\nARTICLE I THE OFFER AND MERGER………………………………………………………………….2<\/p>\n SECTION 1.1. THE OFFER……………………………………………………………………………2
\n SECTION 1.2. COMPANY ACTIONS………………………………………………………………………4
\n SECTION 1.3. DIRECTORS……………………………………………………………………………6
\n SECTION 1.4. THE MERGER…………………………………………………………………………..7
\n SECTION 1.5. EFFECTIVE TIME……………………………………………………………………….7
\n SECTION 1.6. CLOSING……………………………………………………………………………..7
\n SECTION 1.7. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION………………………………………8
\n SECTION 1.8. STOCKHOLDERS’ MEETING…………………………………………………………………8
\n SECTION 1.9. MERGER WITHOUT MEETING OF STOCKHOLDERS………………………………………………….9<\/p>\n
ARTICLE II CONVERSION OF SECURITIES………………………………………………………………9<\/p>\n
SECTION 2.1. CONVERSION OF CAPITAL STOCK……………………………………………………………9
\n SECTION 2.2. EXCHANGE OF CERTIFICATES……………………………………………………………..10
\n SECTION 2.3. DISSENTING SHARES……………………………………………………………………12
\n SECTION 2.4. COMPANY OPTION PLANS…………………………………………………………………13<\/p>\n
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY…………………………………………..13<\/p>\n
SECTION 3.1. CORPORATE ORGANIZATION……………………………………………………………….13
\n SECTION 3.2. CERTIFICATE OF INCORPORATION AND BY-LAWS……………………………………………….14
\n SECTION 3.3. CAPITALIZATION………………………………………………………………………15
\n SECTION 3.4. AUTHORITY…………………………………………………………………………..15
\n SECTION 3.5. CONSENTS AND APPROVALS; NO VIOLATIONS………………………………………………….16
\n SECTION 3.6. SEC DOCUMENTS; UNDISCLOSED LIABILITIES…………………………………………………17
\n SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS…………………………………………………..18
\n SECTION 3.8. LEGAL PROCEEDINGS……………………………………………………………………18
\n SECTION 3.9. COMPLIANCE WITH APPLICABLE LAW………………………………………………………..18
\n SECTION 3.10. COMPANY INFORMATION………………………………………………………………….19
\n SECTION 3.11. PENSION AND BENEFIT PLANS, ERISA………………………………………………………19
\n SECTION 3.12. ENVIRONMENTAL MATTERS; HEALTH AND SAFETY……………………………………………….21
\n SECTION 3.13. PROPERTIES………………………………………………………………………….22
\n SECTION 3.14. TAX RETURNS AND TAX PAYMENTS………………………………………………………….23
\n SECTION 3.15. INTELLECTUAL PROPERTY………………………………………………………………..24
\n SECTION 3.16. INTERESTED PARTY TRANSACTIONS…………………………………………………………25
\n SECTION 3.17. TAKEOVER STATUTES; RIGHTS PLAN………………………………………………………..25
\n SECTION 3.18. OPINION OF FINANCIAL ADVISOR………………………………………………………….26
\n SECTION 3.19. BROKER’S FEES……………………………………………………………………….26
\n SECTION 3.20. CONTRACTS…………………………………………………………………………..26
\n SECTION 3.21. PRODUCT LIABILITY; WARRANTIES…………………………………………………………27
\n SECTION 3.22. INSURANCE…………………………………………………………………………..27
\n SECTION 3.23. EMPLOYEE AND LABOR RELATIONS………………………………………………………….28<\/p>\n
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER…………………………………..29<\/p>\n
SECTION 4.1. CORPORATE ORGANIZATION……………………………………………………………….29
\n SECTION 4.2. CAPITALIZATION………………………………………………………………………29
\n SECTION 4.3. AUTHORITY…………………………………………………………………………..29
\n SECTION 4.4. CONSENTS AND APPROVALS; NO VIOLATIONS………………………………………………….30
\n SECTION 4.5. SEC DOCUMENTS; UNDISCLOSED LIABILITIES…………………………………………………30
\n SECTION 4.6. PARENT OR PURCHASER INFORMATION……………………………………………………….31
\n SECTION 4.7. FINANCING…………………………………………………………………………..31<\/p>\n
-i-<\/p>\n
SECTION 4.8. STOCK OWNERSHIP……………………………………………………………………..31
\n SECTION 4.9. PURCHASER CAPITALIZATION……………………………………………………………..31
\n SECTION 4.10. PURCHASER’S OPERATION………………………………………………………………..32
\n SECTION 4.11. BROKER’S FEES……………………………………………………………………….32
\n SECTION 4.12. TAX MATTERS…………………………………………………………………………32<\/p>\n
ARTICLE V COVENANTS…………………………………………………………………………..32<\/p>\n
SECTION 5.1. CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE EFFECTIVE TIME……………………………32
\n SECTION 5.2. NO SOLICITATION……………………………………………………………………..34
\n SECTION 5.3. INTENTIONALLY OMITTED………………………………………………………………..36
\n SECTION 5.4. FINANCING…………………………………………………………………………..36
\n SECTION 5.5. PUBLICITY…………………………………………………………………………..36
\n SECTION 5.6. NOTIFICATION OF CERTAIN MATTERS……………………………………………………….36
\n SECTION 5.7. ACCESS TO INFORMATION………………………………………………………………..36
\n SECTION 5.8. FURTHER ASSURANCES…………………………………………………………………..37
\n SECTION 5.9. EMPLOYEE BENEFIT PLANS……………………………………………………………….38
\n SECTION 5.10. INDEMNIFICATION……………………………………………………………………..39
\n SECTION 5.11. ADDITIONAL AGREEMENTS………………………………………………………………..40
\n SECTION 5.12. SECTION 16 MATTERS…………………………………………………………………..40
\n SECTION 5.13. NO REDEMPTION OF RIGHTS PLAN………………………………………………………….41
\n SECTION 5.14. AFFILIATE LETTERS……………………………………………………………………41<\/p>\n
ARTICLE VI CONDITIONS………………………………………………………………………….41<\/p>\n
SECTION 6.1. CONDITIONS TO EACH PARTY’S OBLIGATION TO EFFECT THE MERGER……………………………….41
\n SECTION 6.2. CONDITIONS OF OBLIGATIONS OF PARENT AND PURCHASER TO EFFECT THE MERGER…………………….42<\/p>\n
ARTICLE VII TERMINATION…………………………………………………………………………42<\/p>\n
SECTION 7.1. TERMINATION…………………………………………………………………………42
\n SECTION 7.2. EFFECT OF TERMINATION………………………………………………………………..44
\n SECTION 7.3. TERMINATION FEE; EXPENSES…………………………………………………………….44<\/p>\n
ARTICLE VIII DEFINITIONS…………………………………………………………………………45<\/p>\n
SECTION 8.1. DEFINITIONS…………………………………………………………………………45
\n SECTION 8.2. OTHER DEFINED TERMS………………………………………………………………….47<\/p>\n
ARTICLE IX MISCELLANEOUS……………………………………………………………………….49<\/p>\n
SECTION 9.1. AMENDMENTAND MODIFICATION…………………………………………………………….49
\n SECTION 9.2. EXTENSION; WAIVER……………………………………………………………………49
\n SECTION 9.3. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES…………………………………………..50
\n SECTION 9.4. NOTICES…………………………………………………………………………….50
\n SECTION 9.5. COUNTERPARTS………………………………………………………………………..51
\n SECTION 9.6. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES…………………………………………….51
\n SECTION 9.7. SEVERABILITY………………………………………………………………………..51
\n SECTION 9.8. WAIVER OF JURY TRIAL…………………………………………………………………51
\n SECTION 9.9. GOVERNING LAW……………………………………………………………………….51
\n SECTION 9.10. ASSIGNMENT………………………………………………………………………….52
\n SECTION 9.11. HEADINGS……………………………………………………………………………52
\n SECTION 9.12. ENFORCEMENT…………………………………………………………………………52
\n<\/c><\/s><\/caption>\n<\/table>\n
-ii-<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
AGREEMENT AND PLAN OF MERGER (this “AGREEMENT”), dated as of December 17,
\n2001, by and among General Electric Company, a New York corporation (“PARENT”),
\nMargaret Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary
\nof Parent (the “PURCHASER”), and Interlogix, Inc., a Delaware corporation (the
\n“COMPANY”).<\/p>\n
WHEREAS, the Board of Directors of Parent, the Board of Directors of
\nPurchaser, and the Board of Directors of the Company, have approved, and
\ndetermined that it is advisable and in the best interests of their respective
\ncompanies and stockholders to consummate, the transactions provided for herein;
\nand<\/p>\n
WHEREAS, to facilitate a merger between the Company and Purchaser that
\nqualifies as a tax-free reorganization under Section 368(a) of the Code, Parent
\nand the Purchaser have proposed acquiring all of the outstanding Common Stock,
\npar value $.01 per share, of the Company (the “SHARES” or “COMPANY COMMON
\nSTOCK”) at a price (such price, or such higher price per Share as may be paid in
\nthe Offer (as defined herein), being referred to herein as the “OFFER PRICE”) of
\n$38.86 per Share, consisting of (i) $19.43, in cash, and (ii) that number of
\nshares of common stock, par value $0.06, of Parent (“PARENT COMMON STOCK”) equal
\nto the Exchange Ratio (as defined herein); and<\/p>\n
WHEREAS, after the acquisition of the Shares described in the preceding
\nclause and pursuant to the plan specified in this Agreement, the Company will
\nmerge with and into Purchaser (the “MERGER”) with Purchaser surviving the
\nMerger; and<\/p>\n
WHEREAS, the Company, Parent and Purchaser desire to make certain
\nrepresentations, warranties, covenants and agreements in connection with the
\nOffer and the Merger; and<\/p>\n
WHEREAS, Parent desires to make certain agreements in connection with the
\nOffer; and<\/p>\n
WHEREAS, concurrently with the execution and delivery of this Agreement
\nand as a condition to Parent’s and Purchaser’s willingness to enter into this
\nAgreement, Parent and Purchaser have entered into a Voting Agreement, dated as
\nof the date hereof and the form of which is attached as Exhibit A hereto (the
\n“VOTING AGREEMENT”) pursuant to which the stockholder named therein (the
\n“STOCKHOLDER”) has agreed, among other things, to tender all shares into the
\nOffer and to not withdraw any such shares and to vote all Shares subject to such
\nVoting Agreement in favor of the Merger and this Agreement and against any
\nTakeover Proposal (as defined herein), subject to and on the conditions set
\nforth therein.<\/p>\n
NOW, THEREFORE, in consideration of the foregoing and the respective
\nrepresentations, warranties, covenants and agreements set forth herein, the
\nparties hereto agree as follows:<\/p>\n
ARTICLE I<\/p>\n
THE OFFER AND MERGER<\/p>\n
Section 1.1. THE OFFER. (a) Provided this Agreement shall not have been
\nterminated in accordance with Section 7.1 and so long as none of the events set
\nforth on Annex A shall have occurred and be continuing, as promptly as
\npracticable and in any event within 10 Business Days after the date hereof,
\nPurchaser shall, and Parent shall cause Purchaser to, as the first step in
\ncompleting the Merger, commence (within the meaning of Rule 14d-2 under the
\nSecurities Exchange Act of 1934, as amended (the “EXCHANGE ACT”), an offer (the
\n“OFFER”) to purchase all shares of the issued and outstanding Company Common
\nStock together with the associated rights issued pursuant to the Rights Plan (as
\ndefined herein) (the “COMPANY RIGHTS”) for the Offer Price, subject only to the
\nconditions set forth in Annex A hereto; PROVIDED, HOWEVER, that Parent may
\ndesignate another wholly owned, direct subsidiary of Parent as the bidder
\n(within the meaning of Rule 14d-1(g)(2) under the Exchange Act) in the Offer, in
\nwhich case reference herein to Purchaser shall be deemed to apply to such
\nsubsidiary, as appropriate. Except where the context otherwise requires, all
\nreferences herein to Shares or Company Common Stock shall include the associated
\nCompany Rights. The Company shall not tender Shares held by it or by any of its
\nsubsidiaries pursuant to the Offer. The Purchaser shall, and Parent shall cause
\nthe Purchaser to, on the terms and subject to the prior satisfaction or waiver
\nof the conditions of the Offer, accept for payment and pay for Shares tendered
\nas soon as it is legally permitted to do so under applicable law and
\nregulations. The obligations of the Purchaser to consummate the Offer and to
\naccept for payment and to pay for any Shares validly tendered on or prior to the
\nexpiration of the Offer and not withdrawn shall be subject only to the
\nconditions set forth in Annex A hereto. Notwithstanding anything to the contrary
\nset forth herein, no certificates or scrip representing fractional shares of
\nParent Common Stock shall be issued in connection with the Offer, and in lieu
\nthereof each tendering stockholder who would otherwise be entitled to a
\nfractional share of Parent Common Stock in the Offer (after aggregating all
\nfractional shares of Parent Common Stock that otherwise would be received by
\nsuch stockholder) will be paid an amount in cash (rounded up to the nearest
\nwhole cent) equal to the product obtained by multiplying (x) the fractional
\nshare interest to which such stockholder would otherwise be entitled by (y) the
\nclosing price for a share of Parent Common Stock as reported on the New York
\nStock Exchange, Inc. (as reported in THE WALL STREET JOURNAL) on the Acceptance
\nDate.<\/p>\n
(b) The Offer shall be made by means of an offer to purchase (the “OFFER
\nTO PURCHASE”) containing the terms set forth in this Agreement and the
\nconditions set forth in Annex A hereto and providing for an initial expiration
\ndate (the “EXPIRATION DATE”) of twenty Business Days (as defined in Rule 14d-1
\nunder the Exchange Act) from the date of commencement of the Offer. Without the
\nprior written consent of the Company, Purchaser shall not, and Parent shall
\ncause the Purchaser not to, decrease the Offer Price, change the form of
\nconsideration to be paid, decrease the number of Shares sought, amend the
\nconditions to the Offer set forth in Annex A or impose conditions to the Offer
\nin addition to those set forth in Annex A. Notwithstanding the foregoing,
\nwithout the consent of the Company, the Purchaser shall be entitled to and
\nshall, and Parent shall cause the Purchaser to, extend the Offer at any time for
\nthe shortest time periods that it reasonably believes are necessary, if at the
\ninitial Expiration Date, or any extension thereof, any condition to the Offer is
\nnot satisfied or waived, provided that (i) no single extension shall exceed 10
\nBusiness Days and (ii) Purchaser shall not be required to extend the Offer
\nbeyond the<\/p>\n
-2-<\/p>\n
Outside Date (as defined herein). Notwithstanding the foregoing, Purchaser may,
\nwithout the consent of the Company, (i) extend the Offer for one or more periods
\nof not more than 10 Business Days as required by any rule or regulation of the
\nSEC applicable to the Offer and (ii) if the Minimum Condition (as defined
\nherein) has been met but less than 90% of the outstanding Shares on a
\nfully-diluted basis (as defined in Annex A) shall have been validly tendered
\npursuant to the Offer and not withdrawn as of the scheduled or extended
\nexpiration date, extend the Offer after the acceptance of Shares thereunder for
\na further period of time by means of a subsequent offering period under Rule
\n14d-11 promulgated under the Exchange Act for an aggregate period of not more
\nthan 20 Business Days beyond the latest expiration date that would otherwise be
\npermitted under clause (i) of this sentence. In addition, the Offer Price may be
\nincreased and the Offer may be extended to the extent required by law or the
\nUnited States Securities and Exchange Commission (the “SEC”) in connection with
\nsuch increase in each case without the consent of the Company.<\/p>\n
(c) As soon as practicable after the date of this Agreement, Parent shall
\nprepare and file with the SEC under the Securities Act of 1933, as amended, and
\nthe SEC’s rules and regulations promulgated thereunder (the “SECURITIES ACT”) a
\nregistration statement on Form S-4 (the “REGISTRATION STATEMENT”) to register
\nthe offer and sale of Parent Common Stock pursuant to the Offer. The
\nRegistration Statement will include a preliminary prospectus containing the
\ninformation required under Rule 14d-4(b) promulgated under the Exchange Act. The
\nCompany shall provide Parent and the Purchaser all information reasonably
\nrequested by Parent or the Purchaser for inclusion in the Offer Documents (as
\ndefined herein) and any exhibits or annexes thereto. As soon as practicable, but
\nnot later than the date of commencement of the Offer, Parent shall (i) file with
\nthe SEC a Tender Offer Statement on Schedule TO with respect to the Offer, which
\nwill comply in all material respects with the provisions of, and satisfy in all
\nmaterial respects the requirements of, such Schedule TO and all applicable
\nfederal securities laws, and will contain or incorporate by reference all or
\npart of the Registration Statement and the form of the related letter of
\ntransmittal (such documents, together with the preliminary or final prospectus
\nincluded in the Registration Statement and any supplements or amendments
\nthereto, collectively the “OFFER DOCUMENTS”) and (ii) cause the Offer Documents
\nto be disseminated to holders of Shares. Parent and the Company each agree
\npromptly to correct any information provided by it for use in the Registration
\nStatement or the Offer Documents if and to the extent that it shall be, or shall
\nhave become false or misleading in any material respect. Parent agrees to take
\nall steps necessary to cause the Offer Documents as so corrected to be filed
\nwith the SEC and to be disseminated to holders of Shares, in each case as and to
\nthe extent required by applicable federal securities laws. Parent shall use all
\nreasonable efforts to have the Registration Statement declared effective under
\nthe Securities Act as promptly as practicable after its filing and to maintain
\nsuch effectiveness for so long as shall be required for the issuance of Parent
\nCommon Stock pursuant to the Offer. Following the time the Registration
\nStatement is declared effective, Parent shall file the final prospectus included
\ntherein under Rule 424(b) promulgated pursuant to the Securities Act.<\/p>\n
(d) Parent shall include as exhibits to the Registration Statement tax
\nopinions of Dechert and Gibson Dunn & Crutcher LLP, in form and substance
\nreasonably satisfactory to Parent and to the Company, on the basis of customary
\nfacts, representations, warranties and covenants of Parent, the Purchaser and
\nthe Company and assumptions set forth in such opinions (including, without
\nlimitation assumptions that (i) the Minimum Condition will be satisfied and <\/p>\n
-3-<\/p>\n
(ii) the Merger will be completed promptly following the Offer), to the effect
\nthat the Offer and the Merger will be treated for United States federal income
\ntax purposes as a reorganization within the meaning of Section 368(a) of the
\nInternal Revenue Code of 1986, as amended (together with the Treasury
\nRegulations promulgated thereunder, the “CODE”).<\/p>\n
(e) No filing of, or amendment or supplement to, or correspondence to the
\nSEC or its staff with respect to, the Registration Statement, the Schedule TO or
\nthe Offer Documents will be made by the Company, Parent or the Purchaser,
\nwithout providing the other party and its counsel a reasonable opportunity to
\nreview and comment thereon. In addition, Parent shall, and shall cause the
\nPurchaser to, provide the Company and its counsel in writing with any comments
\nthat Parent, Purchaser or their counsel may receive from the SEC or its staff
\nwith respect to the Offer Documents promptly after receipt of such comments and
\nwith copies of any written responses and telephonic notification of any verbal
\nresponses by Parent, Purchaser or their counsel. Parent will advise the Company
\npromptly after it receives notice that the Registration Statement and any
\nsupplement or amendment that has been filed have become effective, of the
\nissuance of any stop order, or of the suspension of the qualification of the
\nParent Common Stock issuable in connection with the Offer for offering or sale
\nin any jurisdiction. If at any time prior to the time of consummation of the
\nOffer, any information relating to the Company or Parent, or any of their
\nrespective affiliates, officers or directors, should be discovered by the
\nCompany or Parent and which should be set forth in an amendment or supplement to
\nthe Registration Statement so that any of such documents would not include any
\nmisstatement of a material fact or omit to state any material fact necessary to
\nmake the statements therein, in light of the circumstances under which they were
\nmade, not misleading, the party that discovers such information shall promptly
\nnotify the other party and an appropriate amendment or supplement describing
\nsuch information shall be promptly filed with the SEC and, to the extent
\nrequired by law, disseminated to the stockholders of the Company.<\/p>\n
(f) Parent shall issue or provide to Purchaser all of the shares of
\nParent Common Stock necessary in connection with the exchange of any shares of
\nCompany Common Stock to satisfy Purchaser’s obligations pursuant to the Offer
\nand the Merger. Parent shall provide or cause to be provided to Purchaser all of
\nthe funds necessary in connection with the purchase of any shares of Company
\nCommon Stock to satisfy Purchaser’s obligations pursuant to the Offer and the
\nMerger.<\/p>\n
Section 1.2. COMPANY ACTIONS.<\/p>\n
(a) The Company hereby approves of and consents to the Offer and
\nrepresents that its Board of Directors, at a meeting duly called and held, has
\n(i) unanimously adopted resolutions approving and declaring advisable this
\nAgreement (including all terms and conditions set forth herein) and the
\ntransactions contemplated hereby, including the Offer and the Merger and the
\nVoting Agreement and all of the transactions contemplated thereby (collectively,
\nthe “TRANSACTIONS”), determining that the Merger is advisable and that the terms
\nof the Offer and the Merger are fair to, and in the best interests of, the
\nCompany’s stockholders, (ii) unanimously resolved to recommend that the
\nstockholders of the Company accept the Offer, tender their Shares thereunder to
\nthe Purchaser and adopt this Agreement and the Merger; PROVIDED, that such
\nrecommendation may be withdrawn, modified or amended by the Company’s Board of
\nDirectors and (iii) taken all action necessary so that the Company’s Rights
\nAgreement, dated as of <\/p>\n
-4-<\/p>\n
November 27, 1996, between the Company and Wells Fargo Bank, N.A., as rights
\nagent, as amended (as so amended, the “RIGHTS PLAN”), is and, through the
\nEffective Time (as defined herein), will be inapplicable to Parent and the
\nPurchaser, this Agreement, and the Transactions. The Company represents that
\nSection 203 of the Delaware General Corporation Law (the “DGCL”) is inapplicable
\nto the Transactions. The Company hereby consents to the inclusion in the Offer
\nDocuments of the recommendation of its Board of Directors described in clauses
\n(i) and (ii) of the immediately preceding sentence.<\/p>\n
(b) Concurrently with the commencement of the Offer or as promptly
\nthereafter as practicable, the Company shall file with the SEC a
\nSolicitation\/Recommendation Statement on Schedule 14D-9 (together with all
\namendments and supplements thereto and including the exhibits thereto, the
\n“SCHEDULE 14D-9”), which shall contain the recommendation referred to in clause
\n(ii) of Section 1.2 (a) hereof unless such recommendation has been withdrawn, or
\nas such recommendation has been modified or amended, in each case in accordance
\nwith the provisions of this Agreement. Parent and the Purchaser shall provide
\nthe Company all information reasonably requested by the Company for inclusion in
\nthe Schedule 14D-9 and any exhibits or annexes thereto. The Schedule 14D-9 shall
\ncomply in all material respects with the provisions of applicable federal
\nsecurities laws and, on the date filed with the SEC and on the date first
\npublished, sent or given to the Company’s stockholders, shall not contain any
\nuntrue statement of a material fact or omit to state any material fact required
\nto be stated therein or necessary in order to make the statements therein, in
\nlight of the circumstances under which they were made, not misleading, except
\nthat no representation is made by the Company with respect to information
\nsupplied by Parent or the Purchaser for inclusion in the Schedule 14D-9. The
\nCompany further shall take all steps necessary to cause the Schedule 14D-9 to be
\nfiled with the SEC and to be disseminated to holders of Shares, in each case as
\nand to the extent required by applicable federal securities laws, and shall mail
\nsuch Schedule 14D-9 to the stockholders of the Company promptly after
\ncommencement of the Offer, together with the initial mailing of the Offer to
\nPurchase. Each of the Company, on the one hand, and Parent and the Purchaser, on
\nthe other hand, shall promptly correct any information provided by it for use in
\nthe Schedule 14D-9 if and to the extent that it shall have become false and
\nmisleading in any material respect and the Company further shall take all steps
\nnecessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
\nand to be disseminated to holders of the Shares, in each case as and to the
\nextent required by applicable federal securities laws. The Company shall provide
\nParent, the Purchaser and their counsel a reasonable opportunity to review and
\ncomment upon the Schedule 14D-9 and any correction or amendment thereto prior to
\nthe filing thereof with the SEC. In addition, the Company shall provide Parent,
\nthe Purchaser and their counsel in writing with any comments the Company or its
\ncounsel may receive from the SEC or its staff with respect to the Schedule 14D-9
\npromptly after receipt of such comments and with copies of any written responses
\nand telephonic notification of any verbal responses by the Company or its
\ncounsel.<\/p>\n
(c) In connection with the Offer, the Company shall promptly furnish or
\ncause to be furnished to the Purchaser mailing labels, security position
\nlistings and any available listing or computer file containing the names and
\naddresses of the record holders of the Shares as of a recent date, and shall
\npromptly furnish Purchaser with such additional information, including updated
\nlists of stockholders, mailing labels and security position listings, and such
\nother information and assistance as the Purchaser or its agents may reasonably
\nrequest in<\/p>\n
-5-<\/p>\n
communicating the Offer to the stockholders of the Company. Except for such
\nsteps as are necessary to disseminate the Offer Documents and subject to the
\nrequirements of applicable law, Parent shall, and shall cause the Purchaser and
\neach of Purchaser’s and Parent’s respective affiliates, associates, employees,
\nagents and advisors to, hold in confidence the information contained in any of
\nsuch labels and lists and the additional information referred to in the
\npreceding sentence, shall use such information only in connection with the Offer
\nand the Merger, and, if this Agreement is terminated, shall upon request of the
\nCompany deliver or cause to be delivered to the Company all copies of such
\ninformation then in its possession or control or the possession or control of
\nits agents or representatives.<\/p>\n
Section 1.3. DIRECTORS. Effective upon the Acceptance Date of Shares
\npursuant to the Offer, and from time to time thereafter as Shares are acquired
\nby Purchaser, Parent or their respective affiliates, Purchaser shall be entitled
\nto designate upon written notice to the Company for appointment or election such
\nnumber of directors, rounded up to the next whole number, on the Board of
\nDirectors of the Company as will give Purchaser, subject to compliance with
\nSection 14(f) of the Exchange Act, representation on the Board of Directors of
\nthe Company equal to that number of directors which equals the product of (i)
\nthe total number of directors on the Board of Directors of the Company (giving
\neffect to the directors appointed or elected pursuant to this sentence and
\nincluding current directors serving as officers of the Company) and (ii) the
\npercentage that the aggregate number of Shares beneficially owned by Parent,
\nPurchaser or any of their respective affiliates (including for purposes of this
\nSection 1.3 such Shares as are accepted for payment pursuant to the Offer, but
\nexcluding Shares held by the Company or any of its subsidiaries) bears to the
\ntotal number of shares of Company Common Stock then issued and outstanding. At
\nsuch times, if requested by Purchaser, and subject to applicable law and the
\nrules of the Nasdaq National Market, the Company will use its best efforts to
\ncause each committee of the Board of Directors of the Company and the Board of
\nDirectors of each subsidiary of the Company to include persons designated by
\nPurchaser constituting the same percentage of each such committee and the Board
\nof Directors of each subsidiary of the Company as Purchaser’s designees are of
\nthe Board of Directors of the Company. The Company shall, upon request by
\nPurchaser, promptly increase the size of the Board of Directors of the Company
\nand\/or exercise its best efforts to secure the resignations of such number of
\nDirectors as is necessary to enable Purchaser’s designees to be elected to the
\nBoard of Directors of the Company in accordance with the terms of this Section
\n1.3 and subject to applicable law, shall cause Purchaser’s designees to be so
\nelected; PROVIDED, HOWEVER, that if Purchaser’s designees are appointed or
\nelected to the Board of Directors of the Company, until the Effective Time, the
\nBoard of Directors of the Company shall have at least two directors who are
\ndirectors on the date hereof and who are neither officers of the Company nor
\ndesignees, affiliates or associates (within the meaning of the federal
\nsecurities laws) of Parent or the Purchaser prior to the date hereof (one or
\nmore of such directors, the “INDEPENDENT DIRECTORS”); PROVIDED FURTHER, that if
\nless than two Independent Directors remain, the remaining Independent Directors
\n(if any) or if no Independent Directors remain, the other directors shall
\ndesignate persons to fill the vacancies who shall not be either officers of the
\nCompany or designees, shareholders, affiliates or associates of Parent, and such
\npersons shall be deemed to be Independent Directors for purposes of this
\nAgreement. Subject to applicable law, the Company shall promptly take all action
\nnecessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
\npromulgated thereunder in order to fulfill its obligations under this Section
\n1.3 and shall include in the Schedule 14D-9 mailed to stockholders of the
\nCompany promptly after the commencement of the Offer (or an<\/p>\n
-6-<\/p>\n
amendment thereof or an information statement pursuant to Rule 14f-1 if
\nPurchaser has not theretofore designated directors) such information with
\nrespect to the Company and its officers and directors as is required under
\nSection 14(f) and Rule 14f-1 in order to fulfill its obligations under this
\nSection 1.3. Parent and Purchaser will supply the Company and be solely
\nresponsible for any information with respect to itself and its nominees,
\nofficers, directors and affiliates required by Section 14(f) and Rule 14f-1.
