SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
ADT Limited
(Name of Issuer)
Common Shares, Par Value $.10 Per Share
(Title of Class and Securities)
000915306
(CUSIP Number of Class of Securities)
Richard L. Handley
Senior Vice President and General Counsel
Republic Industries, Inc.
200 East Las Olas Boulevard, Suite 1400
Fort Lauderdale, FL 33301
Telephone: (954) 627-6000
_____________________________________________________________
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
Stephen F. Arcano
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000
July 1, 1996
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the
subject of this Statement because of Rule 13d-1(b)(3) or
(4), check the following: ( )
Check the following box if a fee is being paid with this
Statement: (X)
SCHEDULE 13D
CUSIP No. 000915306 Page 2 of 13 Pages
_________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Republic Industries, Inc.
_________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (x)
_________________________________________________________________
(3) SEC USE ONLY
_________________________________________________________________
(4) SOURCE OF FUNDS
OO
_________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
__________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_________________________________________________________________
(7) SOLE VOTING POWER
NUMBER OF 15,000,000*
SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH ___________________________________
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON 15,000,000*
WITH ___________________________________
(10) SHARED DISPOSITIVE POWER
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,000,000*
_________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES (x)
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
10.1%
_________________________________________________________________
(14) TYPE OF REPORTING PERSON
CO
_________________________________________________________________
_________________
* Beneficial ownership of 15,000,000 shares of ADT Limited's Common Shares
reported hereunder is being reported solely as a result of the Common
Share Purchase Warrant described in Item 4 hereof. However, Republic
Industries, Inc. expressly disclaims any beneficial ownership of the
15,000,000 shares of ADT Limited Common Shares which are obtainable upon
exercise of the Warrant, because the Warrant is exercisable only in the
circumstances set forth in Item 4, none of which has occurred as of the
date hereof.
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common shares, par value
$.10 per share (the "Common Shares"), of ADT Limited, a
corporation organized under the laws of Bermuda ("ADT"). The
principal executive offices of ADT are located at Cedar House, 41
Cedar Avenue, Hamilton HM12, Bermuda.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed by Republic Industries, Inc., a
Delaware Corporation ("Republic"). Republic is a diversified
services company, which, through its subsidiaries, provides
integrated solid waste disposal, collection and recycling
services and electronic security services. The principal
executive offices of Republic are located at 200 East Las Olas
Boulevard, Suite 1400, Fort Lauderdale, Florida, 33301.
Schedule I attached hereto sets forth certain
additional information with respect to each director and
executive officer of Republic.
To Republic's knowledge, during the last five years
neither Republic nor any of its directors or executive officers
has been (i) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or
is subject to a judgement, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violations with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
No amounts were paid by Republic to ADT in connection
with the issuance of the Warrant. As more fully described in
Item 4 below, pursuant to the terms of the Warrant (as defined
below), Republic will have the right, for a six-month period
commencing upon the termination of the Amalgamation Agreement (as
defined below), to purchase from ADT 15,000,000 Common Shares at
an exercise price of $20 per share, subject to adjustment, on the
terms and subject to the conditions of the Warrant. Should
Republic purchase such Common Shares pursuant to the Warrant,
Republic may determine to finance such purchase from cash on
hand, from cash generated by subsidiaries, by borrowings or from
other sources.
ITEM 4. PURPOSE OF THE TRANSACTION
Republic, R.I./TRIANGLE, LTD., a wholly owned
subsidiary of Republic ("Acquisition") and ADT, have entered into
an Agreement and Plan of Amalgamation dated as of July 1, 1996
(the "Amalgamation Agreement") providing, among other things, for
the amalgamation of Acquisition with and into ADT (the
"Amalgamation"). Following the Amalgamation ADT will be a
wholly owned subsidiary of Republic. A copy of the Amalgamation
Agreement is attached hereto as Exhibit A and is incorporated
herein by reference.
Pursuant to the Amalgamation Agreement, at the
effective time of the Amalgamation (the "Effective Time") (i)
each common share, $1.00 par value, of Acquisition issued and
outstanding immediately prior to the Effective Time will be
converted into one Common Share of the surviving company and (ii)
each Common Share of ADT issued and outstanding immediately prior
to the Effective Time (other than ADT Common Shares held in the
treasury of ADT, held by any of ADT's subsidiaries or held by
Republic or its subsidiaries, which shall be cancelled) shall be
converted into and represent the right to receive .92857 shares
of common stock, par value $.01 per share ("Common Stock") of
Republic. No fractional shares of Republic Common Stock will be
issued in the Amalgamation, and ADT Shareholders who otherwise
would be entitled to receive a fractional share of Republic
Common Stock will receive a cash payment in lieu thereof.
Consummation of the Amalgamation is subject to certain
conditions, including, among others: (i) expiration or
termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the receipt
of other material governmental approvals; (ii) authorization of
the issuance of shares of Republic Common Stock in connection
with the Amalgamation by the requisite vote of the holders of
Republic Common Stock; (iii) authorization of the Amalgamation
and the transactions contemplated thereby by the requisite vote
of the holders of ADT Common Shares; (iv) the effectiveness of a
registration statement filed under the Securities Act of 1933, as
amended, for the shares of Republic Common Stock to be issued in
the Amalgamation; and (v) receipt of legal opinions as to the
tax-free status of the Amalgamation and of accountants' letters
as to the availability of pooling of interests accounting
treatment for the Amalgamation.
The Amalgamation Agreement may be terminated: (i) by
mutual consent of Republic and ADT; (ii) by either Republic or
ADT, if any permanent injunction or other order or decree of a
competent governmental authority preventing the consummation of
the Amalgamation shall have become final and nonappealable; (iii)
by either Republic or ADT, if the Effective Time shall not have
occurred before December 31, 1996; (iv) by Republic or ADT, if
the requisite vote of ADT Shareholders to approve the
Amalgamation, the Amalgamation Agreement and the transactions
contemplated thereby shall not have been obtained or the
requisite vote of the Republic Stockholders to approve the
issuance of Republic Common Stock in the Amalgamation shall not
have been obtained; (v) by Republic or ADT, if there has been a
material breach of any of the covenants or agreements or any of
the representations or warranties set forth in the Amalgamation
Agreement on the part of the other party, which breach is not
cured within thirty days following written notice or cannot be
cured prior to the Closing; (vi) by Republic, if the holders of
more than five percent of the outstanding ADT Common Shares have
complied with the procedures set forth in Section 106 of the
Bermuda Companies Act with respect to appraisal rights; (vii) by
ADT, in order to accept a proposal for a competing transaction
that the Board of Directors of ADT has determined in good faith,
based on a written opinion of an internationally recognized
investment banking firm, is more favorable to ADT Shareholders,
from a financial point of view, than the Amalgamation (including
any adjustment to the terms and conditions of the Amalgamation
proposed by Republic in response to such proposal for a competing
transaction), provided that ADT has given Republic written notice
of such proposal at least twenty-four hours prior to such
termination, setting forth in reasonable detail the material
terms and provisions (including price) of such competing
transaction; (viii) by Republic, if ADT's Board of Directors has
(a) withdrawn or modified in a manner adverse to Republic its
recommendation that ADT Shareholders approve the Bye-Law
Amendment(as defined below), the Amalgamation, the Amalgamation
Agreement and the transactions thereby or (b) recommended a
competing transaction; or (ix) by ADT, if Republic's Board of
Directors has withdrawn or modified in a manner adverse to ADT
its recommendation that Republic Stockholders approve the
issuance of shares of Republic Common Stock in the Amalgamation.
In connection with the Amalgamation Agreement, the
Board of Directors of ADT has approved and agreed to submit to a
vote of ADT shareholders an amendment to the Company's Bye-laws
to provide that the vote of holders of capital shares of ADT
required to approve an amalgamation shall be a simple majority of
the votes cast at a general meeting and a simple majority of the
votes cast by holders of shares of any class of capital shares of
the Company entitled to vote as a class, if a class meeting is
required (the "Bye-Law Amendment"). The Amalgamation Agreement
also contains certain customary restrictions on the conduct of
the business of ADT pending the Amalgamation.
