional information from, any Governmental Entity with respect
to the Transactions.
(c) Notwithstanding anything to the contrary, neither the Company nor the
Parent shall be under any obligation to litigate before or with, or contest any
order or decree, or defend against any such actions or proceedings commenced by
any Governmental Entity in respect of the antitrust, competition, merger control
or similar laws and rules or regulations, and (ii) neither Parent nor any of its
subsidiaries or Affiliates shall be obligated to propose or agree to accept any
undertaking or condition, to enter into any consent decree, to make any
divestiture or accept any operational restriction, or take or commit to take any
action that could reasonably be expected to limit (A) the freedom of action of
Parent or its subsidiaries or Affiliates with respect to the operation of, or
Parent's or its subsidiaries' or Affiliates' ability to retain, the Company or
any businesses, product lines or assets of the Company, or (B) the ability to
retain, own or operate any portion of the businesses, product lines, or assets,
of Parent or any of its subsidiaries or Affiliates, or alter or restrict in any
way the business or commercial practices of the Company, Parent or its
subsidiaries or Affiliates. If any such party or any Affiliate thereof receives
a request for additional information or documentary material from any such
Governmental Entity with respect to the Transactions, then such party will
endeavor in good faith to make, or cause to be made, as soon as possible and
after consultation with the other parties, an appropriate response in compliance
with such request. Parent and the Purchaser, on the one hand, and the Company,
on the other hand, shall promptly inform the other of any material communication
from the United States Federal Trade Commission, the Department of Justice or
any other Governmental Entity regarding any of the Transactions.
Section 5.9. EMPLOYEE BENEFIT PLANS.
(a) COMPENSATION AND BENEFITS. For a period of at least one year
following the Effective Time, Parent shall cause the Surviving Corporation to
provide to the Company's employees pay and benefits and benefit plans, programs
and policies, including, without limitation, severance benefits, medical and
welfare plans, which are no less favorable in the aggregate than those provided
by the Company on the date hereof and agrees to waive any waiting periods or
limitations for preexisting conditions under its medical, dental, and short-term
and long-term disability plans and shall ensure that employees are given credit
for any amounts paid toward deductibles, out-of-pocket limits or other fees on
or prior to the Effective Time. Employees shall also be provided credit by
Purchaser for all service with the Company and its ERISA Affiliates, to the same
extent as such service was credited for such purpose by the Company and its
ERISA Affiliates, under (x) all employee benefit plans, programs, policies and
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fringe benefits to be provided to such employees for purposes of eligibility and
vesting and (y) severance plans, programs and policies for purposes of
calculating the amount of each Employee's severance benefits.
(b) EMPLOYMENT AGREEMENTS. Parent will cause the Surviving Corporation to
discharge the obligations under each employment agreement listed in Section 3.11
of the Company Disclosure Schedule.
(c) COLLECTIVE BARGAINING AGREEMENTS. Parent will cause the Surviving
Corporation to assume and honor the terms of any collective bargaining
agreements covering any employees of the Company and will recognize any labor
organization or other collective bargaining representative of such employees, as
required in accordance with the National Labor Relations Act or any other
applicable law.
Section 5.10. INDEMNIFICATION.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to, indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date of this Agreement or who becomes such
prior to the Effective Time, an officer or director of the Company or any of its
subsidiaries (the "INDEMNIFIED PARTIES") (x) to the same extent such persons are
indemnified or have the right to advancement of expenses as of the date of this
Agreement by the Company and its subsidiaries pursuant to the Company Charter
Documents, the Subsidiary Documents and indemnification agreements, if any, in
existence on the date hereof and set forth in Section 5.10 of the Company
Disclosure Schedule with any directors and officers of the Company and its
subsidiaries and (y) without limitation to clause (x), to the fullest extent
permitted by applicable law, against (i) any and all losses, claims, damages,
costs, expenses, fines, liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party (which approval shall not
be unreasonably withheld or delayed) of or in connection with any threatened or
actual claim, action, suit, proceeding or investigation based in whole or in
part on or arising in whole or in part out of the fact that such person is or
was a director or officer of the Company or any of its subsidiaries pertaining
to any action or omission existing or occurring at or prior to the Effective
Time and whether asserted or claimed prior to, or at or after, the Effective
Time ("INDEMNIFIED LIABILITIES"), and (ii) all Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the Transactions; PROVIDED, HOWEVER, that, in the case of the