\nNotwithstanding anything in this Agreement to the contrary, during the period
\nafter the election or appointment of directors designated by Purchaser pursuant
\nto this Section 1.3 but prior to the Effective Time, the Board of Directors of
\nthe Company shall to the fullest extent permitted by law delegate to a committee
\nof the Board of Directors of the Company comprised solely of the Independent
\nDirectors (the “COMMITTEE”), the sole responsibility for (i) the amendment or
\ntermination of this Agreement (in either case in accordance with this Agreement)
\non behalf of the Company, (ii) the waiver of any of the Company’s rights or
\nremedies hereunder, (iii) the extension of the time for performance of Parent’s
\nor Purchaser’s obligations hereunder, or (iv) the assertion or enforcement of
\nthe Company’s rights under this Agreement.<\/p>\n
Section 1.4. THE MERGER. Subject to the terms and conditions of this
\nAgreement and the provisions of the DGCL, at the Effective Time, the Company and
\nthe Purchaser shall consummate as part of the plan specified in this Agreement a
\nmerger (the “MERGER”) pursuant to which (a) the Company shall be merged with and
\ninto the Purchaser and the separate corporate existence of the Company shall
\nthereupon cease, (b) the Purchaser shall be the successor or surviving
\ncorporation in the Merger (the “SURVIVING CORPORATION”) under the name “Margaret
\nAcquisition, Inc.” and shall continue to be governed by the laws of the State of
\nDelaware, and (c) the separate corporate existence of the Purchaser with all its
\nrights, privileges, immunities, powers and franchises shall continue unaffected
\nby the Merger. At the Effective Time, (x) the certificate of incorporation of
\nthe Purchaser (the “PURCHASER CERTIFICATE OF INCORPORATION”) as in effect
\nimmediately prior to the Effective Time shall be the certificate of
\nincorporation of the Surviving Corporation, and (y) the by-laws of the Purchaser
\n(the “PURCHASER BY-LAWS”), as in effect immediately prior to the Effective Time,
\nshall be the By-laws of the Surviving Corporation until thereafter amended as
\nprovided by law, the Purchaser Certificate of Incorporation and the Purchaser
\nby-laws. The Merger shall have the effects set forth in the DGCL.<\/p>\n
Section 1.5. EFFECTIVE TIME. Parent shall, and shall cause the Purchaser
\nto, and the Company shall cause an appropriate Certificate of Ownership and
\nMerger or Certificate of Merger, as the case may be (the “CERTIFICATE OF
\nMERGER”) to be executed and filed on the date of the Closing (as defined herein)
\n(or on such other date as Parent and the Company may agree) with the Secretary
\nof State of the State of Delaware (the “SECRETARY OF STATE”) as provided in the
\nDGCL. The Merger shall become effective on the date on which the Certificate of
\nMerger has been duly filed with the Secretary of State or such later time as is
\nagreed upon by the parties and specified in the Certificate of Merger, and such
\ntime is hereinafter referred to as the “EFFECTIVE TIME.”<\/p>\n
Section 1.6. CLOSING. The closing of the Merger (the “CLOSING”) shall
\ntake place at 10:00 a.m., on a date to be specified by the parties, which shall
\nbe as soon as practicable, but in no event later than the second Business Day,
\nafter satisfaction or waiver of all of the conditions set forth in Article VI
\nhereof (the “CLOSING DATE”), at the offices of Dechert, 1717 Arch Street,<\/p>\n
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Philadelphia, Pennsylvania 19103, unless another date or place is agreed to in
\nwriting by the parties hereto.<\/p>\n
Section 1.7. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
\ndirectors of the Purchaser and the officers of the Company immediately prior to
\nthe Effective Time, shall, from and after the Effective Time, be the directors
\nand officers, respectively, of the Surviving Corporation until their successors
\nshall have been duly elected or appointed or qualified or until their earlier
\ndeath, resignation or removal in accordance with the Surviving Corporation’s
\nCertificate of Incorporation and By-laws.<\/p>\n
Section 1.8. STOCKHOLDERS’ MEETING.<\/p>\n
(a) If required by applicable law in order to consummate the Merger, the
\nCompany, acting through its Board of Directors, shall, in accordance with
\napplicable law:<\/p>\n
(i) duly call, give notice of, convene and hold a special meeting
\n of its stockholders (the “SPECIAL MEETING”) as soon as practicable
\n following the acceptance for payment and purchase of Shares by the
\n Purchaser pursuant to the Offer for the purpose of considering and taking
\n action upon the Merger and this Agreement;<\/p>\n
(ii) in conjunction with Parent, prepare a registration statement
\n on Form S-4 to register the issuance and sale of Parent Common Stock in
\n connection with the Merger (the “MERGER REGISTRATION STATEMENT”), which
\n will include a form of proxy statement\/prospectus to be mailed to the
\n stockholders of the Company in connection with the Special Meeting (the
\n “PROXY STATEMENT\/PROSPECTUS”) and use its reasonable efforts (x) to
\n respond promptly to any comments made by the SEC with respect to the
\n preliminary proxy statement (y) to cause the Merger Registration
\n Statement to be declared effective and cause a definitive Proxy
\n Statement\/Prospectus to be mailed to its stockholders and (z) to obtain
\n the necessary approvals of the Merger and this Agreement by its
\n stockholders; and<\/p>\n
(iii) include in the Proxy Statement\/Prospectus the recommendation
\n of the Board of Directors that stockholders of the Company vote in favor
\n of the approval of the Merger and the adoption of this Agreement, unless
\n such recommendation has been withdrawn, or as such recommendation has
\n been modified or amended, in each case in accordance with the provisions
\n of this Agreement.<\/p>\n
(b) Parent shall, in conjunction with the Company, prepare and file the
\nMerger Registration Statement and provide the Company with the information
\nconcerning Parent and Purchaser required to be included in the Merger
\nRegistration Statement and the Proxy Statement\/Prospectus. Parent shall vote, or
\ncause to be voted, all of the Shares then owned by it, the Purchaser or any of
\nParent’s or Purchaser’s respective subsidiaries and affiliates in favor of the
\napproval of the Merger and the adoption of this Agreement.<\/p>\n
(c) Parent shall provide to the Company and its counsel a reasonable
\nopportunity to review and comment upon the Merger Registration Statement prior
\nto the filing thereof with the SEC. In addition, Parent shall provide to the
\nCompany and its counsel in writing with any comments the Parent or its counsel
\nmay receive from the SEC or its staff with<\/p>\n
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respect to the Merger Registration Statement promptly after receipt of such
\ncomments and with copies of any written responses and telephonic notification of
\nany verbal responses by the Parent or its counsel. No filing of, or amendment or
\nsupplement to, or written correspondence to the SEC or its staff with respect
\nto, the Merger Registration Statement will be made by Parent without providing
\nthe Company and its counsel a reasonable opportunity to review and comment
\nthereon.<\/p>\n
Section 1.9. MERGER WITHOUT MEETING OF STOCKHOLDERS. In the event that
\nParent, the Purchaser or any other Subsidiary of Parent, shall acquire at least
\nninety percent (90%) (on a fully-diluted basis) of the then-outstanding shares
\nof Company Common Stock pursuant to the Offer or otherwise, each of the parties
\nhereto shall take all necessary and appropriate action to cause the Merger to
\nbecome effective as soon as practicable after such acquisition, without a
\nmeeting of stockholders of the Company, in accordance with Section 253 (in lieu
\nof Section 251) of the DGCL.<\/p>\n
ARTICLE II<\/p>\n
CONVERSION OF SECURITIES<\/p>\n
Section 2.1. CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
\nvirtue of the Merger and without any action on the part of the holders of any
\nshares of Company Common Stock or the holders of any shares of common stock, par
\nvalue $.0l per share, of the Purchaser (the “PURCHASER COMMON STOCK”):<\/p>\n
(a) PURCHASER COMMON STOCK. Each issued and outstanding share of the
\nPurchaser Common Stock shall be converted into and become one validly issued,
\nfully paid and nonassessable share of common stock, $.0l par value per share, of
\nthe Surviving Corporation.<\/p>\n
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. All shares of
\nCompany Common Stock that are owned by the Company as treasury stock, all shares
\nof Company Common Stock owned by any subsidiary of the Company and any shares of
\nCompany Common Stock owned by Parent, the Purchaser or any other wholly owned
\nsubsidiary of Parent shall be automatically canceled and retired and shall cease
\nto exist and no consideration shall be delivered in exchange therefor.<\/p>\n
(c) CONVERSION OF SHARES. Each issued and outstanding share of Company
\nCommon Stock (other than Shares to be canceled in accordance with Section 2.1(b)
\nhereof and any Dissenting Shares (as defined herein)), shall be converted into
\nthe right to receive an amount of cash and whole shares of Parent Common Stock
\nequal to the Offer Price payable to the holder thereof, without interest (the
\n“MERGER CONSIDERATION”). For purposes of calculating the Merger Consideration
\n(other than cash in lieu of fractional shares of Parent Common Stock), the value
\nof each share of Parent Common Stock shall be the Average Share Price. All such
\nshares of Company Common Stock, when so converted, shall no longer be
\noutstanding and shall automatically be canceled and retired and shall cease to
\nexist, and each holder of a certificate representing any such shares shall cease
\nto have any rights with respect thereto, except the right <\/p>\n
-9-<\/p>\n
to receive the Merger Consideration therefor upon the surrender of such
\ncertificate in accordance with Section 2.2 hereof, without interest.<\/p>\n
(d) SHARE NUMBER ADJUSTMENTS. In the event that, subsequent to the date
\nof this Agreement but prior to the Effective Time, the Company changes the
\nnumber of shares of Company Common Stock, or Parent changes the number of shares
\nof Parent Common Stock, issued and outstanding as a result of a stock split,
\nreclassification stock combination, stock dividend, recapitalization,
\nredenomination of share capital or other similar transaction (or in the case of
\nthe Company, issuance of stock pursuant to the Rights Plan), the number of
\nshares of Parent Common Stock paid in the Offer and the Merger and other items
\ndependent thereon shall be appropriately adjusted.<\/p>\n
Section 2.2. EXCHANGE OF CERTIFICATES.<\/p>\n
(a) EXCHANGE AGENT. Prior to the Closing, Parent and Purchaser shall
\ndesignate a bank or trust company (the “EXCHANGE AGENT”) reasonably acceptable
\nto the Company to make the payments of the funds and shares of Parent Common
\nStock to which holders of shares of Company Common Stock shall become entitled
\npursuant to Section 2.1(c) hereof. At the Closing, Parent shall deposit with the
\nExchange Agent (i) cash in the amount necessary for the payment of the aggregate
\ncash Merger Consideration payable pursuant to Section 2.1, and (ii) the shares
\nof Parent Common Stock necessary for payment of the aggregate stock Merger
\nConsideration payable pursuant to Section 2.1. All funds deposited with the
\nExchange Agent shall be invested by the Exchange Agent in (i) direct obligations
\nof the United States of America, (ii) obligations for which the full faith and
\ncredit of the United States of America is pledged to provide for the payment of
\nprincipal and interest, (iii) commercial paper rated the highest quality by
\neither Moody’s Investors Service, Inc., or Standard and Poor’s Ratings Services,
\nor (iv) money market funds investing solely in a combination of the foregoing.
\nAny net profit resulting from, or interest or income produced by, such
\ninvestments will be payable to Purchaser or Parent, as Parent directs.<\/p>\n
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time but in no
\nevent more than three Business Days thereafter, Parent shall cause the Exchange
\nAgent to mail to each holder of record of a certificate or certificates, which
\nimmediately prior to the Effective Time represented outstanding shares of
\nCompany Common Stock (the “CERTIFICATES”), whose shares were converted pursuant
\nto Section 2.1 hereof into the right to receive the Merger Consideration, (i) a
\nletter of transmittal (which shall specify that delivery shall be effected, and
\nrisk of loss and title to the Certificates shall pass, only upon delivery of the
\nCertificates to the Exchange Agent and shall be in such form and have such other
\nprovisions as Parent may reasonably specify) and (ii) instructions for use in
\neffecting the surrender of the Certificates in exchange for payment of the
\nMerger Consideration. Upon surrender of a Certificate for cancellation to the
\nExchange Agent, together with such letter of transmittal, duly executed and
\ncompleted in accordance with the instructions, the holder of such Certificate
\nshall be entitled to receive in exchange therefor the Merger Consideration
\n(subject to subsection (g), below) for each share of Company Common Stock
\nformerly represented by such Certificate, and the Certificate so surrendered
\nshall forthwith be canceled. If payment of the Merger Consideration is to be
\nmade to a person other than the person in whose name the surrendered Certificate
\nis registered, it shall be a condition of payment that the Certificate so
\nsurrendered shall be properly endorsed or shall be otherwise in proper<\/p>\n
-10-<\/p>\n
form for transfer and that the person requesting such payment shall have paid
\nany transfer and other taxes required by reason of the payment of the Merger
\nConsideration to a person other than the registered holder of the Certificate
\nsurrendered or shall have established to the satisfaction of the Surviving
\nCorporation that such tax either has been paid or is not applicable. Until
\nsurrendered as contemplated by this Section 2.2, each Certificate shall be
\ndeemed at any time after the Effective Time to represent only the right to
\nreceive the Merger Consideration as contemplated by this Article II.<\/p>\n
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
\nother distributions declared, made or paid after the Effective Time with respect
\nto shares of Parent Common Stock with a record date on or after the Effective
\nTime shall be paid to the holder of any unsurrendered Certificate with respect
\nto the shares of Parent Common Stock issuable upon surrender of such Certificate
\nand no cash payment in lieu of a fractional share of Parent Common Stock shall
\nbe paid to any such holder pursuant to Section 2.2(g) until the holder of record
\nof such Certificate shall surrender such Certificate in accordance with this
\nSection 2.2. Subject to the effect of applicable laws, following surrender of
\nany such Certificate, there shall be paid to the record holder of the
\ncertificates representing shares of Parent Common Stock issuable as Merger
\nConsideration, without interest, (i) at the time of such surrender, the amount
\nof dividends or other distributions, if any, with a record date on or after the
\nEffective Time which theretofore became payable, but which were not paid by
\nreason of the immediately preceding sentence, with respect to such shares of
\nParent Common Stock and (ii) at the appropriate payment date, the amount of
\ndividends or other distributions with a record date on or after the Effective
\nTime but prior to surrender and a payment date subsequent to surrender payable
\nwith respect to such shares of Parent Common Stock. Dividends or other
\ndistributions with a record date on or after the Effective Time but prior to
\nsurrender of Certificates by holders thereof payable in respect of shares of
\nParent Common Stock held by the Exchange Agent shall be held in trust by the
\nExchange Agent for the benefit of such holders of Certificates, subject to the
\nprovisions of Section 2.2(e) hereof.<\/p>\n
(d) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.
\nAt the Effective Time, the stock transfer books of the Company shall be closed
\nand thereafter there shall be no further registration of transfers of shares of
\nCompany Common Stock on the records of the Company. From and after the Effective
\nTime, the holders of Certificates evidencing ownership of shares of Company
\nCommon Stock outstanding immediately prior to the Effective Time shall cease to
\nhave any rights with respect to such Shares, except as otherwise provided for
\nherein or by applicable law. If, after the Effective Time, Certificates are
\npresented to the Surviving Corporation for any reason, they shall be canceled
\nand exchanged as provided in this Article II.<\/p>\n
(e) TERMINATION OF FUND; NO LIABILITY. At any time following 180 calendar
\ndays after the Effective Time, the Surviving Corporation shall be entitled to
\nrequire the Exchange Agent to deliver to it any funds (including any interest
\nreceived with respect thereto) and any shares of Parent Common Stock that had
\nbeen made available to the Exchange Agent and which have not been disbursed to
\nholders of Certificates, and thereafter such holders shall be entitled to look
\nonly to the Surviving Corporation (subject to abandoned property, escheat or
\nother similar laws) as general creditors thereof with respect to the payment of
\nany Merger Consideration that may be payable upon surrender of any Certificates
\nsuch stockholder holds, as<\/p>\n
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determined pursuant to this Agreement, without any interest thereon.
\nNotwithstanding the foregoing, neither the Surviving Corporation nor the
\nExchange Agent shall be liable to any holder of a Certificate for Merger
\nConsideration delivered to a public official pursuant to any applicable
\nabandoned property, escheat or similar law.<\/p>\n
(f) WITHHOLDING TAXES. If so specified in the Offer Documents or the
\nProxy Statement\/Prospectus, Parent, the Purchaser, the Surviving Corporation and
\nthe Exchange Agent shall be entitled to deduct and withhold from the
\nconsideration otherwise payable to a holder of Shares pursuant to the Offer or
\nMerger such amounts as Parent, the Purchaser, the Surviving Corporation or the
\nExchange Agent is required to deduct and withhold with respect to the making of
\nsuch payment under the Code or any provision of state, local or foreign tax law.