On July 1, 1996, in order to induce Republic to enter
into the Amalgamation Agreement, ADT issued to Republic a Common
Share Purchase Warrant (the "Warrant"), a copy of which is
attached hereto as Exhibit B and is incorporated herein by
reference. Pursuant to the Warrant, ADT granted Republic the
right to purchase from ADT 15,000,000 Common Shares of ADT at an
exercise price of $20 per share, subject to adjustment. The
Warrant will become exercisable for a six-month period commencing
upon termination of the Amalgamation Agreement in accordance with
its terms (the "Exercise Period").
Any Common Shares (or other securities) issued upon
exercise of the Warrant and held by Republic or its affiliates
and nominees will be subject for a two-year period following
commencement of the Exercise Period to a proxy in favor of the
Chairman of ADT to vote such Common Shares (or other securities)
with respect to any matter which shall be voted upon by the
shareholders of ADT. Such proxy shall automatically be revoked
with respect to any Common Shares (or other securities) at such
time as such shares or other securities are no longer held by
Republic, its affiliates or nominees thereof. In addition, the
Warrant provides that Republic will, and will cause its
affiliates or nominees, to tender any Common Shares (or other
securities) received upon exercise of the Warrant in any tender
offer in which the Board of Directors of ADT recommends that ADT
shareholders tender their shares.
The Warrant may only be transferred with the consent of
ADT, which, in the case of a transfer to an institutional
investor may not be unreasonably withheld or delayed. Shares
issued under the Warrant may not be sold to any single purchaser
in an amount greater than five million shares. The Warrant
contains registration rights on customary terms for three demand
registrations and unlimited "piggyback" registrations.
The foregoing summary of the Amalgamation Agreement and
the Warrant does not purport to be complete and is qualified in
its entirety by reference to the Amalgamation Agreement and the
Warrant, which are attached as Exhibit A and Exhibit B,
respectively.
As a result of the Amalgamation, ADT Common Shares
would be delisted from the London Stock Exchange and The New York
Stock Exchange, Inc., and ADT will be eligible to seek
termination of registration under Section 12(g)(4) of the
Exchange Act.
Except as set forth in this Item 4, neither Republic
nor, to the best of Republic's knowledge, any of the individuals
named in Schedule I hereto, has any plans or proposals which
relate to or which would result in any of the actions specified
in clauses (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) By reason of the issuance of the Warrant,
Republic may be deemed to have sole voting and dispositive power
with respect to the ADT Common shares subject to the Warrant and,
accordingly, may be deemed to beneficially own 15,000,000 Common
Shares of ADT, or approximately 10.1% of the ADT Common Shares
outstanding on July 1, 1996, assuming exercise of the Warrant.
Because the Warrant is exercisable only upon the termination of
the Amalgamation Agreement in accordance with its terms, Republic
expressly disclaims any beneficial ownership of the 15,000,000
Common Shares of ADT which are obtainable by Republic upon
exercise of the Warrant.
Michael G. DeGroote, Vice Chairman and a Director of
Republic, indirectly through Westbury (Bermuda) Ltd., a Bermuda
corporation controlled by Mr. DeGroote, may be deemed to
beneficially own 421,300 Common Shares of ADT, which is less than
one percent of the ADT Common Shares outstanding on July 1, 1996.
Republic expressly disclaims any beneficial ownership of the
421,300 Common Shares of ADT held by Westbury (Bermuda) Ltd.
Except as set forth above, neither Republic nor, to the
best of Republic's knowledge, any of the individuals named in
Schedule I hereto, beneficially owns any Common Shares of ADT.
(c) Except as set forth in Item 4, neither Republic
nor, to the best of Republic's knowledge, any of the individuals
named in Schedule I hereto, has effected any transaction in the
Common Shares of ADT during the past 60 days.
(d) Republic does not have the right to receive or the
power to direct the receipt of dividends from, or the proceeds
from the sale of, any ADT Common Shares until such time as the
Warrant has been exercised.
(e) Inapplicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
In connection with the execution of the Amalgamation
Agreement, (i) Michael A. Ashcroft, Chairman and Chief Executive
Officer of ADT, agreed to vote his ADT Common Shares in favor of
the Amalgamation, the Amalgamation Agreement and the transactions
contemplated thereby, including the Bye-Law Amendment and (ii) H.
Wayne Huizenga, Chairman and Chief Executive Officer of Republic,
and Michael G. DeGroote, director of Republic, agreed to vote
their Republic stock in favor of the issuance of Republic Common
Stock in the Amalgamation.
Except as provided in the Amalgamation Agreement, the
Warrant, or as set forth or incorporated by reference in this
Item 6 and Item 4 hereof, neither Republic nor, to the best of
Republic's knowledge, any of the individuals named in Schedule I
hereto, has any contracts, arrangements, understandings or
relationships (legal or otherwise), with any person either with
respect to any securities of ADT, including, but not limited to,
transfer or voting of any securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees
of profits, division of profits or losses, or the giving or
withholding of proxies.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit A -- Agreement and Plan of Amalgamation among
Republic Industries, Inc.,
R.I./TRIANGLE, LTD. and ADT Limited,
dated as of July 1, 1996.
Exhibit B -- ADT Limited Common Share Purchase
Warrant, dated as of July 1, 1996.
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the
information set forth in this statement is true, complete and
correct.
Dated: July 11, 1996
Republic Industries, Inc.
By: /s/ Richard L. Handley
Richard L. Handley
Senior Vice President and
General Counsel
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
REPUBLIC INDUSTRIES, INC.
Set forth below is the name, current business address,
and the present principal occupation or employment of each
director and executive officer of Republic. Unless otherwise
indicated each person identified below is employed by Republic.
The principal address of Republic and, unless otherwise indicated
below, the current business address for each individual listed
below is Republic Industries, Inc., 200 East Las Olas Boulevard,
Suite 1400, Fort Lauderdale, Florida 33301. Each such person is
a citizen of the United States, except for Michael G. DeGroote
who is a citizen of Bermuda.
Name and Address Present Principal Occupation or Employment
H. Wayne Huizenga Chairman of the Board and Chief
Executive Officer.
Michael G. DeGroote Vice Chairman and a Director.
Harris W. Hudson President and a Director.
J. P. Bryan Director. Mr. Bryan is President
Gulf Canada, Inc. and Chief Executive Officer of Gulf
401 9th Avenue, S.W. Canada, which is engaged in oil
Calgary, Alberta, Canada and gas exploration and production.
Mr. Bryan also serves on the Board of
Directors of Bellweather Exploration
Company.
Rick L. Burdick Director. Mr. Burdick is the sole
Akin, Gump, Strauss, shareholder of a professional
Hauer & Feld, L.L.P. corporation which is a partner in the
711 Louisiana Street law firm of Akin, Gump, Strauss, Hauer
Suite 1900 & Feld, L.L.P., a limited liability
Houston, TX 77002 partnership including professional
corporations. Mr. Burdick also serves
as a Director of J. Ray McDermott,
S.A.
George D. Johnson, Jr. Director. Mr. Johnson is President,
Extended Stay America Chief Executive Officer and a Director
Suite 950 of ESA. Mr. Johnson is also a Director
500 East Broward Boulevard of Duke Power Company and of Viacom.
Fort Lauderdale, FL 33374
John J. Melk Director. Mr. Melk is Chairman and
H20 Plus, Inc. Chief Executive Officer of H20 Plus
676 North Michigan Avenue Inc. a bath and skin care product
39th Floor manufacturer and retail distributor.
Chicago, IL 60611 Mr. Melk is a private investor in
various businesses. Mr. Melk also
serves as a Director of Psychemedics
Corporation.
Donald E. Koogler Executive Vice President.
J. Ronald Castell Senior Vice President.
Robert A. Guerin President-Republic Security Services
Division
Richard L. Handley Senior Vice President and General
Counsel.
Thomas W. Hawkins Senior Vice President.