Purchaser and the Surviving Corporation such indemnification shall only be to
the fullest extent a corporation is permitted under the DGCL to indemnify its
own directors and officers. The Surviving Corporation will pay all reasonable
expenses of each Indemnified Party in advance of the final disposition of any
such action or proceeding to the fullest extent permitted by law upon receipt of
any undertaking contemplated by Section 145(e) of the DGCL. Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising before
or after the Effective Time), (i) the Indemnified Parties may retain counsel of
their choice reasonably satisfactory to Parent, (ii) Parent shall, and shall
cause the Surviving Corporation to, pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; PROVIDED that Parent shall not be obligated to pay the reasonable fees
and expenses of more than one counsel (other than local counsel) for all
Indemnified Parties in any single claim except to the extent that any of
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the Indemnified Parties have defenses available to them that are not available
to the other Indemnified Parties, in which case Parent shall pay the fees and
expenses of separate counsel (in addition to local counsel) for such Indemnified
Parties, and (iii) Parent shall, and shall cause the Surviving Corporation to,
use all reasonable efforts to assist in the vigorous defense of any such matter,
provided that none of Parent, Purchaser or the Surviving Corporation shall be
liable for any settlement of any claim effected without its written consent,
which consent, however, shall not be unreasonably withheld. Any Indemnified
Party wishing to claim indemnification under this Section 5.10, upon learning of
any such claim, action, suit, proceeding or investigation, shall notify Parent
and the Surviving Corporation (but the failure so to notify an indemnifying
party shall not relieve it from any liability which it may have under this
Section 5.10 except to the extent such failure materially prejudices such
party), and shall deliver to the Surviving Corporation the undertaking
contemplated by Section 145(e) of the DGCL.
(b) Parent shall maintain, or cause to be maintained, for a period of six
years after the Effective Time the current policies of directors' and officers'
and company liability insurance and fiduciary liability insurance maintained by
the Company and its subsidiaries (provided that Parent or the Surviving
Corporation may substitute therefor one or more policies of substantially the
same coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insureds (which are the Company, its
subsidiaries, their respective officers and directors, Berwind Corporation,
Berwind Group Partners, and Berwind LLC) with respect to claims arising from
facts or events that occurred on or before the Effective Time; PROVIDED,
HOWEVER, that Parent shall not be required to pay an annual premium for such
insurance in excess of $600,000 PROVIDED, FURTHER, that if the annual premiums
of such insurance coverage exceed such amount, Parent or the Surviving
Corporation shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount.
(c) Each Indemnified Party and each "insured" under the current
directors' and officers' and company liability insurance policy maintained by
the Company is intended to be a third party beneficiary of this Section 5.10 and
may specifically enforce its terms.
Section 5.11. ADDITIONAL AGREEMENTS. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of any
of the parties to the merger, the proper officers and directors of each party to
this Agreement and their respective subsidiaries shall take all such necessary
action as may be reasonably requested by, and at the sole expense of, Parent.
Section 5.12. SECTION 16 MATTERS. Prior to the Effective Time, Parent and
the Company shall take all such steps as may be required to cause the
Transactions, including any dispositions of Company Common Stock (including
derivative securities with respect to the Company Common Stock) and acquisitions
of Parent Common Stock (including derivative securities with respect to Parent
Common Stock) by each individual who is or will be subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to the Company or
Parent, as the case may be, to be exempt under Rule 16b-3 promulgated under the
Exchange Act, such steps to be taken in accordance with the No-Action Letter
dated January 12, 1999 issued by the SEC regarding such matters.
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Section 5.13. NO REDEMPTION OF RIGHTS PLAN. Between the date of this
Agreement and the earlier of the Effective Time and the termination of this
Agreement, the Company shall not (a) redeem, amend or waive any provisions of
the Rights Plan (other than such amendments as are necessary to accommodate this
Agreement and the Transactions, but not with respect to any Takeover Proposal)
or (b) implement or adopt any so-called "poison pill," shareholder rights plan
or other similar plan.
Section 5.14. AFFILIATE LETTERS. As promptly as practicable, the Company
shall deliver to Parent a letter identifying all Persons who are at the time
this Agreement is submitted for adoption by the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use all reasonable efforts to deliver or cause to be delivered
to Parent, prior to the expiration of the Offer, an affiliate letter in the form
attached hereto as Exhibit B from each such person.