\nTo the extent amounts are so withheld by Parent, the Purchaser, the Surviving
\nCorporation or the Exchange Agent, the withheld amounts shall be treated for all
\npurposes of this Agreement as having been paid to the holder of the Shares in
\nrespect of which the deduction and withholding was made.<\/p>\n
(g) FRACTIONAL SHARES. No certificate or scrip representing fractional
\nParent Common Stock will be issued in the Merger upon the surrender for exchange
\nof Certificates, and such fractional Parent Common Stock will not entitle the
\nowner thereof to vote or to any rights of a holder of Parent Common Stock. In
\nlieu of any such fractional share of Parent Common Stock, each holder of
\nCertificates who would otherwise have been entitled to a fraction of a share of
\nParent Common Stock in exchange for such Certificate (after taking into account
\nall Certificates delivered by such holder) pursuant to this Section 2.2(g) shall
\nreceive from the Exchange Agent, as applicable, a cash payment rounded up to the
\nnearest whole cent, determined by multiplying (A) the fractional share interest
\nto which such holder would otherwise be entitled by (B) the closing price of the
\nParent Common Stock on the New York Stock Exchange, Inc. (as reported in THE
\nWALL STREET JOURNAL) on the Trading Day immediately preceding the Effective
\nTime.<\/p>\n
Section 2.3. DISSENTING SHARES. Notwithstanding any provision of this
\nAgreement to the contrary, if and to the extent required by the DGCL, shares of
\nCompany Common Stock which are issued and outstanding immediately prior to the
\nEffective Time and which are held by holders of such shares of Company Common
\nStock who have properly exercised appraisal rights with respect thereto (the
\n“DISSENTING COMMON STOCK”) in accordance with Section 262 of the DGCL, shall not
\nbe converted into the right to receive the Merger Consideration, and holders of
\nsuch shares of Dissenting Common Stock shall be entitled to receive payment of
\nthe appraised value of such shares of Dissenting Common Stock in accordance with
\nthe provisions of Section 262 of the DGCL unless and until such holders fail to
\nperfect or effectively withdraw or otherwise lose their rights to appraisal and
\npayment under the DGCL. If, after the Effective Time, any such holder fails to
\nperfect or effectively withdraws or loses such right, such shares of Dissenting
\nCommon Stock shall thereupon be treated as if they had been converted into and
\nto have become exchangeable for, at the Effective Time, the right to receive the
\nMerger Consideration, without any interest thereon. The Company shall give
\nParent prompt notice of any demands received by the Company for appraisals of
\nshares of Dissenting Common Stock. The Company shall not, except with the prior
\nwritten consent of Parent, make any payment with respect to any demands for
\nappraisals or offer to settle or settle any such demands, and Parent<\/p>\n
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shall have the right to participate in all negotiations and proceedings with
\nrespect to such demands.<\/p>\n
Section 2.4. COMPANY OPTION PLANS.<\/p>\n
(a) Effective upon Closing, each unexercised option to acquire Company
\nCommon Stock (a “Company Stock Option”) issued and outstanding under the
\nCompany’s 2000 Stock Incentive Plan, the SLC Technologies, Inc. Option Plan, the
\nITI Technologies, Inc. Long-Term Stock Incentive Plan (1992), as amended and
\nrestated as of May 13, 1998, and any other stock option plan or agreement of the
\nCompany (the “Company Option Plans”) will, on the Closing Date, be converted
\ninto an option (a “Converted Option”) to acquire, that number of shares of
\nCommon Stock of the Parent that is equal, rounded up to the nearest whole share,
\nto the product of twice the Exchange Ratio multiplied by the number of shares
\nthat could have been acquired upon exercise of such Company Stock Option
\n(without regard to actual restrictions) had such Company Stock Option been
\nexercised immediately before Closing, with an exercise price equal to (x) the
\nexercise price of the Company Stock Option divided by (y) twice the Exchange
\nRatio.<\/p>\n
(b) Between the date of this Agreement and Closing, the Company’s Board
\nof Directors, or the appropriate Committee thereof, will, at Parent’s request,
\ntake such action as may be necessary, consistent with the authority reserved to
\nthat Board of Directors or Committee in the relevant Company Stock Option Plan,
\nto give effect to the conversion contemplated by Section 2.4(a), including
\nmaking any permitted determination regarding the vesting of any or all Company
\nStock Options, or conforming the administrative rules and procedures applicable
\nto such Company Stock Options to those specified in Parent’s stock option plans,
\nincluding, without limitation, the procedures applicable in the event of an
\noption holder’s death, disability or other termination of employment, provided
\nthat such changes do not materially adversely affect the intrinsic value of any
\nCompany Stock Option so amended.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES OF THE COMPANY<\/p>\n
The Company represents and warrants to Parent and the Purchaser as
\nfollows:<\/p>\n
Section 3.1. CORPORATE ORGANIZATION.<\/p>\n
(a) The Company is a corporation duly organized, validly existing and in
\ngood standing under the laws of the State of Delaware and has the requisite
\ncorporate power and authority necessary to own or lease all of its properties
\nand assets and to carry on its business as it is now being conducted. The
\nCompany is duly licensed or qualified to do business in each jurisdiction in
\nwhich the nature of the business conducted by it or the character or location of
\nthe properties and assets owned or leased by it makes such licensing or
\nqualification necessary, except where the failure to be so licensed or qualified
\nwould not reasonably be expected to have a Material Adverse Effect (as defined
\nbelow) on the Company (“COMPANY MATERIAL ADVERSE EFFECT”). As used in this
\nAgreement, the term “MATERIAL ADVERSE EFFECT” means, an event, change, effect or
\noccurrence which, individually or together with any other event, change, effect<\/p>\n
-13-<\/p>\n
or occurrence, has a material adverse effect on the business, properties, net
\nassets or results of operations or financial condition of such party and its
\nsubsidiaries taken as a whole or a material adverse effect on the party’s
\nability to consummate the transactions contemplated hereby.<\/p>\n
(b) Set forth in Section 3.1(b) of the disclosure schedule of the Company
\ndelivered to Parent concurrently herewith (the “COMPANY DISCLOSURE SCHEDULE”) is
\na list of all subsidiaries of the Company together with the jurisdiction of
\norganization of each such subsidiary and the percentage of each such
\nsubsidiary’s outstanding capital stock or other ownership interests owned,
\ndirectly or indirectly, by the Company. Each of the Company’s subsidiaries is a
\ncorporation or entity duly organized, validly existing and in good standing
\nunder the laws of the jurisdiction of its organization and has the requisite
\ncorporate power and authority to own or lease all of its properties and assets
\nand to carry on its business as it is now being conducted, except where the
\nfailure to be so organized, existing and in good standing or to have such power
\nand authority would not reasonably be expected to have a Company Material
\nAdverse Effect. Each of the Company and its subsidiaries (as defined below) is
\nduly licensed or qualified to do business in each jurisdiction in which the
\nnature of the business conducted by it or the character or location of the
\nproperties and assets owned or leased by it makes such licensing or
\nqualification necessary, except where the failure to be so licensed or qualified
\nwould not reasonably be expected to have a Company Material Adverse Effect.
\nExcept as set forth in Section 3.1(b) of the Company Disclosure Schedule or in
\nthe SEC Documents (as hereinafter defined), neither the Company nor any of its
\nsubsidiaries directly or indirectly owns any equity or similar interest in, or
\nany interest convertible into or exchangeable or exercisable for, any equity or
\nsimilar interest in, any corporation, partnership, joint venture or other
\nbusiness association or entity (other than its wholly-owned subsidiaries), (i)
\nwith respect to which interest the Company or a subsidiary has invested (and
\ncurrently owns) or is required to invest $5 million or more, or (ii) which is a
\npublicly-traded entity unless such interest is held for investment by the
\nCompany or its subsidiary and comprises less than five percent of the
\noutstanding stock of such entity. As used in this Agreement, the word
\n“SUBSIDIARY” when used with respect to any party means any corporation,
\npartnership or other organization, whether incorporated or unincorporated, of
\nwhich at least a majority of the securities or other interests having by their
\nterms voting power to elect a majority of the Board of Directors or others
\nperforming similar functions with respect to such corporation or other
\norganization is directly or indirectly beneficially owned or controlled by such
\nparty or by any one or more of its subsidiaries, or by such party and one or
\nmore of its subsidiaries.<\/p>\n
Section 3.2. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
\nheretofore made available to Parent a complete and correct copy of its
\ncertificate of incorporation (the “CERTIFICATE OF INCORPORATION”) and by-laws
\n(the “BYLAWS”) as amended to date (the “COMPANY CHARTER DOCUMENTS”), and will
\nmake available to Parent, as promptly as practicable, the certificates of
\nincorporation and by-laws (or equivalent organizational documents) of each of
\nits subsidiaries (the “SUBSIDIARY DOCUMENTS”). All such Company Charter
\nDocuments and Subsidiary Documents are in full force and effect. Neither the
\nCompany nor any of its subsidiaries is in violation of any of the provisions of
\nthe Company Charter Documents or the Subsidiary Documents, respectively, except
\nfor violations that do not and are not reasonably likely to materially interfere
\nwith the operations of such entity.<\/p>\n
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Section 3.3. CAPITALIZATION. (a) The authorized capital stock of the
\nCompany consists of 60,000,000 shares of Company Common Stock. At the close of
\nbusiness on November 30, 2001, there were 19,569,072 Shares issued and
\noutstanding. As of November 30, 2001, there were 2,732,111 Shares issuable upon
\nthe exercise of outstanding Options pursuant to the Stock Plans and 142,639
\nShares reserved for issuance for future grants pursuant to the Stock Plans.
\nExcept as set forth in Section 3.3(a) of the Company Disclosure Schedule, all of
\nthe issued and outstanding Shares have been duly authorized and validly issued
\nand are fully paid, nonassessable and free of preemptive rights. Except as set
\nforth in Section 3.3(a) of the Company Disclosure Schedule and as permitted by
\nSection 5.1, since November 30, 2001, the Company has not issued any shares of
\nits capital stock or any securities convertible into or exercisable for any
\nshares of its capital stock, other than pursuant to the exercise of Options
\nreferred to above. Except (i) pursuant to the Rights Plan, or (ii) as set forth
\nabove or in Section 3.3(a) of the Company Disclosure Schedule, or (iii) as
\notherwise contemplated or permitted by Section 5.1(a) hereof, as of the date of
\nthis Agreement there are not and, as of the Effective Time there will not be,
\nany shares of capital stock issued and outstanding or any subscriptions,
\noptions, warrants, calls, commitments or agreements of any character calling for
\nthe purchase or issuance of any securities of the Company, including any
\nsecurities representing the right to purchase or otherwise receive any Company
\nCommon Stock other than the Options referred to above.<\/p>\n
(b) Except as set forth in Section 3.3(b) of the Company Disclosure
\nSchedule, the Company owns, directly or indirectly, all of the issued and
\noutstanding shares of capital stock of each of its subsidiaries, free and clear
\nof any liens, charges, encumbrances, adverse rights or claims and security
\ninterests whatsoever (“LIENS”) that would reasonably be expected to have a
\nCompany Material Adverse Effect, and all of such shares are duly authorized and
\nvalidly issued and are fully paid and nonassessable. None of the Company’s
\nsubsidiaries has or is bound by any outstanding subscriptions, options,
\nwarrants, calls, commitments or agreements of any character calling for the
\npurchase or issuance of any security of such subsidiary, including any
\nsecurities representing the right to purchase or otherwise receive any shares of
\ncapital stock or any other equity security of such subsidiary.<\/p>\n
Section 3.4. AUTHORITY. (a) The Company has all necessary corporate power
\nand authority to execute and deliver this Agreement and subject to obtaining the
\napproval of holders of a majority of the Shares of Company Common Stock prior to
\nthe consummation of the Merger in accordance with Section 251 of the DGCL, if so
\nrequired, to perform its obligations hereunder and to consummate the
\nTransactions. The execution, delivery and performance by the Company of this
\nAgreement, and the consummation by it of the Transactions, have been duly
\nauthorized by its Board of Directors, and, except for obtaining the approval of
\nits stockholders as contemplated by Section 1.8 hereof, if required by the DGCL,
\nno other corporate action on the part of the Company is necessary to authorize
\nthe execution and delivery by the Company of this Agreement and the consummation
\nby it of the Transactions. This Agreement has been duly executed and delivered
\nby the Company and, assuming due and valid authorization, execution and delivery
\nhereof by the other parties hereto, constitutes a valid and binding obligation
\nof the Company enforceable against the Company in accordance with its terms,
\nexcept that such enforceability (i) may be limited by bankruptcy, insolvency,
\nmoratorium or other similar laws affecting or relating to the enforcement of
\ncreditors’ rights generally and (ii) is subject to general principles of equity.<\/p>\n
-15-<\/p>\n
(b) The Board of Directors of the Company has approved and taken all
\ncorporate action required to be taken by the Board of Directors for the
\nconsummation of the Transactions by the Company. As of the date hereof, the
\nCompany’s Board of Directors has adopted resolutions (i) unanimously approving
\nand declaring advisable this Agreement (including all terms and conditions set
\nforth herein) and the Transactions, determining that the Merger is advisable and
\nthat the terms of the Offer and the Merger are fair to, and in the best
\ninterests of, the Company’s stockholders, and (ii) unanimously recommending that
\nthe stockholders of the Company accept the Offer, tender their Shares thereunder
\nto the Purchaser and adopt this Agreement and the Merger.<\/p>\n
Section 3.5. CONSENTS AND APPROVALS; NO VIOLATIONS. (a) Except for (i)
\nthe consents and approvals set forth in Section 3.5(a) of the Company Disclosure
\nSchedule, (ii) the filing with the SEC of the Offer Documents and, if necessary,
\nof a Proxy Statement\/Prospectus in definitive form relating to the Special
\nMeeting, (iii) the filing of the Certificate of Merger with the Secretary of
\nState pursuant to the DGCL, (iv) if necessary, the approval of the Merger and
\nthe adoption of this Agreement by the requisite votes of the stockholders of the
\nCompany, (v) filings, permits, authorizations, consents and approvals as may be
\nrequired under, and other applicable requirements of, the Exchange Act, state
\nsecurities or “blue sky” laws, the New York Stock Exchange, Inc. and the Nasdaq
\nNational Market, (vi) the pre-merger notification requirements of the
\nHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
\nACT”), and (vii) filings and consents under non-U.S. laws and regulations
\nintended to prohibit, restrict or regulate actions or transactions having the
\npurpose or effect of monopolization, restraint of trade, harm to competition or
\neffectuating foreign investment (“FOREIGN ANTITRUST LAWS”), no consents or
\napprovals of, or filings, declarations or registrations with, any federal, state
\nor local court, administrative or regulatory agency or commission or other
\ngovernmental entity or instrumentality, domestic or foreign (each a
\n“GOVERNMENTAL ENTITY”), are necessary for the consummation by the Company of the
\nTransactions, other than such other consents, approvals, filings, declarations
\nor registrations that, if not obtained, made or given, would not reasonably be
\nexpected to materially delay the Company’s performance of its material
\nobligations under this Agreement.<\/p>\n
(b) Except as set forth in Section 3.5(b) of the Company Disclosure
\nSchedule, neither the execution and delivery of this Agreement by the Company
\nnor the consummation by the Company of the Transactions, nor compliance by the
\nCompany with any of the terms or provisions hereof, will (i) conflict with or
\nviolate any provision of the Company Charter Documents or any of the Subsidiary
\nDocuments or (ii) assuming that the authorization hereof by the Company’s
\nstockholders are duly obtained in accordance with the DGCL, (x) violate any
\nstatute, code, ordinance, rule, regulation, judgment, order, writ, decree or
\ninjunction applicable to the Company or any of its subsidiaries or any of their
\nrespective properties or assets, or (y) violate, conflict with, result in the
\nloss of any material benefit under, constitute a default (or an event which,
\nwith notice or lapse of time, or both, would constitute a default) under, result
\nin the termination of or a right of termination or cancellation under,
\naccelerate the performance required by, or result in the creation of any Lien
\nupon any of the respective properties or assets of the Company or any of its
\nsubsidiaries under, any of the terms, conditions or provisions of any material
\nnote, bond, mortgage, indenture, deed of trust, license, lease, agreement or
\nother instrument or obligation to which the Company or any of its subsidiaries
\nis a party, or by which they or any of their respective properties or assets may
\nbe bound or affected.<\/p>\n
-16-<\/p>\n
Section 3.6. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. The Company has
\nfiled all required reports, schedules, forms and registration statements with
\nthe SEC since January 1, 1998 (collectively, and in each case including all
\nexhibits and schedules thereto and documents incorporated by reference therein,
\nthe “SEC Documents”). As of their respective dates, the SEC Documents complied
\nin all material respects with the requirements of the Securities Act or the
\nExchange Act, as the case may be, and the rules and regulations of the SEC
\npromulgated thereunder applicable to such SEC Documents, and none of the SEC
\nDocuments (including any and all financial statements included therein) as of
\nsuch dates contained any untrue statement of a material fact or omitted to state
\na material fact required to be stated therein or necessary in order to make the
\nstatements therein, in light of the circumstances under which they were made,
\nnot misleading. None of the Company’s subsidiaries is required to file periodic
\nreports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
\nconsolidated financial statements of the Company included in the SEC Documents
\n(the “SEC FINANCIAL STATEMENTS”) comply as to form in all material respects with
\napplicable accounting requirements and the published rules and regulations of
\nthe SEC with respect thereto, have been prepared in accordance with GAAP
\n(except, in the case of unaudited consolidated quarterly statements, (i) as
\npermitted by Form 10-Q of the SEC, (ii) as may be indicated in footnotes thereto
\nor in the SEC Documents and (iii) that they are subject to normal and recurring
\nyear-end adjustments none of which has been or will be material) applied on a
\nconsistent basis during the periods involved (except as may be indicated in the
\nnotes thereto) and fairly present in all material respects the consolidated
\nfinancial position of the Company and its consolidated subsidiaries as of the
\ndates thereof and the consolidated results of their operations and cash flows
\nfor the periods then ended (subject, in the case of unaudited quarterly
\nstatements, to normal year-end audit adjustments none of which has been or will
\nbe material). Total Consolidated Net Indebtedness of the Company as of December
\n14, 2001, was not more than $213 million. “Total Consolidated Net Indebtedness”
\nmeans (a) all obligations for borrowed money; (b) all obligations to pay
\ndeferred purchase price of property or services excluding trade account payables
\nin the ordinary course of business and (excluding contingent payment obligations
\nunder the Contingent Payment Agreement dated January 15, 1999, as amended, by
\nand among Marius ven der Watt, JRAM Trust, Universal Technologies Insurance
\nCompany Limited, International Technologies Insurance Company Limited, EMTMLT
\n1998 Trust, Impac Technologies, Inc. and SLC Technologies, Inc.); (c) all
\nobligations evidenced by notes, bonds, debentures, or other similar instruments;
\n(d) all indebtedness created or arising under any conditional sale or other
\ntitle retention agreement with respect to acquired property; (e) capital lease
\nobligations; and (f) all reimbursement obligations contingent or otherwise,
\nunder a drawn acceptance, letter of credit or a similar facility, less cash and
\ncash equivalents. Except as set forth in Section 3.6 of the Company Disclosure
\nSchedule, neither the Company nor any of its subsidiaries has incurred any
\nliabilities or obligations of any nature (whether accrued, absolute, contingent
\nor otherwise) whether or not required, if known, to be reflected or reserved
\nagainst on a consolidated balance sheet of the Company prepared in accordance
\nwith GAAP or the notes thereto except (i) as and to the extent set forth on the
\naudited balance sheet of the Company and its subsidiaries as of December 31,
\n2000 (including the notes thereto), (ii) as incurred in connection with the
\nTransactions, (iii) as incurred after December 31, 2000 in the ordinary course
\nof business consistent with past practice, (iv) as described in the SEC
\nDocuments filed since December 31, 2000 but prior to the date of this Agreement
\nor (v) as would not reasonably be expected to be material and adverse to the
\nCompany and its subsidiaries taken as a whole.<\/p>\n
-17-<\/p>\n
Section 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
\nthe SEC Documents filed prior to the date hereof or as set forth in Section 3.7
\nof the Company Disclosure Schedule and except as permitted by Section 5.1
\nhereof, since September 29, 2001, the Company and its subsidiaries have carried
\non and operated their respective businesses in all material respects in the
\nordinary course of business consistent with past practice, and there has not
\noccurred: (a) any events which have had a Company Material Adverse Effect, (b)
\nany change by the Company in its accounting principles, (c) any revaluation of
\nany of the Company’s or any subsidiary’s assets, including, without limitation,
\nwriting off notes or accounts receivable other than in the ordinary course of
\nbusiness and consistent with past practice, (d) any sale, pledge, disposition of
\nor encumbrance upon a material amount of property of the Company or of any
\nsubsidiary, except in the ordinary course of business and consistent with past
\npractice, (e) any declaration, setting aside or payment of any dividend or other
\ndistribution (whether in cash, stock or property) with respect to any class of
\ncapital stock, (f) any split, combination or reclassification of any of its
\ncapital stock or any issuance or the authorization of any issuance of any other
\nsecurities in respect of, in lieu of or in substitution for shares of its
\ncapital stock, (g) any granting by the Company or any of its subsidiaries to any
\nexecutive officer of the Company of any increase in compensation, except for
\nnormal increases in the ordinary course of business consistent with past
\npractice, (h) any granting by the Company or any of its subsidiaries to any such
\nexecutive officer of any increase in severance or termination pay, except as was
\nrequired under any employment, severance or termination agreements in effect as
\nof September 1, 2001, copies of which have been made available to Purchaser, (i)
\nany entry by the Company or any of its subsidiaries into any employment,
\nseverance or termination agreement with any such executive officer, (j) any
\nestablishment or increase of benefits under any plan that would constitute an
\nEmployee Benefit Plan (as defined herein), (k) any material Tax (as defined
\nherein) election inconsistent with past practices or the settlement or
\ncompromise of any material Tax liability or (l) any damage, destruction or loss
\nof any material asset not covered by insurance and which materially affects the
\nuse or value thereof.<\/p>\n
Section 3.8. LEGAL PROCEEDINGS.<\/p>\n
(a) Except as disclosed in the SEC Documents or in Section 3.8 of the
\nCompany Disclosure Schedule, neither the Company nor any of its subsidiaries is
\na party to any, and there are no pending material legal, administrative,
\narbitral or other proceedings, claims, actions or governmental or regulatory
\ninvestigations of any nature against the Company or any of its subsidiaries or
\nchallenging the validity or propriety of the Transactions.<\/p>\n
(b) Except as set forth in the SEC Documents or in Section 3.8 of the
\nCompany Disclosure Schedule, there is no injunction, order, judgment, decree or
\nregulatory restriction imposed upon the Company, any of its subsidiaries or the
\nassets of the Company or any of its subsidiaries that would reasonably be
\nexpected to have a Company Material Adverse Effect or interface with the
\nCompany’s ability to consummate the Transactions.<\/p>\n
Section 3.9. COMPLIANCE WITH APPLICABLE LAW. The Company and each of its
\nsubsidiaries hold all material licenses, franchises, permits, certificates,
\napprovals, and authorizations necessary for the lawful conduct of their
\nrespective businesses as presently conducted (collectively, the “COMPANY
\nPERMITS”). The Company and its subsidiaries are in compliance with the terms of
\nthe Company Permits in all material respects, except as described<\/p>\n
-18-<\/p>\n
in the SEC Documents. Except as disclosed in Section 3.9 of the Company
\nDisclosure Schedule, the Company and its subsidiaries are in compliance in all
\nmaterial respects with all applicable laws, statutes, orders, rules and
\nregulations of any Governmental Entity (“LAWS”) relating to the Company or any
\nof its subsidiaries or by which any of their properties is bound or affected. As
\nof the date of this Agreement, except as disclosed in the SEC Documents, no
\naction, demand, requirement or investigation of the Company or any of its
\nsubsidiaries by any Governmental Entity is pending or, to the knowledge of the
\nCompany, threatened other than those the outcome of which individually or in the
\naggregate would not reasonably be expected to have a Company Material Adverse
\nEffect.<\/p>\n
Section 3.10. COMPANY INFORMATION. The information relating to the
\nCompany and its subsidiaries to be provided by the Company to be contained in
\nthe Proxy Statement\/Prospectus, if any, or the Offer Documents, or in any other
\ndocument filed with any other Governmental Entity in connection herewith at the
\nrespective times filed with the SEC or such other Governmental Entity and first
\npublished, sent or given to stockholders of the Company and, in addition, in the
\ncase of the Proxy Statement\/Prospectus, at the date it or any amendment or
\nsupplement is mailed to holders of the Shares, at the time of the Special
\nMeeting and at the Effective Time, will not contain any untrue statement of a
\nmaterial fact or omit to state a material fact necessary to make the statements
\ntherein, in light of the circumstances in which they are made, not misleading.