Robert J. Henninger, Jr. Senior Vice President.
EXHIBIT INDEX
Exhibit Description
A Agreement and Plan of Amalgamation among
Republic Industries, Inc., R.I./TRIANGLE,
LTD. and ADT Limited, dated as of July 1,
1996.
B ADT Limited Common Share Purchase Warrant,
dated as of July 1996.
[CONFORMED COPY]
EXHIBIT A
AGREEMENT AND PLAN OF AMALGAMATION
among
REPUBLIC INDUSTRIES, INC.
("Parent"),
R.I./TRIANGLE, LTD.
a wholly owned direct subsidiary of Parent
("Acquisition"),
and
ADT LIMITED
(the "Company")
Dated as of
July 1, 1996
AGREEMENT AND PLAN OF AMALGAMATION
TABLE OF CONTENTS
PAGE
ARTICLE I
THE AMALGAMATION . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Amalgamation . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time . . . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Amalgamation . . . . . . . . . . . . . 2
1.4 Memorandum of Association and Bye-Laws . . . . . . . 2
1.5 Directors and Officers . . . . . . . . . . . . . . . 2
1.6 Additional Actions . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . . 3
2.1 Conversion of Share Capital . . . . . . . . . . . . . 3
2.2 Fractional Shares; Adjustment of Exchange Ratio . . . 3
2.3 Exchange of Certificates . . . . . . . . . . . . . . 4
2.4 Treatment of Stock Options . . . . . . . . . . . . . 6
2.5 Dissenters' Rights . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION . . . 7
3.1 Organization and Standing . . . . . . . . . . . . . . 7
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . 7
3.3 Corporate Power and Authority . . . . . . . . . . . . 8
3.4 Capitalization of Parent . . . . . . . . . . . . . . 8
3.5 No Conflicts; Consents and Approvals . . . . . . . . 9
3.6 Parent SEC Documents . . . . . . . . . . . . . . . 10
3.7 Absence of Certain Changes . . . . . . . . . . . . 10
3.8 Undisclosed Liabilities . . . . . . . . . . . . . . 11
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Litigation . . . . . . . . . . . . . . . . . . . . 12
3.11 Registration Statement . . . . . . . . . . . . . . 12
3.12 Accounting Matters . . . . . . . . . . . . . . . . 13
3.13 Employee Benefit Plans . . . . . . . . . . . . . . 13
3.14 Contracts . . . . . . . . . . . . . . . . . . . . 13
3.15 Environmental Matters. . . . . . . . . . . . . . . 14
3.16 Company Stock Ownership . . . . . . . . . . . . . 14
3.17 Brokerage and Finder's Fees . . . . . . . . . . . 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . 15
4.1 Organization and Standing . . . . . . . . . . . . . 15
4.2 Subsidiaries . . . . . . . . . . . . . . . . . . . 15
4.3 Corporate Power and Authority . . . . . . . . . . . 16
4.4 Capitalization of the Company . . . . . . . . . . . 16
4.5 No Conflicts . . . . . . . . . . . . . . . . . . . 17
4.6 Company SEC Documents . . . . . . . . . . . . . . . 17
4.7 Absence of Certain Changes . . . . . . . . . . . . 18
4.8 Undisclosed Liabilities . . . . . . . . . . . . . . 18
4.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . 19
4.10 Litigation; Compliance with Law . . . . . . . . . 19
4.11 Registration Statement . . . . . . . . . . . . . . 20
4.12 Accounting Matters . . . . . . . . . . . . . . . . 20
4.13 Employee Benefit Plans . . . . . . . . . . . . . . 20
4.14 Contracts . . . . . . . . . . . . . . . . . . . . 21
4.15 Environmental Matters . . . . . . . . . . . . . . 21
4.16 Parent Stock Ownership . . . . . . . . . . . . . . 22
4.17 Board Action . . . . . . . . . . . . . . . . . . . 22
4.18 Takeover Laws . . . . . . . . . . . . . . . . . . 22
4.19 Brokerage and Finder's Fees; Expenses . . . . . . 22
ARTICLE V
COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . 22
5.1 Mutual Covenants . . . . . . . . . . . . . . . . . 23
5.2 Covenants of Parent . . . . . . . . . . . . . . . . 24
5.3 Covenants of the Company . . . . . . . . . . . . . 27
ARTICLE VI
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1 Mutual Conditions . . . . . . . . . . . . . . . . . 30
6.2 Additional Conditions to Obligations of the Company 31
6.3 Additional Conditions to Obligations of Parent and
Acquisition . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . 34
7.1 Termination . . . . . . . . . . . . . . . . . . . . 34
7.2 Effect of Termination . . . . . . . . . . . . . . . 35
7.3 Amendment . . . . . . . . . . . . . . . . . . . . . 36
7.4 Extension; Waiver . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Survival of Representations and Warranties . . . . 36
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . 36
8.3 Interpretation . . . . . . . . . . . . . . . . . . 37
8.4 Counterparts . . . . . . . . . . . . . . . . . . . 37
8.5 Entire Agreement . . . . . . . . . . . . . . . . . 38
8.6 No Third Party Beneficiaries . . . . . . . . . . . 38
8.7 Governing Law . . . . . . . . . . . . . . . . . . . 38
8.8 Specific Performance . . . . . . . . . . . . . . . 38
8.10 Expenses . . . . . . . . . . . . . . . . . . . . . 38
8.11 Severability . . . . . . . . . . . . . . . . . . . 38
8.12 Jurisdiction . . . . . . . . . . . . . . . . . . . 38
8.13 Joinder by Acquisition . . . . . . . . . . . . . . 39
SCHEDULES
Schedule A: Initial Directors of the Surviving Company
AGREEMENT AND PLAN OF AMALGAMATION
This Agreement and Plan of Amalgamation (this
"Agreement") is made and entered into as of the first day of
July, 1996, by and among Republic Industries, Inc., a Delaware
corporation ("Parent"), R.I./TRIANGLE, Ltd., a Bermuda company
limited by shares and a wholly owned subsidiary of Parent
("Acquisition"), and ADT Limited, a Bermuda company limited by
shares (the "Company").
PRELIMINARY STATEMENTS
A. The respective Boards of Directors of the Company,
Parent and Acquisition consider it advisable and in the best
interests of their respective shareholders to effect the
amalgamation of Acquisition and the Company (the "Amalgamation")
pursuant to this Agreement.
B. The parties intend that the Amalgamation constitute
a tax-free "reorganization" within the meaning of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended
(the "Code").
C. The parties intend that the Amalgamation be
accounted for as a pooling-of-interests for financial reporting
purposes.
D. The respective Boards of Directors of Parent,
Acquisition and the Company, by resolutions duly adopted, have
approved and adopted this Agreement.
E. Concurrently herewith, in order to induce Parent
and Acquisition to enter into this Agreement, the Company has
granted a warrant to Parent (the "Warrant").
Now, therefore, in consideration of the premises and
the representations and warranties, covenants and other
agreements hereinafter set forth, the parties hereto, intending
to be legally bound hereby, agree as follows:
ARTICLE I
THE AMALGAMATION
1.1 The Amalgamation. Upon the terms and subject to
the conditions hereof, and in accordance with the provisions of
The Companies Act 1981, as amended (the "Companies Act"),
Acquisition shall be amalgamated with and into the Company as
soon as practicable following the satisfaction or waiver of the
conditions set forth in Article VI. Upon the Amalgamation, the
separate corporate existence of Acquisition shall cease and the
Company shall continue as the amalgamated company and operate
under the name "ADT Limited" under the laws of Bermuda. The
amalgamated company is hereinafter sometimes referred to as the
"Surviving Company."