ARTICLE VI
CONDITIONS
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly approved
and adopted by the requisite vote of the holders of Company Common Stock, if
required by applicable law and the Company Certificate of Incorporation, in
order to consummate the Merger;
(b) STATUTES. No statute, rule, order, decree or regulation shall have
been enacted or promulgated by (i) any U.S. Governmental Entity or (ii) any
Governmental Entity pursuant to Foreign Antitrust Laws that prohibits, restrains
or enjoins the consummation of the Merger;
(c) INJUNCTIONS. There shall be not be in effect any order or injunction
of (i) any U.S. Governmental Entity or (ii) any Governmental Entity pursuant to
Foreign Antitrust Laws precluding, restraining, enjoining or prohibiting
consummation of the Merger; and no proceeding by any Governmental Entity seeking
any of the foregoing shall have been commenced and be continuing. There shall
not be any action taken, or any statute, rule, regulation or order enacted or
entered into applicable to the Merger, which makes the consummation of the
Merger illegal; and
(d) PURCHASE OF SHARES IN OFFER. Parent, the Purchaser or their
affiliates shall have purchased shares of Company Common Stock pursuant to the
Offer, provided that this condition shall be deemed satisfied with respect to
Parent and the Purchaser if the Purchaser shall have failed to purchase Shares
pursuant to the Offer in breach of its obligations under this Agreement.
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Section 6.2. CONDITIONS OF OBLIGATIONS OF PARENT AND PURCHASER TO EFFECT
THE MERGER. The obligations of Parent and Purchaser to effect the Merger are
subject to the satisfaction of the further condition (which may be waived in
whole or in part by Parent) that the Company shall have performed in all
material respects all material obligations required to be performed by it under
this Agreement on or before the earlier of (i) such time as Parent's or
Purchaser's designees shall constitute at least a majority of the Company's
Board of Directors pursuant to Section 1.3 of this Agreement and (ii) the
Closing Date; PROVIDED, HOWEVER, that no failure by the Company to have so
performed any such material obligation shall constitute a failure of
satisfaction of the foregoing condition where the Company's failure of
performance was caused by Parent or occurred and was actually known to Parent at
or prior to the time Purchaser accepted for payment any Shares pursuant to the
Offer.
ARTICLE VII
TERMINATION
Section 7.1. TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual consent duly authorized by the Boards of Directors of
the Parent and the Company.
(b) By either of the Company or Parent:
(i) if any U.S. Governmental Entity or any other Governmental
Entity acting pursuant to Foreign Antitrust Laws shall have issued an
order, decree or ruling or taken any other action in each case
permanently restraining, enjoining or otherwise prohibiting the
Transactions and such order, decree, ruling or other action shall have
become final and non-appealable; PROVIDED, that a party may not terminate
the Agreement pursuant to this Section 7.1(b)(i) if its failure to
perform its obligations under this Agreement resulted in or contributed
to the issuance of such order, decree or ruling;
(ii) if the Offer shall have expired, terminated or been withdrawn
pursuant to its terms without any Shares being purchased therein,
PROVIDED, that the right to terminate this Agreement under this Section
7.1(b)(ii) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Purchaser to purchase Shares in the Offer; or
(iii) if the Offer shall not have been consummated on or before
the 180th calendar day after the date hereof (the "OUTSIDE DATE");
PROVIDED, that a party may not terminate the Agreement pursuant to this
Section 7.1(b)(iii) if its failure to perform any of its obligations
under this Agreement results in the failure of the Offer to be so
consummated by such time;
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(c) By the Company:
(i) if Parent, the Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to the tenth Business Day
following the date of the initial public announcement of the Offer;
PROVIDED, that the Company may not terminate this Agreement pursuant to
this Section 7.1(c)(i) if the Company is in material breach of this
Agreement;
(ii) if concurrently it enters into a definitive agreement
providing for a Superior Proposal entered into in accordance with Section
5.2; PROVIDED, that prior thereto or simultaneously therewith the Company
has paid or cause to be paid the Termination Fee to Parent in accordance
with Section 7.3 and such termination of this Agreement by the Company
shall not take effect unless and until it shall have paid Parent the
Termination Fee; PROVIDED, FURTHER, that the Company has given Parent at
least four Business Days following Parent's receipt of written notice
advising Parent that the Board of Directors of the Company is prepared to
terminate this Agreement pursuant to this Section 7.1(c)(ii); PROVIDED,
FURTHER, that the Company will in good faith discuss with Parent any
proposals that Parent makes in response to receiving the written notice
required above; or
(iii) if the representations and warranties of Parent or Purchaser
set forth in this Agreement shall not be true and correct (except where
the failure to be true and correct would not reasonably be expected to
have a Parent Material Adverse Effect) or, if qualified by Parent
Material Adverse Effect, such representations and warranties shall not be
true and correct as so qualified, as of the date of this Agreement and as
of the Expiration Date as if made on such date, or either Parent or
Purchaser shall have breached or failed in any material respect to
perform or comply with any material obligation, agreement or covenant
required by this Agreement to be performed or complied with by it, which
inaccuracy or breach cannot be cured or has not been cured within one
Business Day prior to the Expiration Date, except, in the case of the
failure of any representation or warranty, (x) for changes specifically
permitted by this Agreement, and (y) those representations and warranties
that address matters only as of a particular date which are true and
correct as of such date.