\nThe Schedule 14D-9 will comply as to form in all material respects with the
\nprovisions of the Exchange Act and the rules and regulations thereunder (except
\nthat no representation is made by the Company to such portions thereof that
\nrelate only to Parent or any of its subsidiaries or to statements made therein
\nbased on information supplied by Parent or the Purchaser for inclusion therein).<\/p>\n
Section 3.11. PENSION AND BENEFIT PLANS, ERISA.<\/p>\n
(a) Section 3.11(a) of the Company Disclosure Schedule lists (i) all
\n“employee benefit plans,” as defined in Section 3(3) of the Employee Retirement
\nIncome Security Act of 1974, as amended (“ERISA”), and any other material
\nemployee benefit arrangements or payroll practices, whether oral or written and
\nwhether subject to ERISA or not, including without limitation severance pay,
\nsick leave, vacation pay, salary continuation for disability, consulting or
\nother compensation or employment agreements, retirement, deferred compensation,
\nbonus, stock purchase, hospitalization, medical insurance, life insurance, and
\nscholarship programs available to employees of the Company (all of the foregoing
\nreferred to herein as “EMPLOYEE BENEFIT PLANS”); (ii) all “employee pension
\nplans,” as defined in Section 3(2) of ERISA maintained by or for the Company or
\nfor employees of the Company by any employer (an “ERISA AFFILIATE”) that
\ntogether with the Company would be deemed a “single employer” within the meaning
\nof section 414(b), 414(c) or 414(m) of the Code or to which the Company or any
\nERISA Affiliate (as defined herein) contributed or is obligated to contribute
\nthereunder (all of the foregoing referred to herein as “PENSION PLANS”). True
\nand complete copies of the following documents with respect to each of the
\nEmployee Benefit Plans and Pension Plans have been made available to Parent by
\nthe Company: (i) any plans and related trust documents, and amendments thereto;
\n(ii) the most recent Forms 5500; (iii) the last IRS determination letter; and
\n(iv) summary plan descriptions.<\/p>\n
-19-<\/p>\n
(b) No Pension Plan is, or has been during any period for which any
\nrelevant statute of limitations remains open, subject to section 412 of the
\nCode, or Title IV of ERISA. No Employee Benefit Plan is, or has been during any
\nperiod for which any relevant statute of limitations remains open, subject to
\nSection 4063 or Section 4064 of ERISA. No ERISA Affiliate has incurred any
\nliability under Title IV of ERISA, including, without limitation any liability
\nunder Section 4062, 4063 or 4064 of ERISA, or any withdrawal liability, within
\nthe meaning of Section 4201 of ERISA to any multiemployer pension plan, within
\nthe meaning of Section 3(37) of ERISA nor does the Company or any ERISA
\nAffiliate have any potential withdrawal liability arising from a transaction
\ndescribed in Section 4204 of ERISA, which could reasonably be expected to become
\na liability of the Company, any of its subsidiaries, the Parent or the Surviving
\nCorporation.<\/p>\n
(c) The Pension Plans intended to qualify under Section 401 of the Code
\nand the trusts maintained pursuant thereto are exempt from federal income
\ntaxation under Section 501 of the Code, and nothing has occurred with respect to
\nthe operation of the Pension Plans which could reasonably be expected to cause
\nthe loss of such qualification or exemption or the imposition of any liability,
\npenalty, or Taxes (as defined herein) under ERISA or the Code. There is no
\nmaterial violation of ERISA with respect to the filing of applicable reports,
\ndocuments, and notices regarding the Employee Benefit Plans with the Secretary
\nof Labor and the Secretary of the Treasury or the furnishing of such documents
\nto the participants or beneficiaries of the Employee Benefit Plans.<\/p>\n
(d) There are no actions, suits, investigations, arbitrations, or
\nproceedings pending against any Employee Benefit Plan or Pension Plan, against
\nthe assets of any of the trusts under such plans or the plan sponsor or the plan
\nadministrator, or against any fiduciary of any Employee Benefit Plan or Pension
\nPlan with respect to the operation of such plans (other than routine benefit
\nclaims), and the Company is not aware of any facts that could form the basis for
\nany such action, suit, investigation, arbitration, or proceeding.<\/p>\n
(e) All amendments and actions required to bring the Employee Benefit
\nPlans and Pension Plans into conformity in all respects with all of the
\napplicable provisions of ERISA and other applicable Laws have been made or
\ntaken.<\/p>\n
(f) Any bonding required with respect to any Employee Benefit Plan or
\nPension Plan in accordance with applicable provisions of ERISA has been obtained
\nand is in full force and effect.<\/p>\n
(g) The Employee Benefit Plans and Pension Plans have been maintained, in
\nall material respects, in accordance with their terms and with all provisions of
\nERISA (including regulations thereunder) and other applicable Laws, and neither
\nthe Company nor any “party in interest” or any “disqualified person” with
\nrespect to the Employee Benefit Plans has engaged in a “prohibited transaction”
\nwithin the meaning of Section 4975 of the Code or Section 406 of ERISA. The
\nCompany maintains no retiree life and retiree health insurance plans which: (i)
\nare Employee Benefit Plans; (ii) are “welfare benefit plans” within the meaning
\nof Section 3(l) of ERISA; or (iii) provide for continuing benefits or coverage
\nfor any participant or any beneficiary of a participant except as may be
\nrequired under Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)
\nand at the sole expense of the participant or the participant’s<\/p>\n
-20-<\/p>\n
beneficiary. The Company has complied with the notice and continuation
\nrequirements of the Code, COBRA, and Part 6 of Subtitle B of Title I of ERISA
\nand the regulations thereunder.<\/p>\n
(h) Except as set forth in the SEC Documents or in Section 3.11(h) of the
\nCompany Disclosure Schedule, neither the execution and delivery of this
\nAgreement nor the consummation of the Transactions will: (i) result in any
\npayment becoming due to any employee of the Company; (ii) increase any benefits
\notherwise payable under any Employee Benefit Plan or Pension Plan; or (iii)
\nresult in the acceleration of the time of payment of any such benefits. The
\nCompany does not have any contract, plan, or commitment, to create any
\nadditional Employee Benefit Plans or Pension Plans.<\/p>\n
(i) Except as set forth in Section 3.11(i) of the Company Disclosure
\nSchedule, no stock or other security issued by the Company, or any ERISA
\nAffiliate, forms or has formed a part of the assets of any Employee Benefit Plan
\nor Pension Plan. With respect to any period for which any contribution or other
\npayment to or in respect of any Employee Benefit Plan or Pension Plan is not yet
\ndue or owing, the Company has made due and sufficient current accruals for such
\ncontributions and other payments in accordance with GAAP, and such current
\naccruals through September 29, 2001, are duly and fully provided for in the SEC
\nFinancial Statements for the period then ended. All of the plans listed on
\nSchedule 3.11(a) of the Company Disclosure Schedule have been operated and
\nmaintained in material compliance with the laws of the jurisdictions in which
\nsuch plans are maintained, and accrued liabilities and corresponding assets for
\nsuch plans are accurately reflected on the SEC Financial Statements of the
\nCompany.<\/p>\n
Section 3.12. ENVIRONMENTAL MATTERS; HEALTH AND SAFETY.<\/p>\n
Except as set forth in Section 3.12(a) of the Company Disclosure
\nSchedule:<\/p>\n
(a) (i) The Company and each of its subsidiaries is and has been in
\nall material respects in compliance with all Environmental Laws (as defined
\nherein) and all Health and Safety Requirements (as defined herein) except for
\nsuch non-compliance which would not reasonably be expected to have a Company
\nMaterial Adverse Effect;<\/p>\n
(ii) The Company and each of its subsidiaries has obtained all
\n permits, approvals, and authorizations required under Environmental Laws
\n (hereinafter “ENVIRONMENTAL PERMITS”), and is and has been in compliance
\n with all requirements in such Environmental Permits, except when the
\n failure to have such permits or non-compliance would not reasonably be
\n expected to have a Company Material Adverse Effect;<\/p>\n
(iii) There are no present or past actions or activities or events
\n including without limitation the use, storage, or Releases (as defined
\n herein), of any Hazardous Materials (as defined herein) by the Company or
\n its subsidiaries, that forms the basis of any obligation under
\n Environmental Laws for the Company or its subsidiaries to investigate,
\n remediate or respond to such use, storage and Releases, which obligation
\n would reasonably be expected to have a Company Material Adverse Effect;<\/p>\n
-21-<\/p>\n
(iv) No Lien has been placed upon any real property owned or
\n leased by the Company or any of its subsidiaries under any Environmental
\n Law which would reasonably be expected to have a Company Material Adverse
\n Effect;<\/p>\n
(v) There has been no environmental, investigation, study, audit,
\n or review in the Company’s or any of its subsidiaries’ possession
\n conducted in relation to any current operations or properties of the
\n Company or any of its subsidiaries or any other operations or properties
\n or facilities now or previously owned or leased by Company or its
\n subsidiaries, which have not been made available to Parent and which
\n identify a violation of environmental Law or Release of Hazardous
\n Materials which would reasonably be expected to have a Company Material
\n Adverse Effect;<\/p>\n
(vi) No Environmental Law imposes any obligation upon the Company
\n or any of its subsidiaries as a result of or as a condition to any of the
\n Transactions (A) to modify or transfer any Environmental Permits, (B) to
\n file any notice or other submission with a Governmental Entity informing
\n them of the Transactions, or (C) to modify or provide notice under any
\n settlement agreement, consent order or consent decree; which would
\n reasonably be expected to have a Company Material Adverse Effect;<\/p>\n
(vii) Neither the Company nor any of its subsidiaries has entered
\n into or agreed to enter into, any consent decree or order in respect of
\n its business or any property owned or leased by it, and it is not subject
\n to any court order mandating the Company or its subsidiaries to comply
\n with or impose any obligation upon the Company or any of its subsidiaries
\n to address the presence of Hazardous Materials, under any Environmental
\n Laws in respect of its business or properties which would reasonably be
\n expected to have a Company Material Adverse Effect; and<\/p>\n
(viii) Neither the Company nor any of its subsidiaries has entered
\n into or is a party to or, to the knowledge of the Company, subject to any
\n consent decree or order with any environmental authority in respect of
\n its business or any property owned or leased by it, or relating to
\n compliance with or addressing the presence of Hazardous Materials under
\n any Environmental Laws in respect of its business or properties which
\n decree or order would reasonably be expected to have a Company Material
\n Adverse Effect.<\/p>\n
(b) No action, claim or proceeding for any violation or liability by the
\nCompany or any of its subsidiaries under any Environmental Laws or Environmental
\nPermits has been commenced or to the knowledge of the Company, is threatened by
\nany Governmental Authority against the Company or any of its subsidiaries,
\nexcept for any actions, claims or proceedings that would not reasonably be
\nexpected to have a Company Material Adverse Effect.<\/p>\n
Section 3.13. PROPERTIES. Except as disclosed in the SEC Documents, each
\nof the Company and its subsidiaries (i) has good and marketable title to all of
\nits material properties (real, personal or intangible) and assets which are
\nreflected on the latest balance sheet included in such SEC Documents as being
\nowned by the Company or one of its subsidiaries or acquired after the date
\nthereof which are, individually or in the aggregate, material to the Company’s
\nbusiness on a consolidated basis (except properties sold or otherwise disposed
\nof since the date thereof in <\/p>\n
-22-<\/p>\n
the ordinary course of business), free and clear of (A) all Liens except (1)
\nstatutory liens securing payments not yet due and (2) such imperfections or
\nirregularities of title or other Liens (other than real property mortgages or
\ndeeds of trust) as do not materially affect the use of the properties or assets
\nsubject thereto or affected thereby or otherwise materially impair business
\noperations at such properties, and (B) all real property mortgages and deeds of
\ntrust except that secured indebtedness that is properly reflected in the latest
\nSEC Financial Statements, and (ii) is the lessee or sublessee of all leasehold
\nestates listed in the SEC Documents or acquired after the date thereof and is in
\npossession of the properties purported to be leased thereunder, and each such
\nlease is valid without material default thereunder by the lessee (or event which
\nwith notice or lapse of time, or both, would constitute a material default) or,
\nto the Company’s knowledge, the lessor.<\/p>\n
Section 3.14. TAX RETURNS AND TAX PAYMENTS. Except as disclosed in
\nSection 3.14 of the Company Disclosure Schedule, the Company and its
\nsubsidiaries have timely filed (or, as to subsidiaries, the Company has timely
\nfiled on behalf of such subsidiaries) all material Tax Returns (as defined
\nbelow) required to be filed by it. Except as disclosed in Section 3.14 of the
\nCompany Disclosure Schedule, all such tax returns are correct and complete in
\nall material respects. Except as disclosed in Section 3.14 of the Company
\nDisclosure Schedule, the Company and its subsidiaries have timely paid (or, as
\nto subsidiaries, the Company has timely paid on behalf of such subsidiaries) all
\nTaxes (as defined below) shown to be due on such Tax Returns and has provided
\n(or, as to subsidiaries, the Company has made provision on behalf of such
\nsubsidiaries), in accordance with GAAP, reserves in its most recent SEC
\nFinancial Statements for any Taxes that have not been paid (exclusive of
\nreserves representing differences in timing between tax and book income),
\nwhether or not shown as being due on any Tax Returns. Neither the Company nor
\nany of its subsidiaries has made any request for waivers of the time to assess
\nany U.S. Taxes or any material non-U.S. Taxes that are pending or outstanding.
\nNo claim for unpaid Taxes has been asserted against the Company or any of its
\nsubsidiaries in writing by a Tax authority which, if resolved in a manner
\nunfavorable to the Company or any of its subsidiaries, as the case may be, would
\nreasonably be expected to result in a Company Material Adverse Effect. There are
\nno Liens for Taxes upon the assets of the Company or any Subsidiary that would
\nreasonably be expected to result in a Company Material Adverse Effect except for
\nLiens for Taxes not yet due and payable or for Taxes that are being disputed in
\ngood faith by appropriate proceedings, with respect to which Liens adequate
\nreserves have been taken. Except as disclosed in Section 3.14 of the Company
\nDisclosure Schedule, no audit of any Tax Return of the Company or any of its
\nsubsidiaries is being conducted by a Tax authority. Neither the Company nor any
\nof its subsidiaries has made an election under Section 341(f) of the Code.
\nExcept as disclosed in Section 3.14 of the Company Disclosure Schedule, none of
\nthe Company and its subsidiaries has made any payments, is obligated to make any
\npayments, or is party to any agreement that under certain circumstances could
\nobligate it to make any payments that will not be deductible under Code Section
\n280G or Code Section 162(m). None of the Company and its subsidiaries is party
\nto any Tax allocation or sharing agreement. None of the Company and its
\nsubsidiaries will be required to include any item of income in, or exclude any
\nitem of deduction from, taxable income for any taxable period (or portion
\nthereof) ending after the Closing Date as a result of any: (A) change in method
\nof accounting for a taxable period ending on or prior to the Closing Date under
\nCode Section 481(c) (or any corresponding or similar provision of state, local
\nor foreign income Tax law); (B) “closing agreement” as described in Code Section
\n7121 (or any corresponding or similar provision of state, local or foreign
\nincome <\/p>\n
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Tax law) executed on or prior to the Closing Date; (C) material deferred
\nintercompany gains or any material excess loss accounts described in Treasury
\nRegulations under Code Section 1502 (or any corresponding or similar provision
\nof state, local or foreign income Tax law); (D) installment sale or open
\ntransaction disposition made on or prior to the Closing Date; or (E) material
\nprepaid amounts received on or prior to the Closing Date. The Company and its
\nsubsidiaries have not joined in filing a consolidated return as members of a
\nconsolidated group that included the corporation that distributed the stock of
\nSLC Technologies, Inc. in a spin-off on October 10, 1997 (the “SPIN-OFF”) for
\nany tax year of that group beginning after December 31, 1997. The Internal
\nRevenue Service has issued a private letter ruling (the “Ruling”) that the
\nSpin-Off was tax-free pursuant to Section 355 of the Code. The Internal Revenue
\nService has issued a supplemental private letter ruling that the merger of SLC
\nTechnologies, Inc. into the Company, which occurred in May, 2000, would satisfy
\ncertain of the representations made in connection with the Ruling and that the
\nprovisions of the Ruling that the Spin-Off was tax-free to the distributing
\ncorporation and its shareholders under Section 355 of the Code would remain in
\nfull force and effect upon and following completion of the merger. All factual
\nrepresentations made pursuant to each such ruling request were correct and
\naccurate in all material respects when made and thereafter no material facts
\nrepresented therein have changed. Except as disclosed in Section 3.14 of the
\nCompany Disclosure Schedule, neither the Company nor its U.S. subsidiaries has a
\npermanent establishment or tax presence outside of its country of incorporation
\nor organization. Neither the Company nor any of its subsidiaries have taken any
\naction or failed to take any action that would cause the Offer and the Merger to
\nfail to qualify as a tax-free reorganization under Section 368(a) of the Code,
\nand no facts exist that would cause the Offer and the Merger to fail to so
\nqualify.<\/p>\n
As used herein, “Taxes” shall mean all taxes of any kind, including, without
\nlimitation, those on or measured by or referred to as income, gross receipts,
\nsales, use, ad valorem, franchise, profits, license, value added, property or
\nwindfall profits taxes, customs, duties or similar fees, assessments or charges
\nof any kind whatsoever, together with any interest and any penalties, additions
\nto tax or additional amounts imposed by any governmental entity, domestic or
\nforeign. As used herein, “Tax Return” shall mean any return, report or statement
\nrequired to be filed with any governmental entity with respect to Taxes.<\/p>\n
Section 3.15. INTELLECTUAL PROPERTY.<\/p>\n
(a) As used herein, the term “INTELLECTUAL PROPERTY” shall mean all
\npatents, patent applications, statutory invention registrations, inventions and
\nother industrial property rights; trademarks, service marks, trade names, trade
\ndress, logos, and other source identified, including registrations and
\napplications for the registration thereof; copyrights (including without
\nlimitation, computer software programs); Internet domain name registrations;
\nInternet web sites, web content, and registrations and applications for
\nregistrations thereof; confidential and proprietary information, including
\nknow-how and trade secret rights, technologies, techniques and processes;
\ncomputer software, programs and databases in any form, all versions, updates,
\ncorrections, enhancements, replacements, and modifications thereof, and all
\ndocumentation related thereto; and rights of privacy, publicity and endorsement,
\nin each case under the laws of any jurisdiction in the world, and including
\nrights under and with respect to all applications, registrations, continuations,
\ndivisions, renewals, extensions and reissues of the foregoing. As used herein,
\n“COMPANY INTELLECTUAL PROPERTY” shall mean the Intellectual Property used in<\/p>\n
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connection with the business of the Company or any of its subsidiaries or owned
\nor held for use by the Company or any of its subsidiaries.<\/p>\n
(b) Except as set forth in Section 3.15(b) of the Company Disclosure
\nSchedule, the Company and\/or each of its subsidiaries owns, or is licensed or
\notherwise possesses sufficient rights to use and transfer such rights as it has
\nin and to all the Company Intellectual Property, except as would not reasonably
\nbe expected to have a Company Material Adverse Effect. The use of the Company
\nIntellectual Property by the Company and its subsidiaries does not constitute an
\ninfringement or misappropriation of any valid third party Intellectual Property
\nright in existence as of the date hereof, except as would not reasonably be
\nexpected to have a Company Material Adverse Effect. Except as set forth in
\nSection 3.15(b) of the Company Disclosure Schedule, neither the Company nor any
\nof its subsidiaries has received any written notice from any Person since May 2,
\n2000 that the use of any of the Company Intellectual Property or the operation
\nof the Company’s or its subsidiaries’ businesses infringes, dilutes (in the case
\nof trademarks), or otherwise violates the Intellectual Property of such person.<\/p>\n
(c) Except as set forth in Section 3.15(c) of the Company Disclosure
\nSchedule or as would not, individually or in the aggregate, reasonably be
\nexpected to have a Company Material Adverse Effect, (i) no written claims,
\ncharges, or demands are currently pending or, to the knowledge of the Company,
\nthreatened by any person with respect to the Company Intellectual Property, and
\n(ii) there are no pending claims by the Company or any subsidiary alleging or
\nasserting that any third party has violated, misappropriated or infringed any of
\nthe Company Intellectual Property nor, to the Company’s knowledge, is there any
\nbasis for such a claim.<\/p>\n
(d) Except as would not reasonably be expected to have a Company Material
\nAdverse Effect, to the knowledge of the Company, none of the trade secrets,
\nknow-how or other confidential or proprietary information of the Company or any
\nsubsidiary has been disclosed to any person unless such disclosure was
\nnecessary, and was made pursuant to an appropriate confidentiality agreement.<\/p>\n
(e) Except as set forth in Section 3.15(e) of the Company Disclosure
\nSchedule or as would not reasonably be expected to have a Company Material
\nAdverse Effect, to the Company’s knowledge, the information technology assets of
\nthe Company, including without limitation all computer software, hardware,
\nfirmware and telecommunications systems, are adequate for the operation of the
\nCompany’s and subsidiaries’ businesses taken as a whole as currently conducted.<\/p>\n
Section 3.16. INTERESTED PARTY TRANSACTIONS. Except as set forth in
\nSection 3.16 of the Company Disclosure Schedule or the SEC Documents or for
\nevents as to which the amounts involved do not exceed $60,000, since the
\nCompany’s proxy statement dated April 12, 2001, no event has occurred that would
\nbe required to be reported as a Certain Relationship or Related Transaction
\npursuant to Item 404 of Regulation S-K promulgated by the SEC.<\/p>\n
Section 3.17. TAKEOVER STATUTES; RIGHTS PLAN. The Company has taken all
\nactions such that no restrictive provision of any “fair price,” “moratorium,”
\n“control share acquisition,” “interested shareholder” or other similar
\nanti-takeover statute or regulation (including, without<\/p>\n
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limitation, Section 203 of the DGCL) (each a “TAKEOVER STATUTE”) or restrictive
\nprovision of any applicable anti-takeover provision in the governing documents
\nof the Company is, or at the Expiration Date or at the Effective Time will be,
\napplicable to the Company, Parent, the Purchaser, the Shares, the Offer, the
\nMerger or any other Transaction. After giving effect to the amendment to the
\nRights Plan effective as of the date hereof, the Rights Plan is inapplicable to
\nthe Transactions.<\/p>\n
Section 3.18. OPINION OF FINANCIAL ADVISOR. The Company’s Board of
\nDirectors has received the opinion of UBS Warburg LLC (“UBS”), financial advisor
\nto the Company’s Board of Directors, to the effect that, as of the date of such
\nopinion, the consideration to be received in the Offer and the Merger by the
\nholders of Shares is fair to the holders of Shares, (other than the Stockholders
\nand its affiliates), from a financial point of view (the “FAIRNESS OPINION”).