1.2 Effective Time. The Amalgamation shall be
consummated by filing with the Registrar of Companies of Bermuda
(the "Registrar") a duly executed and verified application for
registration of the Surviving Company and such other documents as
are required by the Companies Act, all in accordance with
Sections 104 and 108 of the Companies Act. The Amalgamation
shall become effective (the "Effective Time") at the time and on
the date set forth in the certificate of amalgamation issued by
the Registrar. Prior to the filing referred to in this Section
1.2, a closing (the "Closing") shall be held at the offices of
Parent, or such other place as the parties may agree on the date
(the "Closing Date") specified by the parties, which date shall
be as soon as practicable, but in any event within two business
days, following the date upon which all conditions set forth in
Article VI hereof have been satisfied or waived, to the extent
permitted by Applicable Laws (as defined below), or such other
time as the parties may mutually agree.
1.3 Effects of the Amalgamation. The Amalgamation
shall have the effects set forth in Section 109 of the Companies
Act.
1.4 Memorandum of Association and Bye-Laws. At the
Effective Time (i) the Memorandum of Association of the Company
as in effect immediately prior to the Effective Time shall be the
Memorandum of Association of the Surviving Company and (ii) the
Bye-Laws of the Company in effect immediately prior to the
Effective Time shall be the Bye-Laws of the Surviving Company; in
each case until amended in accordance with applicable law.
1.5 Directors and Officers. From and after the
Effective Time, the officers of the Company shall be the officers
of the Surviving Company and the directors of Acquisition shall
be the directors of the Surviving Company, in each case until
their respective successors are duly elected and qualified. The
name and address of each initial director of the Surviving
Company is set forth on Schedule A hereto.
1.6 Additional Actions. If, at any time after the
Effective Time, the Surviving Company shall consider or be
advised that any further deeds, assignments or assurances in law
or any other acts are necessary or desirable to carry out the
provisions of this Agreement, the proper officers and directors
of Parent and the Surviving Company shall take all such necessary
action.
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Share Capital. At the Effective
Time, by virtue of the Amalgamation and without any action on the
part of Parent, Acquisition, the Company or any holder thereof:
(a) Each common share, $1.00 par value, of Acquisition
issued and outstanding immediately prior to the Effective
Time shall be cancelled and cease to exist and shall be
converted into one common share, $.10 par value, of the
Surviving Company. Such newly issued shares shall
thereafter constitute all of the issued and outstanding
shares of the Surviving Company.
(b) Each Company Common Share (other than shares to be
cancelled in accordance with Section 2.1(c)) issued and
outstanding immediately prior to the Effective Time shall be
cancelled and cease to exist and shall be converted into and
represent the right to receive .92857 shares of Parent
Common Stock (the "Exchange Ratio").
(c) All share capital of the Company held in the
treasury of the Company, held by any of Company's
subsidiaries or held by Parent or any of its subsidiaries
shall be cancelled and cease to exist and no payment shall
be made in respect thereof.
2.2 Fractional Shares; Adjustment of Exchange Ratio.
No certificates for fractional shares of Parent Common Stock
shall be issued as a result of the conversions provided for in
Section 2.1(b); no dividend or other distribution by Parent and
no stock split, combination or reclassification with respect to
Parent Common Stock shall relate to any such fractional share;
and no such fractional share shall entitle the record or
beneficial owner thereof to vote or to any other rights of a
stockholder of Parent. In lieu of any such fractional share, to
the extent that a holder of an outstanding Company Common Share
would otherwise be entitled to receive a fractional share of
Parent Common Stock, such holder, upon presentation of
appropriate certificates for Company Common Shares to the
Exchange Agent pursuant to Section 2.3, shall be entitled to
receive a cash payment therefor in an amount equal to the value
(determined with reference to the closing price of Parent Common
Stock on the Nasdaq National Market on the last full trading day
immediately prior to the Effective Time) of such fractional
share. Such payment with respect to fractional shares is merely
intended to provide a mechanical rounding off of, and is not a
separately bargained for, consideration. If more than one
certificate representing Company Common Shares shall be
surrendered for the account of the same holder, the number of
shares of Parent Common Stock for which certificates have been
surrendered shall be computed on the basis of the aggregate
number of shares represented by the certificates so surrendered.
In the event that prior to the Effective Time Parent shall
declare a stock dividend or other distribution on its capital
stock payable in shares of Parent Common Stock or securities
convertible into shares of Parent Common Stock, or effect a stock
split, reclassification or combination with respect to Parent
Common Stock, the Exchange Ratio set forth in Section 2.1(b)
shall be appropriately adjusted to reflect such dividend,
distribution, stock split, reclassification or combination.
2.3 Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective
Time, Parent shall deposit with an exchange agent designated by
Parent and reasonably acceptable to the Company (the "Exchange
Agent"), for the benefit of holders of Company Common Shares
("Company Shareholders"), for exchange in accordance with this
Section 2.3, certificates representing shares of Parent Common
Stock issuable pursuant to Section 2.1 in exchange for
outstanding Company Common Shares and shall from time-to-time
deposit cash in an amount reasonably expected to be paid pursuant
to Section 2.2 (such shares of Parent Common Stock and cash,
together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures. Promptly and, in any event,
within three (3) business days after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record
of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding
Company Common Shares whose shares were converted into the right
to receive shares of Parent Common Stock pursuant to Section
2.1(b), (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates
to the Exchange Agent and shall be in such form and have such
other provisions as Parent may reasonably specify) and (ii)
instructions for effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common
Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with a duly executed letter of
transmittal, the holder of such Certificate shall be entitled to
receive in exchange therefor (x) a certificate representing that
number of shares of Parent Common Stock which such holder has the
right to receive pursuant to Section 2.1 and (y) a check
representing the amount of cash in lieu of fractional shares, if
any, and unpaid dividends and distributions, if any, which such
holder has the right to receive pursuant to the provisions of
this Article II, after giving effect to any required withholding
tax, and the shares formerly represented by the Certificate so
surrendered shall forthwith be cancelled. No interest will be
paid or accrued on the cash in lieu of fractional shares, if any,
and unpaid dividends and distributions, if any, payable to
holders of Company Common Shares. In the event of a transfer of
ownership of Company Common Shares which is not registered on the
transfer records of the Company, a certificate representing the
proper number of shares of Parent Common Stock, together with a
check for the cash to be paid in lieu of fractional shares, if
any, and unpaid dividends and distributions, if any, may be
issued to such transferee if the Certificate representing such
Company Common Shares held by such transferee is presented to the
Exchange Agent, accompanied by all documents which in the
reasonable judgment of the Exchange Agent are required to
evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.3, each Certificate
shall be deemed at any time after the Effective Time to represent
only the right to receive upon surrender a certificate
representing shares of Parent Common Stock and cash in lieu of
fractional shares, if any, and unpaid dividends and
distributions, if any, as provided in this Article II.
(c) Distributions with Respect to Unexchanged Shares.
Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared or made after the
Effective Time with respect to shares of Parent Common Stock
having a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate, and no cash payment
in lieu of fractional shares shall be paid to any such holder,
until the holder shall surrender such Certificate as provided in
this Section 2.3. Subject to the effect of Applicable Laws (as
defined in Section 3.10), following surrender of any such
Certificate, there shall be paid to the holder of the
certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore payable
with respect to such whole shares of Parent Common Stock and not
paid, less the amount of any withholding taxes which may be
required thereon, and (ii) at the appropriate payment date
subsequent to surrender, the amount of dividends or other
distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Parent Common Stock,
less the amount of any withholding taxes which may be required
thereon.
(d) No Further Ownership Rights in Company Common
Shares. All shares of Parent Common Stock issued upon surrender
of Certificates in accordance with the terms hereof (including
any cash paid pursuant to this Article II) shall be deemed to
have been issued in full satisfaction of all rights pertaining to
such Company Common Shares represented thereby, and from and
after the Effective Time there shall be no further registration
of transfers on the share transfer books of the Company of
Company Common Shares. If, after the Effective Time,
Certificates are presented to the Surviving Company for any
reason, they shall be cancelled and exchanged as provided in this
Section 2.3.