(d) By Parent:
(i) if, due to an occurrence that if occurring after the
commencement of the Offer would make it impossible to satisfy any of the
conditions set forth in Annex A hereto, Parent, Purchaser, or any of
their respective affiliates shall have failed to commence the Offer on or
prior to five Business Days following the date of the initial public
announcement of the Offer; PROVIDED, that Parent may not terminate this
Agreement pursuant to this Section 7.1(d)(i) if Parent or Purchaser is in
material breach of this Agreement;
(ii) if the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified, in a manner adverse to Parent,
its approval or
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recommendation of any of the Transactions; provided, however, that Parent
may only exercise this termination right prior to the Acceptance Date;
(iii) if the Company shall have entered into any agreement
respecting any Takeover Proposal other than a confidentiality agreement
permitted by Section 5.2(a) hereof or the Board of Directors of the
Company shall have recommended to the stockholders of the Company a
Takeover Proposal or shall not have rejected any proposal respecting a
Takeover Proposal within 10 Business Days of the making thereof;
provided, however, that Parent may only exercise this termination right
prior to the Acceptance Date; or
(iv) the Company shall have breached or failed in any material
respect to perform or comply with any obligation, agreement or covenant
required by the Agreement to be performed or complied with by it, or the
representations and warranties of the Company set forth in the Agreement
shall not be true and correct on and as of the Acceptance Date as if made
on such date (except to the extent expressly made as of an earlier date,
in which case as of such earlier date), except where failure to be true
and correct (without giving effect to any limitation as to "materiality"
or "Material Adverse Effect" set forth therein) would not have a Company
Material Adverse Effect, which inaccuracy or breach cannot be cured or
has not been cured within one Business Day prior to the Acceptance Date,
except, in the case of the failure of any representation or warranty, (x)
for changes specifically permitted by this Agreement, and (y) those
representations and warranties that address matters only as of a
particular date which are true and correct as of such date; provided,
however that Parent may only exercise this termination right prior to the
Acceptance Date. For purposes of this Section 7.1(d)(iv), (A) a Company
Material Adverse Effect shall be deemed to have occurred if but only if
the applicable event, change, effect, or occurrence (or aggregation
thereof) would be reasonably likely to (x) result in liability to Company
(or its subsidiaries) or diminution in the value of the Company
(including its subsidiaries) (including but not limited to, as a result
of a diminution of the revenues, earnings or net asset value of the
Company (including its subsidiaries)) of US $100,000,000 or more in the
aggregate, taking into account available insurance proceeds payable to
the Company or its subsidiaries, and (B) a Company Material Adverse
Effect shall not include any event, change, effect or occurrence (or
aggregation thereof) that occurs or would be reasonably likely to occur
as a result of any general, national, international or regional economic
or financial condition or (y) have a material adverse effect on the
parties' ability to consummate the Transactions.
Section 7.2. EFFECT OF TERMINATION. In the event of the termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement (other than
Sections 7.2, 7.3 and Article IX hereof) shall forthwith become null and void,
and there shall be no liability on the part of the Parent or the Company, except
(i) as provided in Section 7.3, and (ii) nothing shall relieve any party from
liability for fraud or any willful breach of a covenant contained in this
Agreement.
Section 7.3. TERMINATION FEE; EXPENSES.
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(a) Except as provided in this Section 7.3, all fees and expenses
incurred by the parties hereto shall be borne solely and entirely by the party
which has incurred such fees and expenses. In the event that (A) (i) a Takeover
Proposal shall have been made known to the Company or shall have been made
directly to its stockholders generally or any person shall have publicly
announced an intention (whether or not conditional) to make a Takeover Proposal
and thereafter, (ii) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified, in a manner adverse to Parent, its
approval or recommendation of the Transactions, (iii) this Agreement is
terminated by Parent pursuant to Section 7.1(d)(ii), (iii) and (iv) the Company
consummates a transaction contemplated by a Takeover Proposal within nine months
of the date this Agreement is terminated, or (B) this Agreement is terminated by
the Company pursuant to Section 7.1(c)(ii), then in either event, the Company
shall pay to Parent a termination fee equal to $30 million in cash. In the event
that Parent terminates this Agreement pursuant to Section 7.1(d)(ii) or (d)(iii)
other than in the circumstances as set forth in the preceding sentence, then the
Company shall pay to Parent all of the Expenses (as defined herein) of Parent.