\nThe Company hereby represents and warrants that it has been authorized by UBS to
\npermit the inclusion of the Fairness Opinion and\/or references thereto, subject
\nto prior review and consent by UBS (such consent not to be unreasonably
\nwithheld) in the Offer Documents, the Schedule 14D-9 and any Proxy
\nStatement\/Prospectus.<\/p>\n
Section 3.19. BROKER’S FEES. Except as set forth in Section 3.19 of the
\nCompany Disclosure Schedule, neither the Company nor any subsidiary of the
\nCompany nor any of their respective officers or directors on behalf of the
\nCompany or such subsidiaries has employed any financial advisor, broker or
\nfinder or incurred any liability for any broker’s fees, commissions or finder’s
\nfees in connection with any of the transactions contemplated hereby. The Company
\nhas delivered to Parent a current copy of the engagement letter with UBS, which
\nengagement letter describes the fee payable to UBS.<\/p>\n
Section 3.20. CONTRACTS.<\/p>\n
(a) Set forth in Section 3.20(a) of the Company Disclosure Schedule is a
\nlist of (i) each written customer or supply contract or agreement of the Company
\nor any subsidiary of the Company currently in effect that involve consideration
\nin fiscal year 2000 in excess of $3,000,000 or that are reasonably likely to
\ninvolve consideration in fiscal year 2001 in excess of $3,000,000 or (ii) each
\nwritten contract or agreement (other than customer or supply contracts or
\nagreements) of the Company or any subsidiary of the Company currently in effect
\nthat involve consideration (whether or not measured in cash) of greater than
\n$5,000,000 (each a “MATERIAL CONTRACT”).<\/p>\n
(b) Neither the Company nor any of its subsidiaries is in default under
\nany Material Contract or other agreement, nor does any condition exist that,
\nwith notice or lapse of time or both, would constitute a default thereunder,
\nexcept for such defaults under any agreement other than a material Contract as
\nin the aggregate would not reasonably be expected to have a Company Material
\nAdverse Effect. Except as disclosed in Section 3.20(b) of the Company Disclosure
\nSchedule, to the knowledge of the Company, no other party to any Material
\nContract or such other agreement is in default thereunder, nor does any
\ncondition exist that with notice or lapse of time or both would constitute a
\ndefault thereunder, except for such defaults under any agreement other than a
\nMaterial Contract as in the aggregate would not reasonably be expected to have a
\nCompany Material Adverse Effect. Except as separately identified in Section
\n3.20(b) of the Company Disclosure Schedule, no approval or consent of any person
\nis needed in order<\/p>\n
-26-<\/p>\n
that any Material Contract continue in full force and effect following the
\nconsummation of the Transactions, except with respect to such agreements the
\ndefault of which in the aggregate would not reasonably be expected to have a
\nCompany Material Adverse Effect. The Company has no knowledge of a claim,
\nactual, pending or threatened, by any governmental agency, prime contractor,
\nsubcontractor, or supplier with respect to any contract, purchase order or
\nagreement to which the Company or any of its subsidiaries is a party, except for
\nsuch claims as in the aggregate would not reasonably be expected to have a
\nCompany Material Adverse Effect.<\/p>\n
(c) Section 3.20(c) of the Company Disclosure Schedule lists the top ten
\nsuppliers (by dollar amount) of the Company for calendar year 2001 and top ten
\ncustomers (by dollar amount) of the Security and Life Safety Group, Key
\nManagement Group, and Enterprise Technologies Group business segments of the
\nCompany and its subsidiaries for calendar year 2001.<\/p>\n
(d) Section 3.20(d) of the Company Disclosure Schedule lists each
\nmaterial agreement preventing the Company or any of its subsidiaries from
\ncompeting in any line of business.<\/p>\n
Section 3.21. PRODUCT LIABILITY; WARRANTIES.<\/p>\n
(a) Except as disclosed in Section 3.21 of the Company Disclosure
\nSchedule, there are no claims asserted or, to the Company’s knowledge,
\nthreatened against the Company or any of its subsidiaries related to the safety
\nof the products of the Company or any of its subsidiaries that could reasonably
\nbe expected to have a Company Material Adverse Effect.<\/p>\n
(b) All products of the Company and of each Company subsidiary
\nmanufactured, processed, assembled, distributed, shipped or sold and any
\nservices rendered in the conduct of the business of the Company or any Company
\nsubsidiary have been in conformity with all applicable contractual commitments
\nand all express or implied warranties, except where the failure to be in
\nconformity could not reasonably be expected to have a Company Material Adverse
\nEffect. All warranties of the Company and each Company subsidiary are in
\nconformity with the labeling and other requirements of applicable Laws, except
\nwhere any failure to be in conformity, either individually or in the aggregate,
\ncould not reasonably be expected to have a Company Material Adverse Effect.<\/p>\n
Section 3.22. INSURANCE. All material insurance policies of the Company
\nand the Company subsidiaries (the “INSURANCE POLICIES”) are in full force and
\neffect and provide insurance in such amounts and against such risks as are
\ncustomary for companies of similar size in the same business as the Company and
\nits subsidiaries. Neither the Company nor any of its subsidiaries is in material
\nbreach or default, and neither the Company nor any of its subsidiaries have
\ntaken any action or failed to take any action which, with notice or the lapse of
\ntime, would constitute such a breach or default, or permit termination or
\nmodification of any of the Insurance Policies. No notice of cancellation or
\ntermination has been received by the Company with respect to any such Insurance
\nPolicy. With respect to each of the legal proceedings set forth in Section 3.8
\nin the Company Disclosure Schedule and the SEC Documents, no carrier of any
\nInsurance Policy has asserted any denial of coverage. The Transactions will not
\ncause the<\/p>\n
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Insurance Policies not to remain in full force and effect, and the Insurance
\nPolicies will not in any way be affected by, and will not terminate or lapse by
\nreason of, any of the Transactions.<\/p>\n
Section 3.23. EMPLOYEE AND LABOR RELATIONS.<\/p>\n
(a) Except as set forth in Section 3.23(a) of the Company Disclosure
\nSchedule, there is no (x) U.S. employment, retention, extension, continuation,
\nseverance, commitment, or other similar contract, or (y) material non-U.S.
\nemployment, retention, extension, continuation, severance, commitment, or other
\nsimilar contract affecting any employee, officer, or director of the Company
\npursuant to which the Company has any liability.<\/p>\n
(b) Except as set forth in Section 3.23(b)(i) of the Company Disclosure
\nSchedule, no labor organization or group of employees has been recognized or
\ncertified as representatives to the Company for any current or former employees
\nof the Company. No labor organization or group of employees of the Company has
\nmade a pending demand for recognition or certification, and there are no
\nrepresentation or certification proceedings or petitions seeking a
\nrepresentation proceeding presently pending or threatened in writing to be
\nbrought or filed with the National Labor Relations Board or any other labor
\nrelations tribunal or authority. Except as set forth in Section 3.23(b)(ii) of
\nthe Company Disclosure Schedule, there are no strikes, work stoppages,
\nslowdowns, lockouts, arbitrations, grievances, or other labor disputes pending
\nor threatened in writing against or involving the Company. There has been no
\n“mass layoff” or “plant closing” as defined by the Worker Adjustment Retraining
\nNotification Act or any similar state or local “plant closing” law with respect
\nto the Company within the six months prior to the date hereof or within the six
\nmonths prior to the Expiration Date.<\/p>\n
(c) Except as set forth in Section 3.23(c) of the Company Disclosure
\nSchedule, there are no material pending allegations that the Company or any of
\nits subsidiaries has violated, any provision of federal, state, local or foreign
\nlaw or any governmental rule or regulation, or any order, ruling, decree,
\njudgment or arbitration award of any court, arbitrator or any governmental,
\nquasi-governmental or regulatory agency regarding the terms and conditions of
\nemployment of employees, former employees or prospective employees or other
\nlabor related matters, including, without limitation, laws, rules, regulations,
\norders, rulings, decrees, judgments and\/or arbitration awards relating to
\ndiscrimination, fair labor standards, occupational health and safety,
\nimmigration and naturalization, worker’s compensation, the National Labor
\nRelations Act, the Family and Medical Leave Act, the Americans with Disabilities
\nAct, the Age Discrimination in Employment Act, wrongful discharge or violation
\nof the personal rights of employees, former employees or prospective employees.
\nNo present or former director, officer, employee or agent of the Company has
\nasserted any claim against the Company (whether under federal, state, local or
\nforeign law), under any employment agreement or otherwise, on account of or for:
\n(i) overtime pay, other than overtime pay for the current payroll period; (ii)
\nwages or salary for any period other than the current payroll period; (iii)
\nvacation, time off or pay in lieu of vacation or time off, other than vacation
\nor time off (or pay in lieu thereof) that has been accrued in the ordinary
\ncourse of business in accordance with existing policies and is reflected on the
\nSEC Financial Statements; or (iv) any violation of any statute, ordinance or
\nregulation relating to payment of wages and fringe benefits, minimum wages or
\nmaximum work hours except, in the case of each of clauses (i) through (iv)
\nabove, where such claim would not reasonably be expected to have a Company
\nMaterial Adverse Effect.<\/p>\n
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(d) Section 3.23(d) of the Company Disclosure Schedule lists all current
\nemployees of the Company with a base salary of $100,000 or more and the job
\ntitle of each such employee.<\/p>\n
ARTICLE IV<\/p>\n
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER<\/p>\n
Parent and Purchaser jointly and severally represent and warrant to the
\nCompany as follows:<\/p>\n
Section 4.1. CORPORATE ORGANIZATION. Each of Parent and Purchaser is a
\ncorporation duly organized, validly existing and in good standing under the laws
\nof the jurisdiction of its organization and has the requisite corporate power
\nand authority necessary to own or lease all of its properties and assets and to
\ncarry on its business as it is now being conducted. Each of Parent’s
\nsubsidiaries is a corporation or other entity duly organized, validly existing
\nand in good standing under the laws of the jurisdiction of its organization and
\nhas the requisite corporate power and authority to own or lease all of its
\nproperties and assets and to carry on its business as it is now being conducted,
\nexcept as would not reasonably be expected to have a Material Adverse Effect on
\nthe Parent (a “PARENT MATERIAL ADVERSE EFFECT”). Each of Parent and Purchaser is
\nduly licensed or qualified to do business in each jurisdiction in which the
\nnature of the business conducted by it or the character or location of the
\nproperties and assets owned or leased by it makes such licensing or
\nqualification necessary, except where the failure to be so licensed or qualified
\nwould not reasonably be expected to prevent or materially delay consummation of
\nthe Transactions.<\/p>\n
Section 4.2. CAPITALIZATION. The Parent Common Stock to be delivered as
\npart of the Offer Price and Merger Consideration has been duly authorized and,
\nwhen issued and delivered in accordance with the terms of this Agreement, will
\nhave been validly issued and will be fully paid and nonassessable, will be
\nlisted on the New York Stock Exchange, Inc., and the issuance thereof is not
\nsubject to any preemptive or other similar right.<\/p>\n
Section 4.3. AUTHORITY. Each of Parent and Purchaser has all necessary
\ncorporate power and authority to execute and deliver this Agreement and to
\nconsummate the Transactions. The execution, delivery and performance by Parent
\nand Purchaser of this Agreement, and the consummation of the Transactions have
\nbeen duly authorized and approved by their Boards of Directors and by Parent as
\nthe sole stockholder of Purchaser, and no other corporate action on the part of
\nParent and Purchaser is necessary to authorize the execution and delivery by
\nParent and Purchaser of this Agreement and the consummation by them of the
\nTransactions. This Agreement has been duly executed and delivered by Parent and
\nPurchaser, and, assuming due and valid authorization, execution and delivery
\nhereof by the Company, is a valid and binding obligation of each of Parent and
\nPurchaser, enforceable against each of them in accordance with its terms, except
\nthat such enforceability (i) may be limited by bankruptcy, insolvency,
\nmoratorium or other similar laws affecting or relating to the enforcement of
\ncreditors’ rights generally and (ii) is subject to general principles of equity.<\/p>\n
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Section 4.4. CONSENTS AND APPROVALS; NO VIOLATIONS.<\/p>\n
(a) Except for (i) the filing with the SEC of the Offer Documents and the
\nProxy Statement\/Prospectus, if any, (ii) the filing of the Certificate of Merger
\nwith the Secretary of State and the Proxy Statement\/Prospectus, if any pursuant
\nto the DGCL, and (iii) filings, permits, authorizations, consents and approvals
\nas may be required under, and other applicable requirements of, the Exchange
\nAct, the Securities Act, the HSR Act and Foreign Antitrust Laws and state
\nsecurities or blue sky laws, no consents or approvals of, or filings,
\ndeclarations or registrations with, any Governmental Entity or the New York
\nStock Exchange, Inc. are necessary for the consummation by Parent and Purchaser
\nof the Transactions, other than such other consents, approvals, filings,
\ndeclarations or registrations that, if not obtained, made or given, would not
\nreasonably be expected to materially delay Parent’s or Purchaser’s performance
\nof their respective material obligations under this Agreement or to have a
\nParent Material Adverse Effect.<\/p>\n
(b) Neither the execution and delivery of this Agreement by Parent or
\nPurchaser, nor the consummation by Parent or Purchaser of the Transactions, nor
\ncompliance by Parent or Purchaser with any of the terms or provisions hereof,
\nwill (i) conflict with or violate any provision of the certificate of
\nincorporation or bylaws of Parent or any of the similar organizational documents
\nof Purchaser of any of Parent’s or Purchaser’s Subsidiaries or (ii) assuming
\nthat the authorizations, consents and approvals referred to in Section 4.4(a)
\nare obtained, (x) violate any statute, code, ordinance, rule, regulation,
\njudgment, order, writ, decree or injunction applicable to Parent or any of its
\nsubsidiaries or any of their respective properties or assets, or (y) violate,
\nconflict with, result in the loss of any material benefit under, constitute a
\ndefault (or an event which, with notice or lapse of time, or both, would
\nconstitute a default) under, result in the termination of or a right of
\ntermination or cancellation under, accelerate the performance required by, or
\nresult in the creation of any Lien upon any of the respective properties or
\nassets of Parent or Purchaser or any of their respective subsidiaries under, any
\nof the terms, conditions or provisions of any note, bond, mortgage, indenture,
\ndeed of trust, license, lease, agreement or other instrument or obligation to
\nwhich Parent, Purchaser or any of their respective subsidiaries is a party, or
\nby which they or any of their respective properties or assets may be bound or
\naffected, except, in the case of clause (ii) above, for such violations,
\nconflicts, breaches, defaults, losses, terminations of rights thereof,
\naccelerations or Lien creations which would not reasonably be expected to have a
\nParent Material Adverse Effect.<\/p>\n
Section 4.5. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. Parent has filed all
\nrequired reports, schedules, forms and registration statements with the SEC
\nsince January 1, 1998 (collectively, and in each case including all exhibits and
\nschedules thereto and documents incorporated by reference therein, the “PARENT
\nSEC DOCUMENTS”) which are all reports, schedules, forms and statements (other
\nthan preliminary material) that Parent was required to file with the SEC. As of
\ntheir respective dates, the Parent SEC Documents complied in all material
\nrespects with the requirements of the Securities Act or the Exchange Act, as the
\ncase may be, and the rules and regulations of the SEC promulgated thereunder
\napplicable to such Parent SEC Documents, and none of the Parent SEC Documents
\n(including any and all financial statements included therein) as of such dates
\ncontained any untrue statement of a material fact or omitted to state a material
\nfact required to be stated therein or necessary in order to make the statements
\ntherein, in light of the circumstances under which they were made, not
\nmisleading. The<\/p>\n
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consolidated financial statements of the Parent included in the Parent SEC
\nDocuments (the “PARENT SEC FINANCIAL STATEMENTS”) comply as to form in all
\nmaterial respects with applicable accounting requirements and the published
\nrules and regulations of the SEC with respect thereto, have been prepared in
\naccordance with GAAP (except, in the case of unaudited consolidated quarterly
\nstatements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
\nduring the periods involved (except as may be indicated in the notes thereto)
\nand fairly present in all material respects the consolidated financial position
\nof the Parent and its consolidated subsidiaries as of the dates thereof and the
\nconsolidated results of their operations and cash flows for the periods then
\nended (subject, in the case of unaudited quarterly statements, to normal
\nyear-end audit adjustments). Since December 31, 2000, neither the Parent nor any
\nof its subsidiaries, has incurred any liabilities or obligations of any nature
\n(whether accrued, absolute, contingent or otherwise) required, if known, to be
\nreflected or reserved against on a consolidated balance sheet of the Parent
\nprepared in accordance with GAAP except (i) as and to the extent set forth on
\nthe audited balance sheet of the Parent and its subsidiaries as of December 31,
\n2000 (including the notes thereto), (ii) as incurred in connection with the
\nTransactions, (iii) as incurred after December 31, 2000 in the ordinary course
\nof business and consistent with past practice, (iv) as described in the SEC
\nDocuments filed since December 31, 2000, or (v) as would not, individually or in
\nthe aggregate, have a Parent Material Adverse Effect.<\/p>\n
Section 4.6. PARENT OR PURCHASER INFORMATION. The information relating to
\nParent and its subsidiaries to be provided by Parent to be contained in the
\nOffer Documents and the Registration\/Prospectus Statement, if any, or in any
\nother document filed with any other Governmental Entity in connection herewith,
\nat the respective time filed with the SEC or such other Governmental Entity and,
\nin addition, in the case of the Proxy Statement\/Prospectus, if any, at the date
\nit or any amendment or supplement is mailed to holders of the Shares, at the
\ntime of the Special Meeting and at the Effective Time, will not contain any
\nuntrue statement of a material fact or omit to state a material fact necessary
\nto make the statements therein, in light of the circumstances in which they are
\nmade, not misleading. The Offer Documents and the Proxy Statement\/Prospectus, if
\nany (except that no representation is made as to such portions thereof that
\nrelate only to the Company or any of its subsidiaries or to statements made
\ntherein based on information supplied by the Company for inclusion therein) will
\ncomply in all material respects with the provisions of the Exchange Act and the
\nrules and regulations thereunder and the Securities Act and the rules and
\nregulations thereunder, respectively.<\/p>\n
Section 4.7. FINANCING. Parent and the Purchaser collectively have and
\nwill have at the Expiration Date and at the Effective Time, and Parent will make
\navailable to the Purchaser, sufficient funds to enable the Purchaser to pay that
\nportion of the Offer Price and Merger Consideration to be paid for all
\noutstanding Shares purchased pursuant to the Offer or converted into cash and
\nParent Common Stock pursuant to the Merger, to perform Parent’s and the
\nPurchaser’s obligations under this Agreement and to pay all fees and expenses
\nrelated to the Transactions payable by them.<\/p>\n
Section 4.8. STOCK OWNERSHIP. As of the date hereof, neither Parent nor
\nthe Purchaser beneficially owns any Shares.<\/p>\n
Section 4.9. PURCHASER CAPITALIZATION. The authorized capital stock of
\nthe Purchaser consists of 1,000 shares of common stock, par value $0.01 per
\nshare, of which 500 shares have<\/p>\n
-31-<\/p>\n
been validly issued, are fully paid and nonassessable and are owned by Parent
\nfree and clear of any Liens.<\/p>\n
Section 4.10. PURCHASER’S OPERATION. Purchaser was formed solely for the
\npurpose of engaging in the Transactions and has not engaged in any business
\nactivities or conducted any operations other than in connection with the
\nTransactions.<\/p>\n
Section 4.11. BROKER’S FEES. Except as disclosed in Section 4.11 of the
\nParent Disclosure Schedule, neither Parent nor any subsidiary of Parent nor any
\nof its respective officers or directors on behalf of Parent or such subsidiaries
\nhas employed any financial advisor, broker or finder in a manner that would
\nresult in any liability of the Company for any broker’s fees, commissions or
\nfinder’s fees in connection with any of the transactions contemplated hereby.<\/p>\n
Section 4.12. TAX MATTERS. Neither the Parent nor any of its subsidiaries
\nhave taken any action or failed to take any action that would cause the Offer
\nand the Merger to fail to qualify as a tax-free reorganization under Section
\n368(a) of the Code, and no facts exist that would cause the Offer and the Merger
\nto fail to so qualify.<\/p>\n
ARTICLE V<\/p>\n
COVENANTS<\/p>\n
Section 5.1. CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE EFFECTIVE
\nTIME. Except as set forth in Section 5.1 of the Company Disclosure Schedule, as
\ncontemplated or permitted by this Agreement, or as required by applicable law,
\nrule or regulation, during the period from the date of this Agreement to the
\nEffective Time, unless Parent otherwise agrees in writing, the Company shall,
\nand shall cause its subsidiaries to, in all material respects, (i) conduct its
\nbusiness in the ordinary course consistent with past practice and (ii) use all
\nreasonable efforts to maintain and preserve intact its business organization and
\nthe good will of those having business relationships with it and retain the
\nservices of its present officers and key employees; and (iii) keep in full force
\nand effect all Insurance Policies maintained by the Company and its subsidiaries
\nin effect on the date hereof other than changes made in the ordinary course.
