Exhibit 10-b
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of December 10, 2000, between
Robert Bosch GmbH, a limited liability company organized under the laws of
Germany ("Bosch"), and Detection Systems, Inc., a New York corporation
("Detection").
WHEREAS, Bosch and Detection are simultaneously with the
execution and delivery of this Agreement entering into a Merger Agreement
(the "Merger Agreement") pursuant to which (i) Bosch has agreed to make a
cash tender offer for all of the outstanding shares of the common stock of
Detection and (ii) Detection will merge with a wholly-owned subsidiary of
Bosch, with Detection to be the surviving corporation (capitalized terms
used but not defined herein shall have the meanings ascribed to them in the
Merger Agreement); and
WHEREAS, in order to induce Bosch to enter into the Merger
Agreement and to make the tender offer referred to therein and in
consideration of its doing so, Detection has agreed to grant the Stock
Option (as hereinafter defined) on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
1. Grant of Stock Option. Detection hereby irrevocably grants to
Bosch an irrevocable option (the "Stock Option") to purchase for $18 per
share in cash up to 1,138,596 shares of its common stock, par value $.05
per share (the "Shares"), provided, that the Stock Option shall terminate,
without any action by Bosch or Detection, in the event that (a) Purchaser
fails to commence the Offer within 10 business days after the date hereof,
except by reason of the conditions set forth in paragraph (e) of Annex A to
the Merger Agreement, (b) Purchaser fails to purchase Shares pursuant to
the Offer, by reason of the conditions set forth in paragraphs (a), (b),
(c), (d) or (g) of Annex A to the Merger Agreement, (c) Bosch terminates
the Merger Agreement pursuant to Sections 7.1(a), (b), (c) or (e)(ii),
(iii) or (iv) of the Merger Agreement, (d) Detection terminates the Merger
Agreement pursuant to Section 7.1(a), (b), (c) or (d)(iv) of the Merger
Agreement or (e) Detection terminates the Merger Agreement pursuant to
Section 7.1(d)(ii) or (iii) of the Merger Agreement, but only if the
failure of Purchaser to commence the Offer or purchase Shares is not due to
the failure of the condition set forth in paragraph (e) of Annex A to the
Merger Agreement.
2. Exercise of Stock Option. On the terms and subject to the
conditions of this Agreement, the Stock Option may be exercised by Bosch,
in whole or in part, at any time, or from time to time, on or after January
2, 2001, by notice given prior to the date the Option is terminated in
accordance with Section 1 above, provided that Bosch is not in material
breach of its obligations under the Merger Agreement. If Bosch wishes to
exercise the Stock Option, it shall notify Detection of such exercise,
specifying the number of Shares to be purchased and the place and date for
the closing of the purchase; provided that such date shall be not earlier
than one business day nor later than ten business days from the date such
notice is given, and provided, further, that if such purchase cannot be
consummated during such ten-day period due to any United States law or
regulation, the date for the closing of such purchase shall be within five
days following the cessation of such restriction on consummation.
3. Payment and Delivery of Shares. At any closing hereunder, (a)
Bosch shall pay the aggregate purchase price for the Shares to be purchased
in immediately avai1able funds by wire transfer to a bank account
designated by Detection at least two days (or such shorter time period as
shall be set forth in Bosch's notice of exercise) prior to the closing and
(b) Detection shall deliver to Bosch a certificate or certificates
representing the Shares so purchased registered in the name of Bosch or any
wholly owned subsidiary of Bosch designated by it.
4. Representations and Warranties of Detection. Detection represents
and warrants to Bosch that: (a) this Agreement has been duly authorized by
all necessary corporate action on the part of Detection and has been duly
executed by a duly authorized officer of Detection; (b) Detection will take
all necessary corporate action to authorize and reserve for issuance, the
Shares to be issued upon exercise of the Stock Option and such Shares, when
issued and delivered by Detection to Bosch upon exercise of the Stock
Option and payment therefor in accordance with the terms of this Agreement,
will be duly authorized, validly issued, fully paid and nonassessable
Shares with no personal liability attached to the ownership thereof and
will be free and clear of all claims, liens, encumbrances, security
interests and charges of any nature whatsoever and shall not be subject to
any preemptive rights; (c) except as otherwise required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), the
execution, delivery and performance of this Agreement by Detection and the
consummation by it of the transactions contemplated hereby do not require
the consent, waiver, approval, license or authorization of or any filing
with any person or public authority and will not violate, result in a
breach of or the acceleration of any obligation under, or constitute a
default under, any provision of any certificate of incorporation or by-law,
indenture, mortgage, lien, lease, agreement, contract, instrument, order,
judgment, ordinance, regulation or decree, or any restriction to which any
property of Detection or any of its subsidiaries is bound, which would have
a material adverse effect upon the financial condition, business or
operations of Detection and its subsidiaries taken as a whole; and (d)
Detection is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York and has the requisite
corporate power to enter into and perform this Agreement.