Provided that the Company has not committed an act with the intent and effect of
breaching Section 5.2(a)(ii), the fee and expense arrangements contemplated
hereby are the sole remedies hereunder (other than equitable or injunctive
relief under Section 9.12) and shall be paid pursuant to this Section 7.3
regardless of any alleged breach, other than a willful or intentional breach, by
Parent of its obligations hereunder, provided that no payment made by the
Company pursuant to this Section 7.3 shall operate or be construed as a waiver
by the Company of any breach of this Agreement by Parent or Purchaser or of any
rights of the Company in respect thereof.
(b) Any payment required to be made pursuant to paragraph (a) of this
Section 7.3 shall be made to the Parent not later than two Business Days after
delivery to the Company of notice of demand for payment and, in circumstances in
which Expenses are payable, an itemization setting forth in reasonable detail
all Expenses of the Parent or Purchaser (which itemization may be supplemented
and updated from time to time by such party until the 60th day after such party
delivers such notice of demand for payment), and shall be made by wire transfer
of immediately available funds to an account designated by the Parent in the
notice of demand for payment delivered pursuant to this Section 7.3(b).
ARTICLE VIII
DEFINITIONS
Section 8.1. DEFINITIONS. When used in this Agreement, the following
terms shall have the respective meanings specified therefor below (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"ACCEPTANCE DATE" shall mean the first date on which Purchaser accepts
for payment all shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer.
"AFFILIATE" shall mean, with respect to any specified Person, any Person
who directly or indirectly controls, is controlled by, or is under common
control with, such specified Person; provided that, for the purposes of this
definition, "control" (including with correlative meanings,
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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 such Person,
whether through the ownership of voting securities or partnership interests, by
contract or otherwise.
"AVERAGE SHARE PRICE" shall mean the average (rounded to the nearest
1/10,000) of the volume weighted sales prices per share of Parent Common Stock
on the New York Stock Exchange Inc., as reported by Bloomberg Financial Markets
(or if not reported thereby any other authoritative source as the parties shall
agree in writing), for the 5 consecutive Trading Days ending on the second
Trading Day immediately preceding the Acceptance Date.
"BUSINESS DAY" shall mean a day other than a Saturday, a Sunday or a day
on which banks in New York, New York or the SEC are permitted or required to
close.
"COMPANY RIGHTS" shall mean the right associated with each share of
Company Common Stock pursuant to the Rights Plan.
"ENVIRONMENTAL LAWS" shall mean any and all applicable municipal, state,
foreign or federal law, statute, treaty, directive, decision, judgment, award,
regulation, decree, rule, order, direction, consent of relevant jurisdiction(s)
concerning environmental, health and safety matters (including, but not limited
to, liabilities or obligations for the clean-up of Hazardous Materials) in
buildings, equipment, soil, sub-surface strata, air, surface water, or ground
water, including by way of illustration and not by way of limitation, the Clean
Air Act, the Federal Water Pollution Control Act of 1972, the Safe Drinking
Water Act, the Resource Conservation and Recovery Act of 1976 ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"),
the Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and any state or foreign equivalents of the foregoing
(including any amendments or extensions thereof and any rules, or regulations
issued pursuant to any of said Environmental Laws).
"EXCHANGE RATIO" shall be equal to 19.43 divided by the Average Share
Price.
"EXPENSES" shall mean all out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants and investment bankers
to a party hereto and its Affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Offer Documents, the Merger Registration Statement and the
Proxy Statement/Prospectus, the solicitation of stockholder approvals, the
filing of any required notices under the HSR Act or other similar regulations
and all other matters related to the Offer, the Merger and the other
transactions contemplated by this Agreement.
"GAAP" shall mean generally accepted accounting principles of the United
States of America, as in effect from time to time.
"HAZARDOUS MATERIALS" means any and all hazardous, toxic or polluting
substances, radioactive substances, hazardous wastes, special solid wastes,
controlled solid wastes, oils, petroleum and petroleum products, hazardous
chemicals which are or may be at any time prior to
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the Effective Time be regulated or controlled under Environmental Laws in the
applicable jurisdictions in which the Company or any of its subsidiaries owns or
has owned real property or in which the business of the Company or any of its
subsidiaries has been operated or is being operated.
"HEALTH AND SAFETY REQUIREMENTS" shall mean all applicable federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law and all applicable judicial and administrative
orders concerning public health and safety, or worker health and safety, each as
amended as now in effect.
"KNOW" or "KNOWLEDGE" shall mean in the case of Parent, the actual
knowledge of Parent's senior executive officers after reasonable inquiry, and in
the case of the Company, the actual knowledge of the Company's officers set
forth on Section 8.1 of the Company's Disclosure Schedule after reasonable
inquiry.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an association, an unincorporated organization,
a limited liability company, a limited partnership, a group, a syndicate, a
person (including, without limitation, a "person" as defined in Section 13(d)(3)
of the Exchange Act), and a government or other department or subdivision or
instrumentality or agency thereof.
"RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, dispersal, leaching or discharge, and any
migration as a result of any of the foregoing, into the indoor or outdoor
environment or into or out of any property now or previously owned by the
Company or any of its subsidiaries.
"TRADING DAY" shall mean any day on which securities are traded on the
New York Stock Exchange, Inc.
Section 8.2. OTHER DEFINED TERMS. The following terms used herein are
defined in the Section of this Agreement specified below:
<Table>
<Caption>
TERM SECTION
- ---- -------
Agreement..................................................................................................Preamble
Bylaws..................................................................................................Section 3.2
Certificate of Incorporation............................................................................Section 3.2
Certificate of Merger...................................................................................Section 1.5
Certificates.........................................................................................Section 2.2(b)
Closing.................................................................................................Section 1.6
Closing Date............................................................................................Section 1.6
COBRA...............................................................................................Section 3.11(g)
Code.................................................................................................Section 1.1(d)
Committee...............................................................................................Section 1.3
Company....................................................................................................Preamble
Company Charter Documents...............................................................................Section 3.2
Company Common Stock........................................................................................Recital
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Company Disclosure Schedule..........................................................................Section 3.1(b)
Company Material Adverse Effect......................................................................Section 3.1(a)
Company Option Plans.................................................................................Section 2.4(a)
Company Permits.........................................................................................Section 3.9
Company Rights...................................................................................... Section 1.1(a)
Company Stock Option.................................................................................Section 2.4(a)
Converted Option.....................................................................................Section 2.4(a)
Delaware Courts.........................................................................................Section 9.9
DGCL.................................................................................................Section 1.2(a)
Dissenting Common Stock.................................................................................Section 2.3
Effective Time..........................................................................................Section 1.5
Employee Benefit Plans..............................................................................Section 3.11(a)
Environmental Permits...........................................................................Section 3.12(a)(ii)
ERISA...............................................................................................Section 3.11(a)
ERISA Affiliate.....................................................................................Section 3.11(a)
Exchange Act.........................................................................................Section 1.1(a)
Exchange Agent.......................................................................................Section 2.2(a)
Expiration Date......................................................................................Section 1.1(b)
Fairness Opinion.......................................................................................Section 3.18
Foreign Antitrust Laws...............................................................................Section 3.5(a)
Governmental Entity..................................................................................Section 3.5(a)
HSR Act..............................................................................................Section 3.5(a)
HSR Filing...........................................................................................Section 5.8(b)
Indemnified Liabilities.............................................................................Section 5.10(a)
Indemnified Parties.................................................................................Section 5.10(a)
Independent Directors...................................................................................Section 1.3
Insurance Policies.....................................................................................Section 3.22
Intellectual Property...............................................................................Section 3.15(a)
Laws....................................................................................................Section 3.9
Liens................................................................................................Section 3.3(b)
Material Adverse Effect..............................................................................Section 3.1(a)
Material Contract...................................................................................Section 3.20(a)
Merger.........................................................................................Section 1.4. Recital
Merger Consideration.................................................................................Section 2.1(c)
Merger Registration Statement....................................................................Section 1.8(a)(ii)
Minimum Condition...........................................................................................Annex A
Offer...............................................................................................Section 1.1(a)
Offer Documents......................................................................................Section 1.1(c)
Offer Price.................................................................................................Recital
Offer to Purchase....................................................................................Section 1.1(b)
Outside Date....................................................................................Section 7.1(b)(iii)
Parent.....................................................................................................Preamble
Parent Common Stock.........................................................................................Recital
Parent Material Adverse Effect..........................................................................Section 4.1
Parent SEC Documents....................................................................................Section 4.5
Parent SEC Financial Statements.........................................................................Section 4.5
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Pension Plans.......................................................................................Section 3.11(a)
Proxy Statement/Prospectus......................................................................Section 1.8(a)(iii)
Purchaser..................................................................................................Preamble
Purchaser By-laws.......................................................................................Section 1.4
Purchaser Certificate of Incorporation..................................................................Section 1.4
Purchaser Common Stock..................................................................................Section 2.1
Registration Statement...............................................................................Section 1.1(c)
Rights Plan..........................................................................................Section 2.1(a)
Schedule 14D-9.......................................................................................Section 1.2(b)
SEC..................................................................................................Section 1.1(b)
SEC Documents...........................................................................................Section 3.6
SEC Financial Statements................................................................................Section 3.6
Secretary of State......................................................................................Section 1.5
Securities Act.......................................................................................Section 1.1(c)
Shares.....................................................................................................Recitals
Special Meeting...................................................................................Section 1.8(a)(i)
Stockholder.................................................................................................Recital
subsidiary...........................................................................................Section 3.1(b)
Subsidiary Documents....................................................................................Section 3.2
Surviving Corporation...................................................................................Section 1.4
Takeover Statute.......................................................................................Section 3.17
Transactions.........................................................................................Section 1.2(a)
UBS....................................................................................................Section 3.18
Voting Agreement............................................................................................Recital
</Table>
ARTICLE IX
MISCELLANEOUS
Section 9.1. AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of the Company contemplated
hereby, by written agreement of the parties hereto at any time prior to the
Closing Date with respect to any of the terms contained herein; PROVIDED,
HOWEVER, that no amendment, modification or supplement of this Agreement shall
be made which adversely effects such holders after the Acceptance Date or
requires by law or the Company Charter Documents the further approval of the
stockholders, unless approved by the Independent Directors.