(e) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to Company Shareholders
for six months after the Effective Time shall be delivered to
Parent or the Surviving Company, upon demand thereby, and Company
Shareholders who have not theretofore complied with this Section
2.3 shall thereafter look only to Parent for payment of any claim
to shares of Parent Common Stock, cash in lieu of fractional
shares thereof, or dividends or distributions, if any, in respect
thereof.
(f) No Liability. None of Parent, the Surviving
Company or the Exchange Agent shall be liable to any person in
respect of any Company Common Shares (or, dividends or
distributions with respect thereto) or cash from the Exchange
Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to seven years after the
Effective Time of the Amalgamation (or immediately prior to such
earlier date on which any cash, any cash in lieu of fractional
shares or any dividends or distributions with respect to whole
shares of Company Common Shares in respect of such Certificate
would otherwise escheat to or become the property of any
Governmental Authority (as defined in Section 3.5)), any such
cash, dividends or distributions in respect of such Certificate
shall, to the extent permitted by Applicable Law, become the
property of Parent, free and clear of all claims or interest of
any person previously entitled thereto.
2.4 Treatment of Stock Options. Prior to the
Effective Time, Parent and the Company shall take all such
actions as may be necessary, including the solicitation of
necessary consents, to cause each unexpired and unexercised
option outstanding under stock option plans of the Company (each,
a "Company Option") to be automatically converted at the
Effective Time into an option (a "Parent Exchange Option") to
purchase that number of shares of Parent Common Stock equal to
the number of Company Common Shares issuable immediately prior to
the Effective Time upon exercise of the Company Option (without
regard to actual restrictions on exercisability) multiplied by
the Exchange Ratio, with an exercise price equal to the exercise
price which existed under the corresponding Company Option
divided by the Exchange Ratio, and with other terms and
conditions that are substantially similar to the terms and
conditions of such Company Option immediately before the
Effective Time. Parent agrees with the Company for the benefit
of itself and as trustee for the holders of Parent Exchange
Options that as promptly as practicable following the Effective
Time, Parent shall use its reasonable best efforts to cause to
become effective a registration statement on Form S-8 to effect
the registration of the shares of Parent Common Stock underlying
the Parent Exchange Option under the Securities Act (as defined
below).
2.5 Dissenters' Rights. Notwithstanding anything in
this Agreement to the contrary, Company Common Shares outstanding
immediately prior to the Effective Time and held by a holder who
has complied with the provisions set forth in Section 106 of the
Companies Act relating to appraisal rights, shall be converted
into shares of Parent Common Stock pursuant to Section 2.1,
subject to the rights of such holder under Section 106 of the
Companies Act relating to appraisal rights. In the event such
holder fails to perfect or effectively withdraws or otherwise
loses his right to appraisal and payment under the Companies Act,
such holder shall no longer have any right to appraisal
thereunder. The Company shall give Parent prompt notice of any
application to the courts in Bermuda filed by a holder of Company
Common Shares to appraise the fair value of his Company Common
Shares, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such applications.
The Company shall not, except with the prior written consent of
Parent, make any offer to settle any such proceedings.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to
the Company as follows:
3.1 Organization and Standing. Each of Parent and its
subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation with full power and authority (corporate and other)
to own, lease, use and operate its properties and to conduct its
business as and where now owned, leased, used, operated and
conducted. Each of Parent and its subsidiaries is duly qualified
to do business and in good standing in each jurisdiction in which
the nature of the business conducted by it or the property it
owns, leases or operates makes such qualification necessary,
except where the failure to be so qualified or in good standing
in such jurisdiction would not have a "material adverse effect"
on Parent. For the purposes of this Agreement, a "material
adverse effect" with respect to any party shall mean a material
adverse effect on the assets, liabilities, results of operations,
business or financial condition of such party and its
subsidiaries, taken as a whole. Neither Parent nor any of its
subsidiaries is in default in the performance, observance or
fulfillment of any provision of, in the case of Parent, its
Certificate of Incorporation, or By-Laws, or, in the case of any
subsidiary of Parent, its Certificate of Incorporation, By-Laws
or other organizational documents. As used in this Agreement,
the word "subsidiary" when used with respect to any party means
any corporation or other organization, whether incorporated or
unincorporated, (i) of which such party directly or indirectly
owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar
functions with respect to such corporation or other organization,
or any organization of which such party is a general partner and
(ii) for purposes of Articles III and IV hereof, that would
constitute a "significant subsidiary" of such party within the
meaning of Rule 1-02 of Regulation S-X promulgated by the United
States Securities and Exchange Commission (the "Commission").
3.2 Subsidiaries. As of the date hereof, other than
immaterial interests, Parent does not own, directly or
indirectly, any equity or other ownership interest in any
corporation, partnership, joint venture or other entity or
enterprise, except as set forth in Section 3.2 to the disclosure
schedule (the "Parent Disclosure Schedule") delivered by Parent
to the Company and dated the date hereof. Section 3.2 of the
Parent Disclosure Schedule sets forth as to each subsidiary of
Parent: (i) its name and jurisdiction of incorporation or
organization and (ii) the percentage of securities owned by its
immediate parent. Each of the outstanding shares of capital
stock of each of Parent's subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned,
directly or indirectly, by Parent free and clear of all liens,
pledges, security interests, claims or other encumbrances, other
than liens imposed by law which could not reasonably be expected
to have, in the aggregate, a material adverse effect on Parent.
Other than as set forth in Section 3.2 of the Parent Disclosure
Schedule, there are no outstanding subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or
other commitments or rights of any type relating to the issuance,
sale or transfer of any securities of any subsidiary of Parent,
nor are there outstanding any securities which are convertible
into or exchangeable for any shares of capital stock of any
subsidiary of Parent.
3.3 Corporate Power and Authority. Each of Parent and
Acquisition has all requisite corporate power and authority to
enter into this Agreement and, subject to authorization of the
issuance of shares of Parent Common Stock in the Amalgamation by
the holders of Parent Common Stock ("Parent Stockholders"), to
consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of each of Parent and
Acquisition, subject to authorization of the issuance of shares
of Parent Common Stock in the Amalgamation. This Agreement has
been duly executed and delivered by each of Parent and
Acquisition, and constitutes the legal, valid and binding
obligation of each of Acquisition and Parent enforceable against
each of them in accordance with its terms.
3.4 Capitalization of Parent. As of June 19, 1996,
Parent's authorized capital stock consisted solely of (a)
500,000,000 shares of common stock, $0.01 par value per share
("Parent Common Stock"), of which (i) 184,023,886 shares were
issued and outstanding, (ii) no shares were issued and held in
treasury and (iii) 50,589,094 shares were reserved for issuance
upon the exercise or conversion of options, warrants or
convertible securities granted or issuable by Parent, and (b)
5,000,000 shares of preferred stock, $0.01 par value per share,
none of which was issued and outstanding or reserved for
issuance. Each outstanding share of Parent capital stock is, and
all shares of Parent Common Stock to be issued in connection with
the Amalgamation will be, duly authorized and validly issued,
fully paid and nonassessable, and each outstanding share of
Parent capital stock has not been, and all shares of Parent
Common Stock to be issued in connection with the Amalgamation
will not be, issued in violation of any preemptive or similar
rights. As of the date hereof, other than as set forth in the
first sentence hereof, in the Parent SEC Documents (as defined in
Section 3.6) filed with the Commission prior to the date hereof
or in Section 3.4 of the Parent Disclosure Schedule, there are no
outstanding subscriptions, options, warrants, puts, calls,
agreements, understandings, claims or other commitments or rights
of any type relating to the issuance, sale or transfer by Parent
of any securities of Parent, nor are there outstanding any
securities which are convertible into or exchangeable for any
shares of capital stock of Parent; and Parent has no obligation
of any kind to issue any additional securities or to pay for,
repurchase, redeem or otherwise acquire securities of Parent or
any predecessor. Parent has no outstanding bonds, debentures,
notes or other similar obligations the holders of which have the
right to vote generally with holders of Parent Common Stock.