\nWithout limiting the generality of the foregoing, and except as set forth in
\nSection 5.1 of the Company Disclosure Schedule, as expressly contemplated or
\npermitted by this Agreement, or as required by applicable law, rule or
\nregulation, during the period from the date of this Agreement to the Effective
\nTime, the Company shall not, and shall not permit any of its subsidiaries to,
\nwithout the prior written consent of Parent:<\/p>\n
(a) issue, sell, grant, dispose of, pledge or otherwise encumber, or
\nauthorize or propose the issuance, sale, disposition or pledge or other
\nencumbrance of (A) any additional shares of its capital stock or any securities
\nor rights convertible into, exchangeable for, or evidencing the right to
\nsubscribe for any shares of its capital stock, or any rights, warrants, options,
\ncalls, commitments or any other agreements of any character to purchase or
\nacquire any shares of its capital stock or any securities or rights convertible
\ninto, exchangeable for, or evidencing the right to subscribe for, any shares of
\nits capital stock; PROVIDED that the Company may grant options to employees
\nhired after the date hereof to the extent available for grant under<\/p>\n
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the Company’s 2000 Stock Incentive Plan as it is in effect on the date hereof;
\nPROVIDED, FURTHER, that such additional options provide that the consummation of
\nthe Transactions shall not be an event that accelerates the vesting thereof, or
\n(B) any other securities in respect of, in lieu of, or in substitution for, any
\nshares of its capital stock outstanding on the date hereof other than pursuant
\nto (x) the exercise of stock options or warrants or conversion rights
\noutstanding as of the date hereof and (y) acquisitions and investments permitted
\nby paragraph (d) hereof; (ii) redeem, purchase or otherwise acquire, or propose
\nto redeem, purchase or otherwise acquire, any of its outstanding shares of
\ncapital stock; or (iii) split, combine, subdivide or reclassify any shares of
\nits capital stock or declare, set aside for payment or pay any dividend, or make
\nany other distribution in respect of any shares of its capital stock or
\notherwise make any payments to its stockholders in their capacity as such; or
\n(iv) amend or waive any of its rights under, or accelerate the vesting under,
\nany provision of the Stock Plans or any agreement evidencing any outstanding
\nstock option, warrant or other right to acquire capital stock of the Company or
\nany restricted stock purchase agreement or any related contract except as
\nrequired pursuant to employment arrangements in place of the date of this
\nAgreement.<\/p>\n
(b) other than in the ordinary course of business consistent with past
\npractice, incur any indebtedness for borrowed money or guarantee any such
\nindebtedness;<\/p>\n
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of its
\nproperties or assets to any individual, corporation or other entity other than a
\ndirect or indirect wholly owned subsidiary, or cancel, release or assign any
\nindebtedness in excess of $5 million to any such person or any claims held by
\nany such person, except (i) sales of inventory in the ordinary course of
\nbusiness consistent with past practice, (ii) pursuant to contracts or agreements
\nin force at the date of this Agreement complete copies of which have been made
\navailable to Parent or (iii) disposition of obsolete or worthless assets; (iv)
\nsales of assets not in excess of $5 million in the aggregate; or (v) pursuant to
\nplans disclosed in writing prior to the execution of this Agreement to Parent
\nand the Purchaser;<\/p>\n
(d) (i) make any acquisition or investment either by purchase of stock or
\nsecurities, merger or consolidation, contributions to capital, property
\ntransfers, or purchases of any property or assets of any other individual,
\ncorporation or other entity other than a direct or indirect wholly owned
\nsubsidiary of the Company, (ii) enter into, terminate or amend any Material
\nContract or agreement other than in the ordinary course of business consistent
\nwith past practices, or (iii) make any capital expenditures and purchases of
\nfixed assets during the period prior to the Effective Date in the aggregate in
\nexcess of $10 million for the Company and its subsidiaries taken as a whole;<\/p>\n
(e) increase in any manner the compensation of any of its directors,
\nofficers or employees or enter into, establish, amend or terminate any
\nemployment, consulting, retention, change in control, collective bargaining,
\nbonus or other incentive compensation, profit sharing, health or other welfare,
\nstock option or other equity, pension, retirement, vacation, severance, deferred
\ncompensation or other compensation or benefit plan, policy, agreement, trust,
\nfund or arrangement with, for or in respect of, any stockholder, officer,
\ndirector, other employee, agent, consultant or Affiliate other than (i) as
\nrequired pursuant to the terms of agreements in effect on the date of this
\nAgreement (complete copies of which have been made available to Parent), and<\/p>\n
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(ii) increases in salaries, wages and benefits of employees or officers of the
\nCompany made in the ordinary course of business and in a manner consistent with
\npast practice;<\/p>\n
(f) make any material Tax election or settle or compromise any material
\nUnited States federal, state, local or non-U.S. tax liability or agree to an
\nextension of a statute of limitations in which case the consent of Parent shall
\nnot be unreasonably withheld;<\/p>\n
(g) take any action to change accounting policies except for changes
\nrequired by GAAP;<\/p>\n
(h) make any commitment to take any of the actions prohibited by this
\nSection 5.1; or<\/p>\n
(i) amend the Company Charter Documents or the Subsidiary Documents.<\/p>\n
Section 5.2. NO SOLICITATION.<\/p>\n
(a) The Company shall immediately cease, and shall cause its officers,
\ndirectors, employees, investment bankers, attorneys, accountants and other
\nrepresentatives to cease, any discussions or negotiations with any parties that
\nmay be ongoing with respect to a Takeover Proposal (as hereinafter defined) and
\nuse its best efforts to obtain the return from all such parties or cause the
\ndestruction of all copies of confidential information provided to such parties
\nby the Company or its representatives that are still in the possession of such
\nparties. From the date hereof until the Effective Time, the Company shall not,
\nand shall cause its subsidiaries not to, and shall cause its officers,
\ndirectors, employees, investment bankers, attorneys, accountants and other
\nrepresentatives not to, directly or indirectly (i) solicit or knowingly
\nencourage the initiation of (including by way of furnishing information that has
\nnot been previously publicly disseminated) any inquiries or proposals that
\nconstitute, or may reasonably be expected to lead to, any Takeover Proposal or
\n(ii) participate in any discussions regarding, or furnish to any person any
\nnon-public information with respect to, or assist or facilitate any Takeover
\nProposal; PROVIDED, HOWEVER, that if, prior to the Effective Time and following
\nthe receipt of a Takeover Proposal that was made in circumstances not otherwise
\ninvolving a breach of this Agreement, the Board of Directors of the Company
\ndetermines in good faith, after considering applicable provisions of state law
\nand after consultation with outside counsel, that a failure to do so would
\nreasonably be expected to constitute a breach by it of its fiduciary duties to
\nits shareholders under applicable law, the Company may, in response to such
\nTakeover Proposal and subject to compliance with Section 5.2(b), (x) furnish
\ninformation with respect to the Company to the party making such Takeover
\nProposal pursuant to a customary confidentiality agreement (but no less
\nfavorable to the Company than the confidentiality agreement entered into with
\nParent), provided that (i) such confidentiality agreement must include a
\nprovision prohibiting solicitation of key employees of the Company or its
\nsubsidiaries, such provision lasting at least one year, and may not include any
\nprovision calling for an exclusive right to negotiate with the Company and (ii)
\nthe Company advises Parent of all such nonpublic information delivered to such
\nperson concurrently with its delivery to the requesting party, and (y)
\nparticipate in negotiations with such party regarding such Takeover Proposal,
\nand (z) prior to the Acceptance Date, following receipt of an unsolicited, bona
\nfide Takeover Proposal from a third party which is a Superior Proposal, enter
\ninto an agreement with such third<\/p>\n
-34-<\/p>\n
party and terminate this Agreement pursuant to Section 7.1(c)(ii) hereof, if
\nafter duly considering the advice of outside counsel, the Board of Directors of
\nthe Company determines in good faith that failure to do so would reasonably be
\nexpected to breach its fiduciary duties to the Company’s stockholders under
\napplicable law.<\/p>\n
(b) In addition to the obligations of the Company set forth in paragraph
\n(a) of this Section 5.2, and subject to the terms of any confidentiality
\nagreement signed prior to the date hereof, the Company shall promptly advise
\nParent orally and in writing, and in no event later than 48 hours after receipt,
\nif any proposal, offer, inquiry, or other contact is received by, any
\ninformation is requested from, or any discussions or negotiations are sought to
\nbe initiated or continued with, the Company in respect of any Takeover Proposal,
\nand shall, in any such notice to Parent, indicate the identity of the person
\nmaking such proposal, offer, inquiry, or other contact and the terms and
\nconditions of any proposals or offers or the nature of any inquiries or
\ncontacts, and thereafter shall keep Parent informed, on a reasonably current
\nbasis, of all material developments affecting the status and terms of any such
\nproposals or offers or the status of any such discussions or negotiations. The
\nCompany shall not release any person from, or waive any provision of, any
\nconfidentiality or standstill agreement entered into as of the date of this
\nAgreement.<\/p>\n
(c) (i) For purposes of this Agreement, “TAKEOVER PROPOSAL” means any
\ninquiry, proposal or offer from any person (other than Parent and its
\nsubsidiaries, affiliates, and representatives) relating to any (A) direct or
\nindirect acquisition or purchase of assets of the Company and its subsidiaries
\nequal to 15% or more of the Company’s consolidated assets or to which 15% or
\nmore of the Company’s revenues of earnings on a consolidated basis are
\nattributable, or (B) any direct or indirect acquisition of 15% or more of any
\nclass of equity securities of the Company, (C) any tender offer or exchange
\noffer that if consummated would result in any person beneficially owning 15% or
\nmore of any class of equity securities of the Company or, (D) any merger,
\nconsolidation, share exchange, business combination, recapitalization,
\nliquidation, dissolution or similar transaction involving the Company or any
\nassets of the Company and its subsidiaries equal to 15% or more of the Company’s
\nconsolidated assets or to which 15% or more of the Company’s revenues or
\nearnings on a consolidated basis are attributable, other than the transactions
\ncontemplated by this Agreement.<\/p>\n
(ii) “SUPERIOR PROPOSAL” means a bona fide written proposal obtained
\nnot in breach of this Agreement to acquire, directly or indirectly, for
\nconsideration consisting of cash and\/or securities, all of the equity securities
\nof the Company or substantially all of the assets of the Company made by a third
\nparty on terms and conditions which the Board of Directors of the Company
\ndetermines in its good faith and reasonable judgment after consultation with its
\nfinancial advisor and outside counsel to be more favorable (other than in
\nimmaterial respects) from a financial point of view than the Offer or the Merger
\nand the Transactions, taking into account at the time of determination any
\nchanges to the terms of this Agreement that as of that time had been proposed by
\nParent and the ability of the Person making such Superior Proposal to consummate
\nsuch Takeover Proposal (based upon, among other things, the availability of
\nfinancing and the expectation of obtaining required regulatory approvals).<\/p>\n
(d) COMMUNICATION OF RESTRICTIONS. The Company shall use its reasonable
\nbest efforts to ensure that the officers, directors and employees of the Company
\nand of each<\/p>\n
-35-<\/p>\n
subsidiary of the Company and any investment banker or other advisor or
\nrepresentative retained by the Company are aware of the restrictions described
\nin this Section 5.2, and the failure of such officers, directors, employees,
\ninvestment bankers or other advisors or representatives to comply with the
\nprovisions hereof shall be deemed to be a breach by the Company of this
\nAgreement, unless such person or entity is acting outside the scope of their
\nauthority.<\/p>\n
(e) AGREEMENT WITH OTHERS. Nothing in this Section 5.2 shall (i) permit
\nthe Company to terminate this Agreement or (ii) permit the Company to enter into
\nany written agreement with respect to a Takeover Proposal during the term of
\nthis Agreement (it being agreed that during the term of this Agreement the
\nCompany shall not enter into any written agreement with any person that provides
\nfor, or in any way facilitates, a Takeover Proposal, other than a
\nconfidentiality agreement in the form referred to above), it being understood
\nthat Section 7.1(c) (ii) sets forth the sole right of the Company to terminate
\nthis Agreement in the circumstances specified in Section 5.2(a).<\/p>\n
Section 5.3. Intentionally Omitted.<\/p>\n
Section 5.4. FINANCING. On the date hereof and at all times on or prior
\nto the consummation of the Offer, Parent and the Purchaser shall have sufficient
\nfunds available (through cash on hand and existing credit arrangements) to
\npurchase all of the Shares outstanding on a fully diluted basis and to pay all
\nfees and expenses related to the Transactions.<\/p>\n
Section 5.5. PUBLICITY. The initial press release with respect to the
\nexecution of this Agreement shall be a joint press release reasonably acceptable
\nto Parent and the Company. Thereafter, except as may be required by law or by
\nany listing agreement with Nasdaq or a national securities exchange as
\ndetermined in the good faith judgment of the party wanting to make such release,
\nneither the Company, Parent nor any of their respective Affiliates shall issue
\nor cause the publication of any press release or other announcement with respect
\nto the Offer, the Merger, this Agreement or the other Transactions without the
\nprior consultation of the other party.<\/p>\n
Section 5.6. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
\nprompt notice to Parent, and Parent shall give prompt notice to the Company, of
\n(i) the occurrence, or non-occurrence of any event the occurrence, or
\nnon-occurrence of which would cause any representation or warranty made by the
\nparty delivering the notice contained in this Agreement to be untrue or
\ninaccurate in any material respect at or prior to the Effective Time and (ii)
\nany material failure of the party delivering the notice to comply with or
\nsatisfy any covenant, condition or agreement to be complied with or satisfied by
\nit hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
\nthis Section 5.6 shall not limit or otherwise affect the remedies available
\nhereunder to the party receiving such notice.<\/p>\n
Section 5.7. ACCESS TO INFORMATION.<\/p>\n
(a) Upon reasonable notice and subject to applicable laws relating to the
\nexchange of information, the Company shall, and shall cause each of its
\nsubsidiaries to, afford to the officers, employees, accountants, counsel and
\nother representatives of the Parent, during normal business hours during the
\nperiod prior to the Effective Time, reasonable access to all its<\/p>\n
-36-<\/p>\n
properties (PROVIDED, HOWEVER, that if in the process of confirmatory due
\ndiligence information received by Parent regarding an existing environmental
\nevent, circumstance or condition that would reasonably be likely to be material
\nand adverse to the Company, then with the prior written consent of the Company
\n(such consent not to be unreasonably withheld) (it being understood that neither
\nParent nor the Purchaser believes that such an environmental event, circumstance
\nor condition exists that would reasonably be likely to be material and adverse
\nto the Company), Parent and its representatives may conduct “Phase II” or other
\nenvironmental testing or sampling; PROVIDED, HOWEVER, that if permitted to do
\nsampling or testing, Parent’s representatives shall not unreasonably interfere
\nwith or otherwise disrupt the business or operations of the Company or any of
\nits subsidiaries while conducting such testing or sampling), books, contracts,
\ncommitments and records, and to its officers, employees, accountants, counsel
\nand other representatives and, during such period, the Company shall, and shall
\ncause its subsidiaries to, make available to the Parent (i) a copy of each
\nreport, schedule, registration statement and other document filed or received by
\nit during such period pursuant to the requirements of Federal securities laws
\n(other than reports or documents which the Company is not permitted to disclose
\nunder applicable law) and (ii) all other information concerning its business,
\nproperties and personnel as Parent may reasonably request. Neither the Company
\nnor any of its subsidiaries shall be required to provide access to or to
\ndisclose information where such access or disclosure would violate or prejudice
\nthe rights of its customers, jeopardize the work product privilege of the entity
\nin possession or control of such information or contravene any law, rule,
\nregulation, order, judgment, decree, fiduciary duty or binding agreement entered
\ninto prior to the date of this Agreement. The parties hereto will make
\nappropriate substitute disclosure arrangements under circumstances in which the
\nrestrictions of the preceding sentence apply.<\/p>\n
(b) The information provided pursuant to Section 5.7(a) will be used
\nsolely for the purpose of the Transactions, and unless and until the Merger is
\nconsummated, solely in accordance with the Confidentiality Agreement between
\nParent and the Company, dated September 25, 2001.<\/p>\n
Section 5.8. FURTHER ASSURANCES.<\/p>\n
(a) Subject to the terms and conditions of this Agreement, each of Parent
\nand the Company shall, and shall cause its subsidiaries to, use all reasonable
\nefforts (i) to take, or cause to be taken, all actions necessary, proper or
\nadvisable to comply promptly with all legal requirements which may be imposed on
\nsuch party or its subsidiaries with respect to the Transactions and, subject to
\nthe conditions set forth in Article VI hereof, to consummate the Transactions as
\npromptly as practicable and (ii) to obtain (and to cooperate with the other
\nparty to obtain) any consent, authorization, order or approval of, or any
\nexemption by, any Governmental Entity and any other third party which is
\nrequired to be obtained by the Company or Parent or any of their respective
\nsubsidiaries in connection with the Offer and the Merger and the other
\nTransactions, and to comply with the terms and conditions of any such consent,
\nauthorization, order or approval.<\/p>\n
(b) Without limiting the foregoing, the Company and Parent shall duly
\nfile with the FTC and the Antitrust Division of the Department of Justice the
\nnotification and report form (the “HSR FILING”) required under the HSR Act with
\nrespect to the Transactions as<\/p>\n
-37-<\/p>\n
promptly as practical, but in no event later than the seventh Business Day
\nfollowing the date hereof. The HSR Filings shall be in substantial compliance
\nwith the requirements of the HSR Act. Each party shall cooperate with the other
\nparty to the extent necessary to assist the other party in the preparation of
\nits HSR Filing, to request early termination of the waiting period required by
\nthe HSR Act and, if requested, to promptly amend or furnish additional
\ninformation thereunder. Each of Parent and the Company shall as promptly as
\npracticable, comply with the Foreign Antitrust Laws. Parent and the Company
\nshall furnish to each other all such information as is necessary to prepare any
\nsuch registration, declaration or filing. Parent and the Company each shall pay
\nthe filing fees with respect to the HSR Filing filed by it and any other such
\nregistration, declaration or filing. Parent and the Company shall keep each
\nother apprised of the status of any communications with, and any inquiries or
\nrequests for additional information from, any Governmental Entity with respect
\nto the Transactions.<\/p>\n
(c) Notwithstanding anything to the contrary, neither the Company nor the
\nParent shall be under any obligation to litigate before or with, or contest any
\norder or decree, or defend against any such actions or proceedings commenced by
\nany Governmental Entity in respect of the antitrust, competition, merger control
\nor similar laws and rules or regulations, and (ii) neither Parent nor any of its
\nsubsidiaries or Affiliates shall be obligated to propose or agree to accept any
\nundertaking or condition, to enter into any consent decree, to make any
\ndivestiture or accept any operational restriction, or take or commit to take any
\naction that could reasonably be expected to limit (A) the freedom of action of
\nParent or its subsidiaries or Affiliates with respect to the operation of, or
\nParent’s or its subsidiaries’ or Affiliates’ ability to retain, the Company or
\nany businesses, product lines or assets of the Company, or (B) the ability to
\nretain, own or operate any portion of the businesses, product lines, or assets,
\nof Parent or any of its subsidiaries or Affiliates, or alter or restrict in any
\nway the business or commercial practices of the Company, Parent or its
\nsubsidiaries or Affiliates. If any such party or any Affiliate thereof receives
\na request for additional information or documentary material from any such
\nGovernmental Entity with respect to the Transactions, then such party will
\nendeavor in good faith to make, or cause to be made, as soon as possible and
\nafter consultation with the other parties, an appropriate response in compliance
\nwith such request. Parent and the Purchaser, on the one hand, and the Company,
\non the other hand, shall promptly inform the other of any material communication
\nfrom the United States Federal Trade Commission, the Department of Justice or
\nany other Governmental Entity regarding any of the Transactions.<\/p>\n
Section 5.9. EMPLOYEE BENEFIT PLANS.<\/p>\n
(a) COMPENSATION AND BENEFITS. For a period of at least one year
\nfollowing the Effective Time, Parent shall cause the Surviving Corporation to
\nprovide to the Company’s employees pay and benefits and benefit plans, programs
\nand policies, including, without limitation, severance benefits, medical and
\nwelfare plans, which are no less favorable in the aggregate than those provided
\nby the Company on the date hereof and agrees to waive any waiting periods or
\nlimitations for preexisting conditions under its medical, dental, and short-term
\nand long-term disability plans and shall ensure that employees are given credit
\nfor any amounts paid toward deductibles, out-of-pocket limits or other fees on
\nor prior to the Effective Time. Employees shall also be provided credit by
\nPurchaser for all service with the Company and its ERISA Affiliates, to the same
\nextent as such service was credited for such purpose by the Company and its
\nERISA Affiliates, under (x) all employee benefit plans, programs, policies and<\/p>\n
-38-<\/p>\n
fringe benefits to be provided to such employees for purposes of eligibility and
\nvesting and (y) severance plans, programs and policies for purposes of
\ncalculating the amount of each Employee’s severance benefits.<\/p>\n
(b) EMPLOYMENT AGREEMENTS. Parent will cause the Surviving Corporation to
\ndischarge the obligations under each employment agreement listed in Section 3.11
\nof the Company Disclosure Schedule.<\/p>\n
(c) COLLECTIVE BARGAINING AGREEMENTS. Parent will cause the Surviving
\nCorporation to assume and honor the terms of any collective bargaining
\nagreements covering any employees of the Company and will recognize any labor
\norganization or other collective bargaining representative of such employees, as
\nrequired in accordance with the National Labor Relations Act or any other
\napplicable law.<\/p>\n
Section 5.10. INDEMNIFICATION.<\/p>\n
(a) From and after the Effective Time, Parent shall cause the Surviving
\nCorporation to, indemnify, defend and hold harmless each person who is now, or
\nhas been at any time prior to the date of this Agreement or who becomes such
\nprior to the Effective Time, an officer or director of the Company or any of its
\nsubsidiaries (the “INDEMNIFIED PARTIES”) (x) to the same extent such persons are
\nindemnified or have the right to advancement of expenses as of the date of this
\nAgreement by the Company and its subsidiaries pursuant to the Company Charter
\nDocuments, the Subsidiary Documents and indemnification agreements, if any, in
\nexistence on the date hereof and set forth in Section 5.10 of the Company
\nDisclosure Schedule with any directors and officers of the Company and its
\nsubsidiaries and (y) without limitation to clause (x), to the fullest extent
\npermitted by applicable law, against (i) any and all losses, claims, damages,
\ncosts, expenses, fines, liabilities or judgments or amounts that are paid in
\nsettlement with the approval of the indemnifying party (which approval shall not
\nbe unreasonably withheld or delayed) of or in connection with any threatened or
\nactual claim, action, suit, proceeding or investigation based in whole or in
\npart on or arising in whole or in part out of the fact that such person is or
\nwas a director or officer of the Company or any of its subsidiaries pertaining
\nto any action or omission existing or occurring at or prior to the Effective
\nTime and whether asserted or claimed prior to, or at or after, the Effective
\nTime (“INDEMNIFIED LIABILITIES”), and (ii) all Indemnified Liabilities based in
\nwhole or in part on, or arising in whole or in part out of, or pertaining to
\nthis Agreement or the Transactions; PROVIDED, HOWEVER, that, in the case of the
\nPurchaser and the Surviving Corporation such indemnification shall only be to
\nthe fullest extent a corporation is permitted under the DGCL to indemnify its
\nown directors and officers. The Surviving Corporation will pay all reasonable
\nexpenses of each Indemnified Party in advance of the final disposition of any
\nsuch action or proceeding to the fullest extent permitted by law upon receipt of
\nany undertaking contemplated by Section 145(e) of the DGCL. Without limiting the
\nforegoing, in the event any such claim, action, suit, proceeding or
\ninvestigation is brought against any Indemnified Party (whether arising before
\nor after the Effective Time), (i) the Indemnified Parties may retain counsel of
\ntheir choice reasonably satisfactory to Parent, (ii) Parent shall, and shall
\ncause the Surviving Corporation to, pay all reasonable fees and expenses of such
\ncounsel for the Indemnified Parties promptly as statements therefor are
\nreceived; PROVIDED that Parent shall not be obligated to pay the reasonable fees
\nand expenses of more than one counsel (other than local counsel) for all
\nIndemnified Parties in any single claim except to the extent that any of<\/p>\n
-39-<\/p>\n
the Indemnified Parties have defenses available to them that are not available
\nto the other Indemnified Parties, in which case Parent shall pay the fees and
\nexpenses of separate counsel (in addition to local counsel) for such Indemnified
\nParties, and (iii) Parent shall, and shall cause the Surviving Corporation to,
\nuse all reasonable efforts to assist in the vigorous defense of any such matter,
\nprovided that none of Parent, Purchaser or the Surviving Corporation shall be
\nliable for any settlement of any claim effected without its written consent,
\nwhich consent, however, shall not be unreasonably withheld. Any Indemnified
\nParty wishing to claim indemnification under this Section 5.10, upon learning of
\nany such claim, action, suit, proceeding or investigation, shall notify Parent
\nand the Surviving Corporation (but the failure so to notify an indemnifying
\nparty shall not relieve it from any liability which it may have under this
\nSection 5.10 except to the extent such failure materially prejudices such
\nparty), and shall deliver to the Surviving Corporation the undertaking
\ncontemplated by Section 145(e) of the DGCL.<\/p>\n
(b) Parent shall maintain, or cause to be maintained, for a period of six
\nyears after the Effective Time the current policies of directors’ and officers’
\nand company liability insurance and fiduciary liability insurance maintained by
\nthe Company and its subsidiaries (provided that Parent or the Surviving
\nCorporation may substitute therefor one or more policies of substantially the
\nsame coverage and amounts containing terms and conditions which are, in the
\naggregate, no less advantageous to the insureds (which are the Company, its
\nsubsidiaries, their respective officers and directors, Berwind Corporation,
\nBerwind Group Partners, and Berwind LLC) with respect to claims arising from
\nfacts or events that occurred on or before the Effective Time; PROVIDED,
\nHOWEVER, that Parent shall not be required to pay an annual premium for such
\ninsurance in excess of $600,000 PROVIDED, FURTHER, that if the annual premiums
\nof such insurance coverage exceed such amount, Parent or the Surviving
\nCorporation shall be obligated to obtain a policy with the greatest coverage
\navailable for a cost not exceeding such amount.<\/p>\n
(c) Each Indemnified Party and each “insured” under the current
\ndirectors’ and officers’ and company liability insurance policy maintained by
\nthe Company is intended to be a third party beneficiary of this Section 5.10 and
\nmay specifically enforce its terms.<\/p>\n
Section 5.11. ADDITIONAL AGREEMENTS. In case at any time after the
\nEffective Time any further action is necessary or desirable to carry out the
\npurposes of this Agreement or to vest the Surviving Corporation with full title
\nto all properties, assets, rights, approvals, immunities and franchises of any
\nof the parties to the merger, the proper officers and directors of each party to
\nthis Agreement and their respective subsidiaries shall take all such necessary
\naction as may be reasonably requested by, and at the sole expense of, Parent.<\/p>\n
Section 5.12. SECTION 16 MATTERS. Prior to the Effective Time, Parent and
\nthe Company shall take all such steps as may be required to cause the
\nTransactions, including any dispositions of Company Common Stock (including
\nderivative securities with respect to the Company Common Stock) and acquisitions
\nof Parent Common Stock (including derivative securities with respect to Parent
\nCommon Stock) by each individual who is or will be subject to the reporting
\nrequirements of Section 16(a) of the Exchange Act with respect to the Company or
\nParent, as the case may be, to be exempt under Rule 16b-3 promulgated under the
\nExchange Act, such steps to be taken in accordance with the No-Action Letter
\ndated January 12, 1999 issued by the SEC regarding such matters.<\/p>\n
-40-<\/p>\n
Section 5.13. NO REDEMPTION OF RIGHTS PLAN. Between the date of this
\nAgreement and the earlier of the Effective Time and the termination of this
\nAgreement, the Company shall not (a) redeem, amend or waive any provisions of
\nthe Rights Plan (other than such amendments as are necessary to accommodate this
\nAgreement and the Transactions, but not with respect to any Takeover Proposal)
\nor (b) implement or adopt any so-called “poison pill,” shareholder rights plan
\nor other similar plan.<\/p>\n
Section 5.14. AFFILIATE LETTERS. As promptly as practicable, the Company
\nshall deliver to Parent a letter identifying all Persons who are at the time
\nthis Agreement is submitted for adoption by the stockholders of the Company,
\n“affiliates” of the Company for purposes of Rule 145 under the Securities Act.