Section 9.2. EXTENSION; WAIVER. At any time prior to the Effective Time,
subject to Section 1.3, the parties may (a) extend the time for the performance
of any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.1, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
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The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
Section 9.3. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
provided otherwise in the Section 9.3, the representations, warranties and
agreements of each party hereto shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any other party
hereto, any person controlling any such party or any of their officers or
directors, whether prior to or after the execution of this Agreement. None of
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 9.4. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, facsimile
(which is confirmed) or sent by an overnight courier service, such as Federal
Express, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
GE Industrial Systems
41 Woodford Avenue
Plainville, CT 06062
Attention: James R. Billingsley, Jr.
Senior Counsel
Telecopier No.: (860) 747-7079
with a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166-0193
Attention: Steven R. Shoemate
Telephone No.: (212) 351-3879
Telecopier No.: (212) 351-4035
(b) if to the Company, to:
Interlogix, Inc.
114 West 7th Street
Suite 1300
Austin, Texas 78701
Attention: Michael S. Lafair,
General Counsel
Telephone No.: (512) 381-2760
Telecopier No.: (512) 381-1773
with a copy to:
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Dechert
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention: Craig L. Godshall, Esq.
Telephone No.: (215) 994-4000
Telecopier No.: (215) 994-2222
Section 9.5. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. Delivery of an executed counterpart
by facsimile transmission shall be as effective as delivery of a
manually-executed counterpart hereof.
Section 9.6. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and the instruments referred to herein): (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 5.10 is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. The parties acknowledge that all parties participated in the
drafting of this Agreement and agree that any rule of law or any legal decision
that may or would require interpretation of any alleged ambiguities in this
Agreement against the party that drafted it has no application and is expressly
waived.
Section 9.7. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 9.8. WAIVER OF JURY TRIAL. EACH OF PARENT, THE PURCHASER AND THE
COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS OR THE ACTIONS
OF PARENT, THE PURCHASER OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
Section 9.9. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction. Notwithstanding anything herein to the contrary, the parties
hereto hereby irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America located in the State of Delaware (the "DELAWARE COURTS") for any
litigation arising out of or relating to this Agreement or the Transactions (and
agrees not to commence counterclaims except in such courts), waives any
objection to the laying of venue of any such litigation in the
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Delaware Courts and agrees not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in any inconvenient forum.
Section 9.10. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent; PROVIDED
that any such assignment would not cause any delay in the consummation of the
Offer or the Merger. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
Section 9.11. HEADINGS. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement. "Include," "includes,"
and "including" shall be deemed to be followed by "without limitation" whether
or not they are in fact followed by such words or words of like import.
Section 9.12. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the State of Delaware
or of the United States located in the State of Delaware in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, and each party will not attempt to deny or defeat personal
jurisdiction or venue in any such court by motion or other request for leave
from any such court.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
GENERAL ELECTRIC COMPANY
By: /s/ Lloyd G. Trotter
--------------------------------------
Name: Lloyd G. Trotter
Title: Senior Vice President,
President and CEO GE Industrial
Systems
MARGARET ACQUISITION, INC.
By: /s/ Lloyd G. Trotter
--------------------------------------
Name: Lloyd G. Trotter
Title: President
INTERLOGIX, INC.