3.5 No Conflicts; Consents and Approvals. Neither the
execution and delivery of this Agreement by Parent or Acquisition
nor the consummation of the transactions contemplated hereby
will:
(a) conflict with, or result in a breach of any
provision of the Certificate of Incorporation or By-Laws of
Parent or the Memorandum of Association or Bye-Laws of
Acquisition;
(b) violate any order, writ, injunction, decree,
statute, rule or regulation, applicable to or binding upon
Parent or any of its subsidiaries or their respective
properties or assets;
(c) violate, or conflict with, or result in a breach
of any provision of, or constitute a default (or an event
which, with the giving of notice, the passage of time or
otherwise, would constitute a default) under, or entitle any
party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or call a
default under, or result in the termination, acceleration or
cancellation of, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the
properties or assets of Parent or any of its subsidiaries or
result in any right of conversion or redemption under, or
result in the loss of any benefit under, any of the terms,
conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, contract, undertaking,
agreement, lease or other instrument or obligation to which
Parent or any of its subsidiaries is a party; or
(d) require any action or consent or approval of, or
review by, or registration or filing by Parent or any of its
affiliates with any third party or any United States or non-
United States court, arbitral tribunal, administrative
agency or commission or other governmental or regulatory
body, agency, instrumentality or authority (a "Governmental
Authority"), other than (i) authorization of the issuance of
shares of Parent Common Stock pursuant to this Agreement by
Parent Stockholders, (ii) authorization for inclusion of
the shares of Parent Common Stock to be issued in the
Amalgamation on the Nasdaq National Market, (iii) actions
required by the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act") and non-
United States laws intended to prohibit, restrict or
regulate actions having the purpose or effect of
monopolization or restraint of trade ("Competition Laws"),
(iv) the filing of the application to register the
Amalgamation pursuant to the Companies Act and the consent
of the Minister of Finance of Bermuda (the "Minister") to
the Amalgamation and (v) registrations or other actions
required under United States federal and state securities
laws as are contemplated by this Agreement;
except, in the case of (c) and (d), (i) as set forth in Section
3.5 of the Parent Disclosure Schedule or (ii) for any of the
foregoing that would not, individually or in the aggregate, have
or reasonably be expected to have a material adverse effect on
Parent or materially impair or delay the consummation of the
transactions contemplated hereby.
3.6 Parent SEC Documents. Each of Parent and its
subsidiaries has timely filed with the Commission all forms,
reports, schedules, statements, exhibits and other documents
required to be filed by it since January 1, 1995 under the United
States Securities Exchange Act of 1934, as amended (together with
the rules and regulations thereunder, the "Exchange Act") or the
United States Securities Act of 1933, as amended (together with
the rules and regulations thereunder, the "Securities Act") (such
documents, as supplemented and amended since the time of filing,
collectively, the "Parent SEC Documents") and has heretofore made
available to the Company, in the form filed with the Commission,
(i) its Annual Report on Form 10-K for the year ended December
31, 1995, (ii) its Quarterly Report on Form 10-Q for the period
ended March 31, 1996, (iii) all proxy statements relating to the
Company's meetings of stockholders (whether annual or special)
held since January 1, 1995 and (iv) all other forms, reports and
registration statements (other than Quarterly Reports on Form 10-
Q and preliminary materials) filed by Parent with the Commission
since December 31, 1994. The Parent SEC Documents, including,
without limitation, any financial statements or schedules
included therein, at the time filed (and, in the case of
registration statements and proxy statements, on the dates of
effectiveness and the dates of mailing, respectively) (a) did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (b)
complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the
case may be. The financial statements of Parent included in the
Parent SEC Documents at the time filed (and, in the case of
registration statements and proxy statements, on the date of
effectiveness and the date of mailing, respectively) complied as
to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the
Commission with respect thereto, were prepared in accordance with
United States generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto), and fairly present
(subject in the case of unaudited statements to normal, recurring
and year-end audit adjustments and any other adjustments
described therein that are not expected to be materially adverse
to Parent and its subsidiaries taken as a whole) in all material
respects the consolidated financial position of Parent as at the
dates thereof and the consolidated results of its operations and
cash flows for the periods then ended.
3.7 Absence of Certain Changes. Except as disclosed
in the Parent SEC Documents filed with the Commission prior to
the date hereof or as set forth in Section 3.7 of the Parent
Disclosure Schedule, since January 1, 1996, each of Parent and
its subsidiaries has conducted its business in the ordinary
course, and there has been no (i) material adverse change in the
assets, liabilities, results of operations, business or financial
condition of Parent and its subsidiaries taken as a whole, (ii)
material adverse effect on the ability of Parent to consummate
the transactions contemplated hereby, (iii) declaration, setting
aside or payment of any dividend or other distribution with
respect to its capital stock, or (iv) change in its accounting
principles, practices or methods except as required by GAAP.
3.8 Undisclosed Liabilities. Except (i) as and to the
extent disclosed or reserved against on the consolidated balance
sheet of Parent as of March 31, 1996 or the notes thereto
included in the Parent SEC Documents filed with the Commission
prior to the date hereof, (ii) as incurred after the date thereof
in the ordinary course of business and not prohibited by this
Agreement or (iii) as set forth in Section 3.8 of the Parent
Disclosure Schedule, neither Parent nor any of its subsidiaries
have any liabilities or obligations of any nature, whether known
or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due, that, individually or in the
aggregate, (i) have or would reasonably be expected to have a
material adverse effect on Parent or (ii) are required to be
reflected or reserved against on a consolidated balance sheet of
Parent and its subsidiaries (including the notes thereto)
prepared in accordance with GAAP.
3.9 Taxes. Except as set forth in Section 3.9 of the
Parent Disclosure Schedule, (i) Parent and its subsidiaries have
duly filed all United States federal, state and local and non-
United States income, franchise, excise, real and personal
property and other tax returns and reports (including, but not
limited to, those filed on a consolidated, combined or unitary
basis) required to have been filed by Parent or its subsidiaries
with relevant tax authorities prior to the date hereof, except
those as to which the failure to file would not have or would not
reasonably be expected to have a material adverse effect on
Parent, (ii) all of the foregoing returns and reports are true,
complete and correct in all material respects, and Parent and its
subsidiaries have paid or, prior to the Effective Time, will pay
all taxes required to be paid in respect of the periods covered
by such returns or reports to any United States federal, state
and local or non-United States taxing authority, except those as
to which the failure to pay would not have or would not
reasonably be expected to have a material adverse effect on
Parent, (iii) Parent has paid or made adequate provision (in
accordance with GAAP) in the financial statements of Parent
included in the Parent SEC Documents filed with the Commission
prior to the date hereof for all taxes payable in respect of all
periods ending on or prior to December 31, 1995, except those as
to which the failure to pay would not have or would not
reasonably be expected to have a material adverse effect on
Parent, (iv) neither Parent nor any of its subsidiaries will have
any material liability for any taxes in excess of the amounts so
paid or reserves so established and neither Parent nor any of its
subsidiaries is delinquent in the payment of any material tax,
assessment or governmental charge and none of them has requested
any extension of time within which to file any returns in respect
of any fiscal year which have not since been filed, (v) no
deficiencies for any tax, assessment or governmental charge have
been proposed in writing, asserted or assessed (tentatively or
definitely), in each case, by any taxing authority, against
Parent or any of its subsidiaries for which there are not
adequate reserves (in accordance with GAAP), and (vi) as of the
date of this Agreement, there are no pending requests for waivers
of the time to assess any such tax, other than those made in the
ordinary course and for which payment has been made or there are
adequate reserves (in accordance with GAAP). For purposes of
this Agreement, the term "tax" shall include all United States
federal, state and local and non-United States taxes including
interest and penalties thereon.