\nThe Company shall use all reasonable efforts to deliver or cause to be delivered
\nto Parent, prior to the expiration of the Offer, an affiliate letter in the form
\nattached hereto as Exhibit B from each such person.<\/p>\n
ARTICLE VI<\/p>\n
CONDITIONS<\/p>\n
Section 6.1. CONDITIONS TO EACH PARTY’S OBLIGATION TO EFFECT THE MERGER.
\nThe respective obligation of each party to effect the Merger shall be subject to
\nthe satisfaction on or prior to the Closing Date of each of the following
\nconditions:<\/p>\n
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly approved
\nand adopted by the requisite vote of the holders of Company Common Stock, if
\nrequired by applicable law and the Company Certificate of Incorporation, in
\norder to consummate the Merger;<\/p>\n
(b) STATUTES. No statute, rule, order, decree or regulation shall have
\nbeen enacted or promulgated by (i) any U.S. Governmental Entity or (ii) any
\nGovernmental Entity pursuant to Foreign Antitrust Laws that prohibits, restrains
\nor enjoins the consummation of the Merger;<\/p>\n
(c) INJUNCTIONS. There shall be not be in effect any order or injunction
\nof (i) any U.S. Governmental Entity or (ii) any Governmental Entity pursuant to
\nForeign Antitrust Laws precluding, restraining, enjoining or prohibiting
\nconsummation of the Merger; and no proceeding by any Governmental Entity seeking
\nany of the foregoing shall have been commenced and be continuing. There shall
\nnot be any action taken, or any statute, rule, regulation or order enacted or
\nentered into applicable to the Merger, which makes the consummation of the
\nMerger illegal; and<\/p>\n
(d) PURCHASE OF SHARES IN OFFER. Parent, the Purchaser or their
\naffiliates shall have purchased shares of Company Common Stock pursuant to the
\nOffer, provided that this condition shall be deemed satisfied with respect to
\nParent and the Purchaser if the Purchaser shall have failed to purchase Shares
\npursuant to the Offer in breach of its obligations under this Agreement.<\/p>\n
-41-<\/p>\n
Section 6.2. CONDITIONS OF OBLIGATIONS OF PARENT AND PURCHASER TO EFFECT
\nTHE MERGER. The obligations of Parent and Purchaser to effect the Merger are
\nsubject to the satisfaction of the further condition (which may be waived in
\nwhole or in part by Parent) that the Company shall have performed in all
\nmaterial respects all material obligations required to be performed by it under
\nthis Agreement on or before the earlier of (i) such time as Parent’s or
\nPurchaser’s designees shall constitute at least a majority of the Company’s
\nBoard of Directors pursuant to Section 1.3 of this Agreement and (ii) the
\nClosing Date; PROVIDED, HOWEVER, that no failure by the Company to have so
\nperformed any such material obligation shall constitute a failure of
\nsatisfaction of the foregoing condition where the Company’s failure of
\nperformance was caused by Parent or occurred and was actually known to Parent at
\nor prior to the time Purchaser accepted for payment any Shares pursuant to the
\nOffer.<\/p>\n
ARTICLE VII<\/p>\n
TERMINATION<\/p>\n
Section 7.1. TERMINATION. Anything herein or elsewhere to the contrary
\nnotwithstanding, this Agreement may be terminated and the Merger contemplated
\nherein may be abandoned at any time prior to the Effective Time, whether before
\nor after stockholder approval thereof:<\/p>\n
(a) By the mutual consent duly authorized by the Boards of Directors of
\nthe Parent and the Company.<\/p>\n
(b) By either of the Company or Parent:<\/p>\n
(i) if any U.S. Governmental Entity or any other Governmental
\n Entity acting pursuant to Foreign Antitrust Laws shall have issued an
\n order, decree or ruling or taken any other action in each case
\n permanently restraining, enjoining or otherwise prohibiting the
\n Transactions and such order, decree, ruling or other action shall have
\n become final and non-appealable; PROVIDED, that a party may not terminate
\n the Agreement pursuant to this Section 7.1(b)(i) if its failure to
\n perform its obligations under this Agreement resulted in or contributed
\n to the issuance of such order, decree or ruling;<\/p>\n
(ii) if the Offer shall have expired, terminated or been withdrawn
\n pursuant to its terms without any Shares being purchased therein,
\n PROVIDED, that the right to terminate this Agreement under this Section
\n 7.1(b)(ii) shall not be available to any party whose failure to fulfill
\n any obligation under this Agreement has been the cause of, or resulted
\n in, the failure of the Purchaser to purchase Shares in the Offer; or<\/p>\n
(iii) if the Offer shall not have been consummated on or before
\n the 180th calendar day after the date hereof (the “OUTSIDE DATE”);
\n PROVIDED, that a party may not terminate the Agreement pursuant to this
\n Section 7.1(b)(iii) if its failure to perform any of its obligations
\n under this Agreement results in the failure of the Offer to be so
\n consummated by such time;<\/p>\n
-42-<\/p>\n
(c) By the Company:<\/p>\n
(i) if Parent, the Purchaser or any of their affiliates shall have
\n failed to commence the Offer on or prior to the tenth Business Day
\n following the date of the initial public announcement of the Offer;
\n PROVIDED, that the Company may not terminate this Agreement pursuant to
\n this Section 7.1(c)(i) if the Company is in material breach of this
\n Agreement;<\/p>\n
(ii) if concurrently it enters into a definitive agreement
\n providing for a Superior Proposal entered into in accordance with Section
\n 5.2; PROVIDED, that prior thereto or simultaneously therewith the Company
\n has paid or cause to be paid the Termination Fee to Parent in accordance
\n with Section 7.3 and such termination of this Agreement by the Company
\n shall not take effect unless and until it shall have paid Parent the
\n Termination Fee; PROVIDED, FURTHER, that the Company has given Parent at
\n least four Business Days following Parent’s receipt of written notice
\n advising Parent that the Board of Directors of the Company is prepared to
\n terminate this Agreement pursuant to this Section 7.1(c)(ii); PROVIDED,
\n FURTHER, that the Company will in good faith discuss with Parent any
\n proposals that Parent makes in response to receiving the written notice
\n required above; or<\/p>\n
(iii) if the representations and warranties of Parent or Purchaser
\n set forth in this Agreement shall not be true and correct (except where
\n the failure to be true and correct would not reasonably be expected to
\n have a Parent Material Adverse Effect) or, if qualified by Parent
\n Material Adverse Effect, such representations and warranties shall not be
\n true and correct as so qualified, as of the date of this Agreement and as
\n of the Expiration Date as if made on such date, or either Parent or
\n Purchaser shall have breached or failed in any material respect to
\n perform or comply with any material obligation, agreement or covenant
\n required by this Agreement to be performed or complied with by it, which
\n inaccuracy or breach cannot be cured or has not been cured within one
\n Business Day prior to the Expiration Date, except, in the case of the
\n failure of any representation or warranty, (x) for changes specifically
\n permitted by this Agreement, and (y) those representations and warranties
\n that address matters only as of a particular date which are true and
\n correct as of such date.<\/p>\n
(d) By Parent:<\/p>\n
(i) if, due to an occurrence that if occurring after the
\n commencement of the Offer would make it impossible to satisfy any of the
\n conditions set forth in Annex A hereto, Parent, Purchaser, or any of
\n their respective affiliates shall have failed to commence the Offer on or
\n prior to five Business Days following the date of the initial public
\n announcement of the Offer; PROVIDED, that Parent may not terminate this
\n Agreement pursuant to this Section 7.1(d)(i) if Parent or Purchaser is in
\n material breach of this Agreement;<\/p>\n
(ii) if the Board of Directors of the Company or any committee
\n thereof shall have withdrawn or modified, in a manner adverse to Parent,
\n its approval or<\/p>\n
-43-<\/p>\n
recommendation of any of the Transactions; provided, however, that Parent
\n may only exercise this termination right prior to the Acceptance Date;<\/p>\n
(iii) if the Company shall have entered into any agreement
\n respecting any Takeover Proposal other than a confidentiality agreement
\n permitted by Section 5.2(a) hereof or the Board of Directors of the
\n Company shall have recommended to the stockholders of the Company a
\n Takeover Proposal or shall not have rejected any proposal respecting a
\n Takeover Proposal within 10 Business Days of the making thereof;
\n provided, however, that Parent may only exercise this termination right
\n prior to the Acceptance Date; or<\/p>\n
(iv) the Company shall have breached or failed in any material
\n respect to perform or comply with any obligation, agreement or covenant
\n required by the Agreement to be performed or complied with by it, or the
\n representations and warranties of the Company set forth in the Agreement
\n shall not be true and correct on and as of the Acceptance Date as if made
\n on such date (except to the extent expressly made as of an earlier date,
\n in which case as of such earlier date), except where failure to be true
\n and correct (without giving effect to any limitation as to “materiality”
\n or “Material Adverse Effect” set forth therein) would not have a Company
\n Material Adverse Effect, which inaccuracy or breach cannot be cured or
\n has not been cured within one Business Day prior to the Acceptance Date,
\n except, in the case of the failure of any representation or warranty, (x)
\n for changes specifically permitted by this Agreement, and (y) those
\n representations and warranties that address matters only as of a
\n particular date which are true and correct as of such date; provided,
\n however that Parent may only exercise this termination right prior to the
\n Acceptance Date. For purposes of this Section 7.1(d)(iv), (A) a Company
\n Material Adverse Effect shall be deemed to have occurred if but only if
\n the applicable event, change, effect, or occurrence (or aggregation
\n thereof) would be reasonably likely to (x) result in liability to Company
\n (or its subsidiaries) or diminution in the value of the Company
\n (including its subsidiaries) (including but not limited to, as a result
\n of a diminution of the revenues, earnings or net asset value of the
\n Company (including its subsidiaries)) of US $100,000,000 or more in the
\n aggregate, taking into account available insurance proceeds payable to
\n the Company or its subsidiaries, and (B) a Company Material Adverse
\n Effect shall not include any event, change, effect or occurrence (or
\n aggregation thereof) that occurs or would be reasonably likely to occur
\n as a result of any general, national, international or regional economic
\n or financial condition or (y) have a material adverse effect on the
\n parties’ ability to consummate the Transactions.<\/p>\n
Section 7.2. EFFECT OF TERMINATION. In the event of the termination of
\nthis Agreement as provided in Section 7.1, written notice thereof shall
\nforthwith be given to the other party or parties specifying the provision hereof
\npursuant to which such termination is made, and this Agreement (other than
\nSections 7.2, 7.3 and Article IX hereof) shall forthwith become null and void,
\nand there shall be no liability on the part of the Parent or the Company, except
\n(i) as provided in Section 7.3, and (ii) nothing shall relieve any party from
\nliability for fraud or any willful breach of a covenant contained in this
\nAgreement.<\/p>\n
Section 7.3. TERMINATION FEE; EXPENSES.<\/p>\n
-44-<\/p>\n
(a) Except as provided in this Section 7.3, all fees and expenses
\nincurred by the parties hereto shall be borne solely and entirely by the party
\nwhich has incurred such fees and expenses. In the event that (A) (i) a Takeover
\nProposal shall have been made known to the Company or shall have been made
\ndirectly to its stockholders generally or any person shall have publicly
\nannounced an intention (whether or not conditional) to make a Takeover Proposal
\nand thereafter, (ii) the Board of Directors of the Company or any committee
\nthereof shall have withdrawn or modified, in a manner adverse to Parent, its
\napproval or recommendation of the Transactions, (iii) this Agreement is
\nterminated by Parent pursuant to Section 7.1(d)(ii), (iii) and (iv) the Company
\nconsummates a transaction contemplated by a Takeover Proposal within nine months
\nof the date this Agreement is terminated, or (B) this Agreement is terminated by
\nthe Company pursuant to Section 7.1(c)(ii), then in either event, the Company
\nshall pay to Parent a termination fee equal to $30 million in cash. In the event
\nthat Parent terminates this Agreement pursuant to Section 7.1(d)(ii) or (d)(iii)
\nother than in the circumstances as set forth in the preceding sentence, then the
\nCompany shall pay to Parent all of the Expenses (as defined herein) of Parent.