By: /s/ Kenneth L. Boyda
--------------------------------------
Name: Kenneth L. Boyda
Title: President and CEO
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ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer (subject to the
provisions of the Agreement), as a first step in effectuating a merger between
Purchaser and Company qualifying as a tax-free reorganization under Section
368(a) of the Code, the Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-l(c) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer and not accept for payment any tendered shares if (i) there
shall not have been validly tendered and not withdrawn prior to the expiration
of the Offer such number of Shares which would constitute at least a majority of
the Shares outstanding on a fully-diluted basis on the date of purchase (on a
"fully-diluted basis" meaning the number of Shares outstanding, together with
the Shares which the Company may be required to issue pursuant to options or
obligations outstanding at that date and which do not terminate upon
consummation of the Offer under employee stock or similar benefit plans or
otherwise, whether or not vested or then exercisable), when aggregated with any
Shares owned by Parent, the Purchaser or an affiliate of Parent or the Purchaser
(the "MINIMUM CONDITION"), (ii) any applicable waiting period under the HSR Act,
and under all Foreign Antitrust Laws where the expiration or termination of the
waiting period is necessary, has not expired or terminated prior to the
expiration of the Offer, or (iii) at any time on or after the date of the
Agreement, and before the time of acceptance of Shares for payment pursuant to
the Offer, any of the following events shall occur and be continuing:
(a) there shall be any action, proceeding or litigation threatened,
instituted or pending by any Governmental Entity that seeks to and which would
reasonably be expected to (i) prevent, prohibit or make illegal Parent's or the
Purchaser's ownership or operation of all or a material portion of the Company's
and its subsidiaries' businesses and assets taken as a whole, (ii) prevent,
prohibit, or make illegal the acceptance for payment, payment for or purchase of
Shares by the Purchaser or the consummation of the Transactions, (iii) renders
the Purchaser unable to accept for payment, pay for or purchase some or all of
the Shares, (iv) imposes material limitations on the ability of the Purchaser or
Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it on
all matters properly presented to the Company's stockholders, or (v) imposes, as
a result of the Transactions, damages on Parent that are material to Parent, and
PROVIDED, that the failure of any condition to be satisfied is not primarily due
to the failure by Parent and/or Purchaser to comply with the terms of this
Agreement.
(b) there shall have been any statute, rule, regulation, order,
legislation or interpretation enacted, promulgated, amended, entered or issued
applicable to (i) Parent, Purchaser, the Company or any of their respective
subsidiaries or an Affiliate of either Parent or the Company or (ii) the
Transactions, by any United States or non-United States legislative body or
Governmental Entity with appropriate jurisdiction (other than the routine
application of the waiting period provisions of the HSR Act or similar statutes
or regulations of foreign
A-1
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jurisdictions applicable to the Offer or the Merger) that would be reasonably
likely to result, directly or indirectly, in any of the consequences referred to
in paragraph (a) above;
(c) (i) the Company shall have breached or failed in any material respect
to perform or comply with any obligation, agreement or covenant required by the
Agreement to be performed or complied with by it or (ii) the representations and
warranties of the Company set forth in the Agreement shall not be true and
correct on and as of the Acceptance Date as if made on such date (except to the
extent expressly made as of an earlier date, in which case as of such earlier
date), except where failure to be true and correct (without giving effect to any
limitation as to "materiality" or "Material Adverse Effect" set forth therein)
would not have a Company Material Adverse Effect. For purposes of paragraph
(c)(ii), (A) a Company Material Adverse Effect shall be deemed to have occurred
if but only if the applicable event, change, effect, or occurrence (or
aggregation thereof) would be reasonably likely to (x) result in liability to
Company (or its subsidiaries) or diminution in the value of the Company
(including its subsidiaries) (including but not limited to, as a result of a
diminution of the revenues, earnings or net asset value of the Company
(including its subsidiaries)) of US $100,000,000 or more in the aggregate,
taking into account available insurance proceeds payable to the Company or its
subsidiaries, and (B) a Company Material Adverse Effect shall not include any
event, change, effect or occurrence (or aggregation thereof) that occurs or
would be reasonably likely to occur as a result of any general, national,
international or regional economic or financial condition or (y) have a material
adverse effect on the parties' ability to consummate the Transactions;
(d) (i) any general suspension of trading in securities on any national
securities exchange or in the over-the-counter market or (ii) the declaration of
a banking moratorium or any suspension of payments in respect of banks by a
United States Governmental Entity;
(e) the Agreement shall have been terminated in accordance with its
terms;
(f) the Registration Statement shall have not become effective under the
Securities Act or shall be the subject of any stop order or proceedings seeking
a stop order; or
(g) the shares of Parent Common Stock to be issued in the Offer shall not
have been approved for listing on the New York Stock Exchange, Inc., subject to
official notice of issuance.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by either of them regardless or the circumstances
giving rise to such conditions or may be waived by Parent or the Purchaser, in
whole or in part at any time and from time to time in the sole discretion of
Parent or the Purchaser. The failure by Parent or the Purchaser at any time to
exercise any of the foregoing rights will not be deemed a waiver of any right,
the waiver of such right with respect to any particular facts or circumstances
shall not be deemed a waiver with respect to any other facts or circumstances,
and each right will be deemed an ongoing right which may be asserted at any time
and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be returned
to the tendering stockholders.
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