3.10 Litigation; Compliance with Law. Except as
disclosed in the Parent SEC Documents filed with the Commission
prior to the date hereof or as set forth in Section 3.10 of the
Parent Disclosure Schedule, there is no suit, claim, action,
proceeding or investigation (an "Action") pending or, to the
knowledge of Parent, threatened against Parent or any of its
subsidiaries which, individually or in the aggregate, would have
or reasonably be expected to have a material adverse effect on
Parent or a material adverse effect on the ability of Parent to
consummate the transactions contemplated hereby. Neither Parent
nor any of its subsidiaries is subject to any outstanding order,
writ, injunction or decree which, individually or in the
aggregate, would have or reasonably be expected to have a
material adverse effect on Parent or materially impair or delay
the ability of Parent to consummate the transactions contemplated
hereby. Each of Parent and its subsidiaries is in compliance
with, and at all times since January 1, 1995 has been in
compliance with, all applicable United States or non-United
States laws, statutes, orders, rules, regulations, policies or
guidelines promulgated, or judgments, decisions or orders entered
by any Governmental Authority (collectively, "Applicable Laws")
relating to it or its business or properties, except for any such
failures to be in compliance therewith which, individually or in
the aggregate, would not have or reasonably be expected to have a
material adverse effect on Parent. Each of Parent and its
subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders
(collectively, "Permits") necessary to own, lease and operate its
properties and to carry on its business as it is now being
conducted, except for any such Permits the failure of which to
possess, individually or in the aggregate, would not have or
reasonably be expected to have a material adverse effect on
Parent.
3.11 Registration Statement. None of the information
provided by Parent or any of its subsidiaries for inclusion in
the registration statement on Form S-4 to be filed with the
Commission by Parent under the Securities Act, including the
prospectus (as amended, supplemented or modified, the
"Prospectus") relating to shares of Parent Common Stock to be
issued in the Amalgamation and the joint proxy statement and form
of proxies relating to the vote of the Company Shareholders with
respect to the Amalgamation and the vote of Parent Stockholders
with respect to the Parent Common Stock to be issued in the
Amalgamation (collectively and as amended, supplemented or
modified, the "Joint Proxy Statement") contained therein (such
registration statement as amended, supplemented or modified, the
"Registration Statement"), at the time the Registration Statement
becomes effective or, in the case of the Joint Proxy Statement,
at the date of mailing, will contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading. The Registration Statement and Joint Proxy
Statement will each comply as to form in all material respects
with the provisions of the Securities Act and the Exchange Act.
No representation or warranty is made by Parent in this Section
with respect to statements made or incorporated by reference in,
or omitted from, the Registration Statement or the Joint Proxy
Statement based on information supplied by the Company
specifically for inclusion or incorporation by reference therein.
3.12 Accounting Matters. To the best knowledge of
Parent, neither Parent nor any of its affiliates has taken or
agreed to take any action that (without giving effect to any
actions taken or agreed to be taken by the Company or any of its
affiliates) would prevent Parent from accounting for the business
combination to be effected by the Amalgamation as a pooling-of-
interests for financial reporting purposes in accordance with
Accounting Principles Board Opinion No. 16, the interpretative
releases issued pursuant thereto, and the pronouncements of the
Commission thereon.
3.13 Employee Benefit Plans. Neither Parent nor any
of its ERISA Affiliates has any liabilities with respect to any
Parent Plan, including without limitation, any liabilities under
the United States Employee Retirement Income Security Act of
1974, as amended ("ERISA"), except for liabilities which would
not have or reasonably be expected to have a material adverse
effect on Parent. As used herein: (i) "Parent Plan" means a
"pension plan" (as defined in Section 3(2) of ERISA, other than a
Parent Multiemployer Plan) or a "welfare plan" (as defined in
Section 3(1) of ERISA) established or maintained by Parent or any
of its ERISA Affiliates or to which Parent or any of its ERISA
Affiliates has contributed or otherwise may have any liability;
(ii) "Parent Multiemployer Plan" means a "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) to which Parent or any of
its ERISA Affiliates is or has been obligated to contribute or
otherwise may have any liability; and (iii) with respect to any
person, "ERISA Affiliate" means any trade or business (whether or
not incorporated) which is under common control or would be
considered a single employer with such person pursuant to Section
414(b), (c), (m) or (o) of the Code and the regulations
promulgated thereunder or pursuant to Section 4001(b) of ERISA
and the regulations promulgated thereunder.
3.14 Contracts. None of Parent, any of its
subsidiaries, or, to the knowledge of Parent, any other party
thereto is in violation of or in default in respect of, nor has
there occurred an event or condition which with the passage of
time or giving of notice (or both) would constitute a default by
Parent under, any contract, agreement, guarantee, lease or
executory commitment (each a "Contract") to which it is a party,
except such violations or defaults under such Contracts which,
individually or in the aggregate, would not have a material
adverse effect on Parent. Each contract to which Parent or any
of its subsidiaries is a party is valid, binding and enforceable
and in full force and effect, except where failure to be valid,
binding and enforceable and in full force and effect would not
have a material adverse effect on Parent or its subsidiaries.
Neither Parent nor its subsidiaries is a party to any Contract
that expressly limits the ability of Parent or any subsidiary to
compete in or conduct the electronic security services business.
3.15 Environmental Matters.
(a) As used herein, the term "Environmental Laws"
means all laws relating to pollution or protection of human
health or the environment (including, without limitation, ambient
air, ionizing or non-ionizing radiation, surface water,
groundwater, land surface, subsurface strata, living organisms
and the eco-systems of which they form part), including, without
limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or
industrial, toxic or hazardous substances, energy or wastes or
other substances capable of causing harm to the environment
(collectively, "Hazardous Materials") into the environment, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes,
decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(b) Except as disclosed in the Parent SEC Documents
filed with the Commission prior to the date hereof or as set
forth in Section 3.15(b) of the Parent Disclosure Schedule, there
are, with respect to Parent, its subsidiaries or any predecessor
of the foregoing, no past or present violations of Environmental
Laws, other than those which, individually or in the aggregate,
would not reasonably be expected to have a material adverse
effect on Parent, and none of Parent and its subsidiaries has
received any notice with respect to any of the foregoing, nor is
any Action pending or threatened in connection with any of the
foregoing, in each case, other than those which, individually or
in the aggregate, would not reasonably be expected to have a
material adverse effect on Parent.
(c) Except as disclosed in the Parent SEC Documents
filed with the Commission prior to the date hereof or set forth
in Section 3.15(c) of the Parent Disclosure Schedule, no
Hazardous Materials are contained on or about any real property
currently owned, leased or used by Parent or any of its
subsidiaries and no Hazardous Materials were released on or about
any real property previously owned, leased or used by Parent or
any of its subsidiaries during the period the property was so
owned, leased or used, other than those which, individually or in
the aggregate, would not have or reasonably be expected to have a
material adverse effect on Parent.
3.16 Company Stock Ownership. Other than the Warrant,
neither Parent nor any of its subsidiaries owns any Company
Common Shares or other securities exercisable for, or convertible
into, Company Common Shares.
3.17 Brokerage and Finder's Fees. Except for Parent's
obligations to Allen & Company, Incorporated, Parent has not
incurred and will not incur, directly or indirectly, any
brokerage, finder's or similar fee in connection with the
transactions contemplated by this Agreement. Other than the
foregoing obligation, Parent is not aware of any claim for
payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiation of this
Agreement or in connection with the transactions contemplated
hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent
and Acquisition as follows:
4.1 Organization and Standing. Each of the Company
and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation with full power and authority (corporate and
other) to own, lease, use and operate its properties and to
conduct its business as and where now owned, leased, used,
operated and conducted. Each of the Company and its subsidiaries
is duly qualified to do business and in good standing in each
jurisdiction in which the nature of the business conducted by it
or the property it owns, leases or operates makes such
qualification necessary, except where the failure to be so
qualified or in good standing in such jurisdiction would not have
a material adverse effect on the Company. Neither the Company
nor any of its subsidiaries is in default in the performance,
observance or fulfillment of any provision of, in the case of the
Company, its Memorandum of Association, as altered, or Bye-Laws,
or, in the case of any subsidiary of the Company, its Certificate
of Incorporation, Bylaws or other organizational documents. The
Company has heretofore made available to Parent accurate and
complete copies of the Memorandum of Association and Bye-Laws as
currently in effect of the Company and of similar constitutional
documents of its subsidiaries.