\nProvided that the Company has not committed an act with the intent and effect of
\nbreaching Section 5.2(a)(ii), the fee and expense arrangements contemplated
\nhereby are the sole remedies hereunder (other than equitable or injunctive
\nrelief under Section 9.12) and shall be paid pursuant to this Section 7.3
\nregardless of any alleged breach, other than a willful or intentional breach, by
\nParent of its obligations hereunder, provided that no payment made by the
\nCompany pursuant to this Section 7.3 shall operate or be construed as a waiver
\nby the Company of any breach of this Agreement by Parent or Purchaser or of any
\nrights of the Company in respect thereof.<\/p>\n
(b) Any payment required to be made pursuant to paragraph (a) of this
\nSection 7.3 shall be made to the Parent not later than two Business Days after
\ndelivery to the Company of notice of demand for payment and, in circumstances in
\nwhich Expenses are payable, an itemization setting forth in reasonable detail
\nall Expenses of the Parent or Purchaser (which itemization may be supplemented
\nand updated from time to time by such party until the 60th day after such party
\ndelivers such notice of demand for payment), and shall be made by wire transfer
\nof immediately available funds to an account designated by the Parent in the
\nnotice of demand for payment delivered pursuant to this Section 7.3(b).<\/p>\n
ARTICLE VIII<\/p>\n
DEFINITIONS<\/p>\n
Section 8.1. DEFINITIONS. When used in this Agreement, the following
\nterms shall have the respective meanings specified therefor below (such meanings
\nto be equally applicable to both the singular and plural forms of the terms
\ndefined):<\/p>\n
“ACCEPTANCE DATE” shall mean the first date on which Purchaser accepts
\nfor payment all shares of Company Common Stock validly tendered and not
\nwithdrawn pursuant to the Offer.<\/p>\n
“AFFILIATE” shall mean, with respect to any specified Person, any Person
\nwho directly or indirectly controls, is controlled by, or is under common
\ncontrol with, such specified Person; provided that, for the purposes of this
\ndefinition, “control” (including with correlative meanings,<\/p>\n
-45-<\/p>\n
the terms “controlled by” and “under common control with”), as used with respect
\nto any Person, shall mean the possession, directly or indirectly, of the power
\nto direct or cause the direction of the management and policies of such Person,
\nwhether through the ownership of voting securities or partnership interests, by
\ncontract or otherwise.<\/p>\n
“AVERAGE SHARE PRICE” shall mean the average (rounded to the nearest
\n1\/10,000) of the volume weighted sales prices per share of Parent Common Stock
\non the New York Stock Exchange Inc., as reported by Bloomberg Financial Markets
\n(or if not reported thereby any other authoritative source as the parties shall
\nagree in writing), for the 5 consecutive Trading Days ending on the second
\nTrading Day immediately preceding the Acceptance Date.<\/p>\n
“BUSINESS DAY” shall mean a day other than a Saturday, a Sunday or a day
\non which banks in New York, New York or the SEC are permitted or required to
\nclose.<\/p>\n
“COMPANY RIGHTS” shall mean the right associated with each share of
\nCompany Common Stock pursuant to the Rights Plan.<\/p>\n
“ENVIRONMENTAL LAWS” shall mean any and all applicable municipal, state,
\nforeign or federal law, statute, treaty, directive, decision, judgment, award,
\nregulation, decree, rule, order, direction, consent of relevant jurisdiction(s)
\nconcerning environmental, health and safety matters (including, but not limited
\nto, liabilities or obligations for the clean-up of Hazardous Materials) in
\nbuildings, equipment, soil, sub-surface strata, air, surface water, or ground
\nwater, including by way of illustration and not by way of limitation, the Clean
\nAir Act, the Federal Water Pollution Control Act of 1972, the Safe Drinking
\nWater Act, the Resource Conservation and Recovery Act of 1976 (“RCRA”), the
\nComprehensive Environmental Response, Compensation and Liability Act of 1980 as
\namended by the Superfund Amendments and Reauthorization Act of 1986 (“CERCLA”),
\nthe Toxic Substances Control Act, the Federal Insecticide, Fungicide and
\nRodenticide Act, and any state or foreign equivalents of the foregoing
\n(including any amendments or extensions thereof and any rules, or regulations
\nissued pursuant to any of said Environmental Laws).<\/p>\n
“EXCHANGE RATIO” shall be equal to 19.43 divided by the Average Share
\nPrice.<\/p>\n
“EXPENSES” shall mean all out-of-pocket expenses (including, without
\nlimitation, all fees and expenses of counsel, accountants and investment bankers
\nto a party hereto and its Affiliates) incurred by a party or on its behalf in
\nconnection with or related to the authorization, preparation, negotiation,
\nexecution and performance of this Agreement, the preparation, printing, filing
\nand mailing of the Offer Documents, the Merger Registration Statement and the
\nProxy Statement\/Prospectus, the solicitation of stockholder approvals, the
\nfiling of any required notices under the HSR Act or other similar regulations
\nand all other matters related to the Offer, the Merger and the other
\ntransactions contemplated by this Agreement.<\/p>\n
“GAAP” shall mean generally accepted accounting principles of the United
\nStates of America, as in effect from time to time.<\/p>\n
“HAZARDOUS MATERIALS” means any and all hazardous, toxic or polluting
\nsubstances, radioactive substances, hazardous wastes, special solid wastes,
\ncontrolled solid wastes, oils, petroleum and petroleum products, hazardous
\nchemicals which are or may be at any time prior to<\/p>\n
-46-<\/p>\n
the Effective Time be regulated or controlled under Environmental Laws in the
\napplicable jurisdictions in which the Company or any of its subsidiaries owns or
\nhas owned real property or in which the business of the Company or any of its
\nsubsidiaries has been operated or is being operated.<\/p>\n
“HEALTH AND SAFETY REQUIREMENTS” shall mean all applicable federal,
\nstate, local and foreign statutes, regulations, ordinances and other provisions
\nhaving the force or effect of law and all applicable judicial and administrative
\norders concerning public health and safety, or worker health and safety, each as
\namended as now in effect.<\/p>\n
“KNOW” or “KNOWLEDGE” shall mean in the case of Parent, the actual
\nknowledge of Parent’s senior executive officers after reasonable inquiry, and in
\nthe case of the Company, the actual knowledge of the Company’s officers set
\nforth on Section 8.1 of the Company’s Disclosure Schedule after reasonable
\ninquiry.<\/p>\n
“PERSON” shall mean and include an individual, a partnership, a joint
\nventure, a corporation, a trust, an association, an unincorporated organization,
\na limited liability company, a limited partnership, a group, a syndicate, a
\nperson (including, without limitation, a “person” as defined in Section 13(d)(3)
\nof the Exchange Act), and a government or other department or subdivision or
\ninstrumentality or agency thereof.<\/p>\n
“RELEASE” shall mean any release, spill, emission, leaking, pumping,
\ninjection, deposit, disposal, dispersal, leaching or discharge, and any
\nmigration as a result of any of the foregoing, into the indoor or outdoor
\nenvironment or into or out of any property now or previously owned by the
\nCompany or any of its subsidiaries.<\/p>\n
“TRADING DAY” shall mean any day on which securities are traded on the
\nNew York Stock Exchange, Inc.<\/p>\n
Section 8.2. OTHER DEFINED TERMS. The following terms used herein are
\ndefined in the Section of this Agreement specified below:<\/p>\n
\n\nTERM SECTION
\n—- ——-
\n
\nAgreement……………………………………………………………………………………..Preamble
\nBylaws……………………………………………………………………………………..Section 3.2
\nCertificate of Incorporation………………………………………………………………….Section 3.2
\nCertificate of Merger………………………………………………………………………..Section 1.5
\nCertificates……………………………………………………………………………..Section 2.2(b)
\nClosing…………………………………………………………………………………….Section 1.6
\nClosing Date………………………………………………………………………………..Section 1.6
\nCOBRA…………………………………………………………………………………..Section 3.11(g)
\nCode…………………………………………………………………………………….Section 1.1(d)
\nCommittee…………………………………………………………………………………..Section 1.3
\nCompany……………………………………………………………………………………….Preamble
\nCompany Charter Documents…………………………………………………………………….Section 3.2
\nCompany Common Stock…………………………………………………………………………….Recital<\/p>\n -47-<\/p>\n
Company Disclosure Schedule………………………………………………………………..Section 3.1(b)
\nCompany Material Adverse Effect…………………………………………………………….Section 3.1(a)
\nCompany Option Plans………………………………………………………………………Section 2.4(a)
\nCompany Permits……………………………………………………………………………..Section 3.9
\nCompany Rights………………………………………………………………………….. Section 1.1(a)
\nCompany Stock Option………………………………………………………………………Section 2.4(a)
\nConverted Option………………………………………………………………………….Section 2.4(a)
\nDelaware Courts……………………………………………………………………………..Section 9.9
\nDGCL…………………………………………………………………………………….Section 1.2(a)
\nDissenting Common Stock………………………………………………………………………Section 2.3
\nEffective Time………………………………………………………………………………Section 1.5
\nEmployee Benefit Plans……………………………………………………………………Section 3.11(a)
\nEnvironmental Permits…………………………………………………………………Section 3.12(a)(ii)
\nERISA…………………………………………………………………………………..Section 3.11(a)
\nERISA Affiliate………………………………………………………………………….Section 3.11(a)
\nExchange Act……………………………………………………………………………..Section 1.1(a)
\nExchange Agent……………………………………………………………………………Section 2.2(a)
\nExpiration Date…………………………………………………………………………..Section 1.1(b)
\nFairness Opinion……………………………………………………………………………Section 3.18
\nForeign Antitrust Laws…………………………………………………………………….Section 3.5(a)
\nGovernmental Entity……………………………………………………………………….Section 3.5(a)
\nHSR Act………………………………………………………………………………….Section 3.5(a)
\nHSR Filing……………………………………………………………………………….Section 5.8(b)
\nIndemnified Liabilities…………………………………………………………………..Section 5.10(a)
\nIndemnified Parties………………………………………………………………………Section 5.10(a)
\nIndependent Directors………………………………………………………………………..Section 1.3
\nInsurance Policies………………………………………………………………………….Section 3.22
\nIntellectual Property…………………………………………………………………….Section 3.15(a)
\nLaws……………………………………………………………………………………….Section 3.9
\nLiens……………………………………………………………………………………Section 3.3(b)
\nMaterial Adverse Effect……………………………………………………………………Section 3.1(a)
\nMaterial Contract………………………………………………………………………..Section 3.20(a)
\nMerger……………………………………………………………………………..Section 1.4. Recital
\nMerger Consideration………………………………………………………………………Section 2.1(c)
\nMerger Registration Statement…………………………………………………………..Section 1.8(a)(ii)
\nMinimum Condition……………………………………………………………………………….Annex A
\nOffer…………………………………………………………………………………..Section 1.1(a)
\nOffer Documents…………………………………………………………………………..Section 1.1(c)
\nOffer Price…………………………………………………………………………………….Recital
\nOffer to Purchase…………………………………………………………………………Section 1.1(b)
\nOutside Date…………………………………………………………………………Section 7.1(b)(iii)
\nParent………………………………………………………………………………………..Preamble
\nParent Common Stock……………………………………………………………………………..Recital
\nParent Material Adverse Effect………………………………………………………………..Section 4.1
\nParent SEC Documents…………………………………………………………………………Section 4.5
\nParent SEC Financial Statements……………………………………………………………….Section 4.5<\/p>\n
-48-<\/p>\n
Pension Plans……………………………………………………………………………Section 3.11(a)
\nProxy Statement\/Prospectus…………………………………………………………….Section 1.8(a)(iii)
\nPurchaser……………………………………………………………………………………..Preamble
\nPurchaser By-laws……………………………………………………………………………Section 1.4
\nPurchaser Certificate of Incorporation…………………………………………………………Section 1.4
\nPurchaser Common Stock……………………………………………………………………….Section 2.1
\nRegistration Statement…………………………………………………………………….Section 1.1(c)
\nRights Plan………………………………………………………………………………Section 2.1(a)
\nSchedule 14D-9……………………………………………………………………………Section 1.2(b)
\nSEC……………………………………………………………………………………..Section 1.1(b)
\nSEC Documents……………………………………………………………………………….Section 3.6
\nSEC Financial Statements……………………………………………………………………..Section 3.6
\nSecretary of State…………………………………………………………………………..Section 1.5
\nSecurities Act……………………………………………………………………………Section 1.1(c)
\nShares………………………………………………………………………………………..Recitals
\nSpecial Meeting………………………………………………………………………..Section 1.8(a)(i)
\nStockholder…………………………………………………………………………………….Recital
\nsubsidiary……………………………………………………………………………….Section 3.1(b)
\nSubsidiary Documents…………………………………………………………………………Section 3.2
\nSurviving Corporation………………………………………………………………………..Section 1.4
\nTakeover Statute……………………………………………………………………………Section 3.17
\nTransactions……………………………………………………………………………..Section 1.2(a)
\nUBS……………………………………………………………………………………….Section 3.18
\nVoting Agreement………………………………………………………………………………..Recital
\n<\/c><\/s><\/caption>\n<\/table>\n
ARTICLE IX<\/p>\n
MISCELLANEOUS<\/p>\n
Section 9.1. AMENDMENT AND MODIFICATION. Subject to applicable law, this
\nAgreement may be amended, modified and supplemented in any and all respects,
\nwhether before or after any vote of the stockholders of the Company contemplated
\nhereby, by written agreement of the parties hereto at any time prior to the
\nClosing Date with respect to any of the terms contained herein; PROVIDED,
\nHOWEVER, that no amendment, modification or supplement of this Agreement shall
\nbe made which adversely effects such holders after the Acceptance Date or
\nrequires by law or the Company Charter Documents the further approval of the
\nstockholders, unless approved by the Independent Directors.<\/p>\n
Section 9.2. EXTENSION; WAIVER. At any time prior to the Effective Time,
\nsubject to Section 1.3, the parties may (a) extend the time for the performance
\nof any of the obligations or other acts of the other parties, (b) waive any
\ninaccuracies in the representations and warranties contained in this Agreement
\nor in any document delivered pursuant to this Agreement or (c) subject to the
\nproviso of Section 8.1, waive compliance with any of the agreements or
\nconditions contained in this Agreement. Any agreement on the part of a party to
\nany such extension or waiver shall be valid only if set forth in an instrument
\nin writing signed on behalf of such party.<\/p>\n
-49-<\/p>\n
The failure of any party to this Agreement to assert any of its rights under
\nthis Agreement or otherwise shall not constitute a waiver of such rights.<\/p>\n
Section 9.3. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
\nprovided otherwise in the Section 9.3, the representations, warranties and
\nagreements of each party hereto shall remain operative and in full force and
\neffect regardless of any investigation made by or on behalf of any other party
\nhereto, any person controlling any such party or any of their officers or
\ndirectors, whether prior to or after the execution of this Agreement. None of
\nthe representations and warranties in this Agreement or in any schedule,
\ninstrument or other document delivered pursuant to this Agreement shall survive
\nthe Effective Time.<\/p>\n
Section 9.4. NOTICES. All notices and other communications hereunder
\nshall be in writing and shall be deemed given if delivered personally, facsimile
\n(which is confirmed) or sent by an overnight courier service, such as Federal
\nExpress, to the parties at the following addresses (or at such other address for
\na party as shall be specified by like notice):<\/p>\n
(a) if to Parent or the Purchaser, to:<\/p>\n
GE Industrial Systems
\n 41 Woodford Avenue
\n Plainville, CT 06062
\n Attention: James R. Billingsley, Jr.
\n Senior Counsel
\n Telecopier No.: (860) 747-7079<\/p>\n
with a copy to:<\/p>\n
Gibson, Dunn & Crutcher LLP
\n 200 Park Avenue
\n New York, New York 10166-0193
\n Attention: Steven R. Shoemate
\n Telephone No.: (212) 351-3879
\n Telecopier No.: (212) 351-4035<\/p>\n
(b) if to the Company, to:<\/p>\n
Interlogix, Inc.
\n 114 West 7th Street
\n Suite 1300
\n Austin, Texas 78701
\n Attention: Michael S. Lafair,
\n General Counsel
\n Telephone No.: (512) 381-2760
\n Telecopier No.: (512) 381-1773<\/p>\n
with a copy to:<\/p>\n
-50-<\/p>\n
Dechert
\n 4000 Bell Atlantic Tower
\n 1717 Arch Street
\n Philadelphia, Pennsylvania 19103
\n Attention: Craig L. Godshall, Esq.
\n Telephone No.: (215) 994-4000
\n Telecopier No.: (215) 994-2222<\/p>\n
Section 9.5. COUNTERPARTS. This Agreement may be executed in two or more
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when two or more counterparts have been signed by each of
\nthe parties and delivered to the other parties, it being understood that all
\nparties need not sign the same counterpart. Delivery of an executed counterpart
\nby facsimile transmission shall be as effective as delivery of a
\nmanually-executed counterpart hereof.<\/p>\n
Section 9.6. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement
\n(including the documents and the instruments referred to herein): (a)
\nconstitutes the entire agreement and supersedes all prior agreements and
\nunderstandings, both written and oral, among the parties with respect to the
\nsubject matter hereof, and (b) except as provided in Section 5.10 is not
\nintended to confer upon any person other than the parties hereto any rights or
\nremedies hereunder. The parties acknowledge that all parties participated in the
\ndrafting of this Agreement and agree that any rule of law or any legal decision
\nthat may or would require interpretation of any alleged ambiguities in this
\nAgreement against the party that drafted it has no application and is expressly
\nwaived.<\/p>\n
Section 9.7. SEVERABILITY. If any term, provision, covenant or
\nrestriction of this Agreement is held by a court of competent jurisdiction or
\nother authority to be invalid, void, unenforceable or against its regulatory
\npolicy, the remainder of the terms, provisions, covenants and restrictions of
\nthis Agreement shall remain in full force and effect and shall in no way be
\naffected, impaired or invalidated.<\/p>\n
Section 9.8. WAIVER OF JURY TRIAL. EACH OF PARENT, THE PURCHASER AND THE
\nCOMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
\nPROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
\nARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS OR THE ACTIONS
\nOF PARENT, THE PURCHASER OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION,
\nPERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.<\/p>\n
Section 9.9. GOVERNING LAW. This Agreement shall be governed and
\nconstrued in accordance with the laws of the State of Delaware without giving
\neffect to the principles of conflicts of law thereof or of any other
\njurisdiction. Notwithstanding anything herein to the contrary, the parties
\nhereto hereby irrevocably and unconditionally consent to submit to the exclusive
\njurisdiction of the courts of the State of Delaware and of the United States of
\nAmerica located in the State of Delaware (the “DELAWARE COURTS”) for any
\nlitigation arising out of or relating to this Agreement or the Transactions (and
\nagrees not to commence counterclaims except in such courts), waives any
\nobjection to the laying of venue of any such litigation in the <\/p>\n
-51-<\/p>\n
Delaware Courts and agrees not to plead or claim in any Delaware Court that such
\nlitigation brought therein has been brought in any inconvenient forum.<\/p>\n
Section 9.10. ASSIGNMENT. Neither this Agreement nor any of the rights,
\ninterests or obligations hereunder shall be assigned by any of the parties
\nhereto (whether by operation of law or otherwise) without the prior written
\nconsent of the other parties, except that the Purchaser may assign, in its sole
\ndiscretion, any or all of its rights, interests and obligations hereunder to
\nParent or to any direct or indirect wholly owned subsidiary of Parent; PROVIDED
\nthat any such assignment would not cause any delay in the consummation of the
\nOffer or the Merger. Subject to the preceding sentence, this Agreement shall be
\nbinding upon, inure to the benefit of and be enforceable by the parties and
\ntheir respective successors and assigns.<\/p>\n
Section 9.11. HEADINGS. The descriptive headings used herein are inserted
\nfor convenience of reference only and are not intended to be part of or to
\naffect the meaning or interpretation of this Agreement. “Include,” “includes,”
\nand “including” shall be deemed to be followed by “without limitation” whether
\nor not they are in fact followed by such words or words of like import.<\/p>\n
Section 9.12. ENFORCEMENT. The parties agree that irreparable damage
\nwould occur in the event that any of the provisions of this Agreement were not
\nperformed in accordance with their specific terms or were otherwise breached. It
\nis accordingly agreed that the parties shall be entitled to an injunction or
\ninjunctions to prevent breaches of this Agreement and to enforce specifically
\nthe terms and provisions of this Agreement in any court of the State of Delaware
\nor of the United States located in the State of Delaware in the event any
\ndispute arises out of this Agreement or any of the transactions contemplated by
\nthis Agreement, and each party will not attempt to deny or defeat personal
\njurisdiction or venue in any such court by motion or other request for leave
\nfrom any such court.<\/p>\n
-52-<\/p>\n
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
\nAgreement to be signed by their respective officers thereunto duly authorized as
\nof the date first written above.<\/p>\n
GENERAL ELECTRIC COMPANY<\/p>\n
By: \/s\/ Lloyd G. Trotter
\n ————————————–
\n Name: Lloyd G. Trotter
\n Title: Senior Vice President,
\n President and CEO GE Industrial
\n Systems<\/p>\n
MARGARET ACQUISITION, INC.<\/p>\n
By: \/s\/ Lloyd G. Trotter
\n ————————————–
\n Name: Lloyd G. Trotter
\n Title: President<\/p>\n
INTERLOGIX, INC.<\/p>\n
By: \/s\/ Kenneth L. Boyda
\n ————————————–
\n Name: Kenneth L. Boyda
\n Title: President and CEO<\/p>\n
-53-<\/p>\n
ANNEX A<\/p>\n
CONDITIONS TO THE OFFER<\/p>\n
Notwithstanding any other provision of the Offer (subject to the
\nprovisions of the Agreement), as a first step in effectuating a merger between
\nPurchaser and Company qualifying as a tax-free reorganization under Section
\n368(a) of the Code, the Purchaser shall not be required to accept for payment
\nor, subject to any applicable rules and regulations of the SEC, including Rule
\n14e-l(c) under the Exchange Act (relating to the Purchaser’s obligation to pay
\nfor or return tendered Shares promptly after termination or withdrawal of the
\nOffer), pay for, and may delay the acceptance for payment of or, subject to the
\nrestriction referred to above, the payment for, any tendered Shares, and may
\nterminate the Offer and not accept for payment any tendered shares if (i) there
\nshall not have been validly tendered and not withdrawn prior to the expiration
\nof the Offer such number of Shares which would constitute at least a majority of
\nthe Shares outstanding on a fully-diluted basis on the date of purchase (on a
\n“fully-diluted basis” meaning the number of Shares outstanding, together with
\nthe Shares which the Company may be required to issue pursuant to options or
\nobligations outstanding at that date and which do not terminate upon
\nconsummation of the Offer under employee stock or similar benefit plans or
\notherwise, whether or not vested or then exercisable), when aggregated with any
\nShares owned by Parent, the Purchaser or an affiliate of Parent or the Purchaser
\n(the “MINIMUM CONDITION”), (ii) any applicable waiting period under the HSR Act,
\nand under all Foreign Antitrust Laws where the expiration or termination of the
\nwaiting period is necessary, has not expired or terminated prior to the
\nexpiration of the Offer, or (iii) at any time on or after the date of the
\nAgreement, and before the time of acceptance of Shares for payment pursuant to
\nthe Offer, any of the following events shall occur and be continuing:<\/p>\n
(a) there shall be any action, proceeding or litigation threatened,
\ninstituted or pending by any Governmental Entity that seeks to and which would
\nreasonably be expected to (i) prevent, prohibit or make illegal Parent’s or the
\nPurchaser’s ownership or operation of all or a material portion of the Company’s
\nand its subsidiaries’ businesses and assets taken as a whole, (ii) prevent,
\nprohibit, or make illegal the acceptance for payment, payment for or purchase of
\nShares by the Purchaser or the consummation of the Transactions, (iii) renders
\nthe Purchaser unable to accept for payment, pay for or purchase some or all of
\nthe Shares, (iv) imposes material limitations on the ability of the Purchaser or
\nParent effectively to exercise full rights of ownership of the Shares,
\nincluding, without limitation, the right to vote the Shares purchased by it on
\nall matters properly presented to the Company’s stockholders, or (v) imposes, as
\na result of the Transactions, damages on Parent that are material to Parent, and
\nPROVIDED, that the failure of any condition to be satisfied is not primarily due
\nto the failure by Parent and\/or Purchaser to comply with the terms of this
\nAgreement.<\/p>\n
(b) there shall have been any statute, rule, regulation, order,
\nlegislation or interpretation enacted, promulgated, amended, entered or issued
\napplicable to (i) Parent, Purchaser, the Company or any of their respective
\nsubsidiaries or an Affiliate of either Parent or the Company or (ii) the
\nTransactions, by any United States or non-United States legislative body or
\nGovernmental Entity with appropriate jurisdiction (other than the routine
\napplication of the waiting period provisions of the HSR Act or similar statutes
\nor regulations of foreign<\/p>\n
A-1<\/p>\n
jurisdictions applicable to the Offer or the Merger) that would be reasonably
\nlikely to result, directly or indirectly, in any of the consequences referred to
\nin paragraph (a) above;<\/p>\n
(c) (i) the Company shall have breached or failed in any material respect
\nto perform or comply with any obligation, agreement or covenant required by the
\nAgreement to be performed or complied with by it or (ii) the representations and
\nwarranties of the Company set forth in the Agreement shall not be true and
\ncorrect on and as of the Acceptance Date as if made on such date (except to the
\nextent expressly made as of an earlier date, in which case as of such earlier
\ndate), except where failure to be true and correct (without giving effect to any
\nlimitation as to “materiality” or “Material Adverse Effect” set forth therein)
\nwould not have a Company Material Adverse Effect. For purposes of paragraph
\n(c)(ii), (A) a Company Material Adverse Effect shall be deemed to have occurred
\nif but only if the applicable event, change, effect, or occurrence (or
\naggregation thereof) would be reasonably likely to (x) result in liability to
\nCompany (or its subsidiaries) or diminution in the value of the Company
\n(including its subsidiaries) (including but not limited to, as a result of a
\ndiminution of the revenues, earnings or net asset value of the Company
\n(including its subsidiaries)) of US $100,000,000 or more in the aggregate,
\ntaking into account available insurance proceeds payable to the Company or its
\nsubsidiaries, and (B) a Company Material Adverse Effect shall not include any
\nevent, change, effect or occurrence (or aggregation thereof) that occurs or
\nwould be reasonably likely to occur as a result of any general, national,
\ninternational or regional economic or financial condition or (y) have a material
\nadverse effect on the parties’ ability to consummate the Transactions;<\/p>\n
(d) (i) any general suspension of trading in securities on any national
\nsecurities exchange or in the over-the-counter market or (ii) the declaration of
\na banking moratorium or any suspension of payments in respect of banks by a
\nUnited States Governmental Entity;<\/p>\n
(e) the Agreement shall have been terminated in accordance with its
\nterms;<\/p>\n
(f) the Registration Statement shall have not become effective under the
\nSecurities Act or shall be the subject of any stop order or proceedings seeking
\na stop order; or<\/p>\n
(g) the shares of Parent Common Stock to be issued in the Offer shall not
\nhave been approved for listing on the New York Stock Exchange, Inc., subject to
\nofficial notice of issuance.<\/p>\n
The foregoing conditions are for the sole benefit of the Purchaser and
\nParent and may be asserted by either of them regardless or the circumstances
\ngiving rise to such conditions or may be waived by Parent or the Purchaser, in
\nwhole or in part at any time and from time to time in the sole discretion of
\nParent or the Purchaser. The failure by Parent or the Purchaser at any time to
\nexercise any of the foregoing rights will not be deemed a waiver of any right,
\nthe waiver of such right with respect to any particular facts or circumstances
\nshall not be deemed a waiver with respect to any other facts or circumstances,
\nand each right will be deemed an ongoing right which may be asserted at any time
\nand from time to time.<\/p>\n
Should the Offer be terminated pursuant to the foregoing provisions, all
\ntendered Shares not theretofore accepted for payment shall forthwith be returned
\nto the tendering stockholders.<\/p>\n
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