5. Representations and Warranties of Bosch. Bosch represents and
warrants to Detection that: (a) this Agreement has been duly authorized by
all necessary corporate action on the part of Bosch and has been duly
executed by a duly authorized officer of Bosch; and (b) Bosch is acquiring
the Option and the Shares issuable upon the exercise thereof for its own
account and not with a view to the distribution thereof. Bosch understands
that the Stock Option and the Shares issuable upon exercise thereof have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and agrees that it will not sell or otherwise dispose of
the Option or any such Shares except in compliance with the Securities Act
and any applicable state securities laws.
6. Remedies. The parties agree that Bosch would be irreparably
damaged if for any reason Detection failed to issue any of the Shares upon
exercise of the Stock Option or to perform any of its other obligations
under this Agreement, and that it would not have an adequate remedy at law
for money damages in such event. Accordingly, Bosch shall be entitled to
specific performance and injunctive and other equitable relief to enforce
the performance hereof by Detection. This provision is without prejudice to
any other rights that Bosch may have against Detection for any failure to
perform its obligations under this Agreement.
7. H-S-R Filing and Listing of Shares. Promptly after the date
hereof, and from time to time thereafter if necessary, Bosch and Detection
shall each file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice all required pre-merger
notification and report forms and other documents and exhibits required to
be filed under the HSR Act, to permit the purchase of the Shares subject to
the Stock Option.
8. Miscellaneous.
(a) Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto.
(b) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly received if so given) by delivery or by
telegram or telefax (with copies by registered or certified mail, postage
prepaid, return receipt requested), to the respective parties as follows:
if to Bosch, to:
Robert Bosch GmbH
Robert Bosch Platz 1
70049 Stuttgart
Germany
Attention: Dr. Heiko Carrie
Telephone No.: 0049 711 811 6864
Telecopy No.: 0049 711 811 6760
with a copy to:
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036
Attention: Brian McGunigle
Telephone No.: (212) 626-4524
Telecopy No.: (212) 626-4120
and
if to Detection, to:
Detection Systems, Inc.
130 Perinton Parkway
Fairport, New York 14450
Attention: Karl H. Kostusiak,
Chairman and Chief Executive Officer
Telephone No.: (716) 421-4202
Telecopy No.: (716) 421-4287
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10022
Attention: Stephen M. Banker
Telephone No.: (212) 735-7760
Telecopy No.: (212) 777-2760
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall only be effective upon receipt.
(c) Severability. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement
remain in full force and effect and shall in no way be impaired or
invalidated.
(d) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(f) Headings. The section headings herein are for convenience only and
shall not affect the construction hereof.
(g) Assignment. This Agreement shall be binding upon each party
hereto and such party's successors and assigns. This Agreement shall not be
assignable by either party, except that Bosch may assign this agreement to
Purchaser, provided Bosch remains liable for the Purchaser's performance
hereof.
(h) Survival. All representations, warranties and covenants contained
herein shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
IN WITNESS WHEREOF, Detection and Bosch have caused this
Agreement to be duly executed as of the day and year first above written.
DETECTION SYSTEMS, INC.
By: /s/ Karl H. Kostusiak
-----------------------------
Name: Karl H. Kostusiak
Title: Chairman and Chief
Executive Officer
ROBERT BOSCH GmbH
By: /s/ Georg Hanen
-----------------------------
Name: Dr. Georg Hanen
Title: Senior Vice President
By: /s/ Heiko Carrie
-----------------------------
Name: Dr. Heiko Carrie
Title: Director