4.2 Subsidiaries. As of the date hereof, other than
immaterial interests, the Company does not own, directly or
indirectly, any equity or other ownership interest in any
corporation, partnership, joint venture or other entity or
enterprise, except as set forth in Section 4.2 to the disclosure
schedule (the "Company Disclosure Schedule") delivered by the
Company to Parent and dated the date hereof. Section 4.2 of the
Company Disclosure Schedule sets forth as to each subsidiary of
the Company: (i) its name and jurisdiction of incorporation or
organization and (ii) the percentage of securities owned by its
immediate parent. Each of the outstanding shares of capital
stock of each of the Company's subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned,
directly or indirectly, by the Company free and clear of all
liens, pledges, security interests, claims or other encumbrances,
other than liens imposed by law which could not reasonably be
expected to have, in the aggregate, a material adverse effect on
the Company. Other than as set forth in Section 4.2 to the
Company Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type
relating to the issuance, sale or transfer of any securities of
any subsidiary of the Company, nor are there outstanding any
securities which are convertible into or exchangeable for any
shares of capital stock of any subsidiary of the Company; and no
subsidiary of the Company has any obligation of any kind to issue
any additional securities or to pay for, repurchase, redeem or
otherwise acquire securities of any subsidiary of the Company or
any predecessor thereof.
4.3 Corporate Power and Authority. The Company has
all requisite corporate power and authority to enter into this
Agreement and, subject to authorization of the Amalgamation and
the transactions contemplated hereby by Company Shareholders, to
consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of the Company,
subject to authorization of the Amalgamation, this Agreement and
the transactions contemplated hereby by Company Shareholders.
This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation
of the Company enforceable against it in accordance with its
terms.
4.4 Capitalization of the Company. As of the date
hereof, the Company's authorized share capital consisted solely
of (a) 220,000,000 common shares, $.10 par value per share
("Company Common Shares"), of which (i) 133,492,146 shares were
issued and outstanding, of which 3,182,787 are held by a
subsidiary of the Company and (ii) 20,681,832 shares were
reserved for issuance upon the exercise or conversion of
outstanding options, warrants or convertible securities granted
or issued by the Company, (b) 850,000,000 convertible cumulative
redeemable preference shares, $1.00 par value per share divided
into three classes (the "Company Preference Shares"), 4,936 of
which were issued and outstanding and (c) 25,000 exchangeable
cumulative redeemable preference shares, $1.00 par value per
share, none of which were issued and outstanding. All
outstanding share capital is duly authorized and validly issued,
fully paid and nonassessable, and has not been issued in
violation of any preemptive or similar rights. Section 4.4 of
the Company Disclosure Schedule sets forth each plan, arrangement
or agreement pursuant to which options with respect to Company
Common Shares may be granted or under which such options have
been granted and are outstanding and in the aggregate by plan,
arrangement or agreement the number of options outstanding, their
grant price, the date such options were granted and the number of
Company Common Shares reserved for issuance pursuant to the plan,
arrangement or agreement, together with the name of each holder
of an option outstanding under any such plan, arrangement or
agreement, a description of the exercise or purchase prices and
numbers of Company Common Shares subject to each such option,
together with a listing of all options which by their terms shall
vest at the Effective Time as a result of the Amalgamation. As
of the date hereof, other than as set forth in Section 4.4 of the
Company Disclosure Schedule, there are no outstanding
subscriptions, options, stock appreciation rights, warrants,
puts, calls, agreements, understandings, claims or other
commitments or rights of any type relating to the issuance, sale
or transfer by the Company of any securities of the Company, nor
are there outstanding any securities which are convertible into
or exchangeable for any capital shares of the Company; and the
Company has no obligation of any kind to issue any additional
securities or to pay for, repurchase, redeem or otherwise acquire
securities of the Company or any predecessor. The Company has no
outstanding bonds, debentures, notes or other similar obligations
the holders of which have the right to vote generally with
holders of Company Common Shares. There are no voting trusts or
other agreements or understandings to which the Company or any of
its subsidiaries is a party with respect to voting of Company
Common Shares.
4.5 No Conflicts; Consents and Approvals. Neither the
execution and delivery of this Agreement by the Company, nor the
consummation of the transactions contemplated hereby will:
(a) conflict with, or result in a breach of any
provision of the Memorandum of Association, as altered, or
Bye-Laws of the Company;
(b) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to or binding upon
the Company or any of its subsidiaries or any of their
respective properties or assets;
(c) violate, or conflict with, or result in a breach
of any provision of, or constitute a default (or an event
which, with the giving of notice, the passage of time or
otherwise, would constitute a default) under, or entitle any
party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or call a
default under, or result in the termination, acceleration or
cancellation of, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its
subsidiaries or result in any right of conversion or
redemption under, or result in the loss of any benefit
under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license,
contract, undertaking, agreement, lease or other instrument
or obligation to which the Company or any of its
subsidiaries is a party; or
(d) require any action or consent or approval of, or
review by, or registration or filing by the Company or any
of its affiliates with any third party or any Governmental
Authority, other than (i) authorization of the Amalgamation
and the transactions contemplated hereby by Company
Shareholders, (ii) actions required by the HSR Act and
Competition Laws, (iii) the filing of the application to
register the Amalgamation pursuant to the Companies Act and
the consent of the Minister to the Amalgamation and (iv)
registrations or other actions required under United States
federal and state securities laws as are contemplated by
this Agreement;
except, in the case of (c) and (d), (i) as set forth in Section
4.5 of the Company Disclosure Schedule or (ii) for any of the
foregoing that would not, individually or in the aggregate, have
or reasonably be expected to have a material adverse effect on
the Company or materially impair or delay the consummation of the
transactions contemplated hereby.
4.6 Company SEC Documents. Each of the Company and
its subsidiaries has timely filed with the Commission all forms,
reports, schedules, statements, exhibits and other documents
required to be filed by it since January 1, 1993 under the
Exchange Act or the Securities Act (such documents, as
supplemented and amended since the time of filing, collectively,
the "Company SEC Documents") and has heretofore made available to
Parent, in the form filed with the Commission, (i) its Annual
Reports on Form 10-K for the years ended December 31, 1995, 1994
and 1993, respectively, (ii) its Quarterly Report on Form 10-Q
for the period ended March 31, 1996, (iii) all proxy statements
relating to Parent's meetings of stockholders (whether annual or
special) held since January 1, 1993 and (iv) all other forms,
reports and registration statements (other than Quarterly Reports
on Form 10-Q and preliminary materials) filed by the Company with
the Commission since December 31, 1992. The Company SEC
Documents, including, without limitation, any financial
statements or schedules included therein, at the time filed (and,
in the case of registration statements and proxy statements, on
the dates of effectiveness and the dates of mailing,
respectively) (a) did not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading, and (b) complied in all material respects
with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be. The financial statements of
the Company included in the Company SEC Documents at the time
filed (and, in the case of registration statements and proxy
statements, on the date of effectiveness and the date of mailing,
respectively) complied as to form in all material respects with
applicable accounting requirements and with the published rules
and regulations of the Commission with respect thereto, were
prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated in the
notes thereto), and fairly present (subject in the case of
unaudited statements to normal, recurring and year-end audit
adjustments and any other adjustments described therein that are
not expected to be materially adverse to the Company and its
subsidiaries taken as a whole) in all material respects the
consolidated financial position of the Company as at the dates
thereof and the consolidated results of its operations and cash
flows for the periods then ended.
4.7 Absence of Certain Changes. Except as disclosed
in the Company SEC Documents filed with the Commission prior to
the date hereof or as set forth in Section 4.7 of the Company
Disclosure Schedule, since January 1, 1996, each of the Company
and its subsidiaries has conducted its business in the ordinary
course, and there has been no (i) material adverse change in the
assets, liabilities, results of operations, business or financial
condition of the Company and its subsidiaries taken as a whole,
(ii) material adverse effect on the ability of the Company to
consummate the transactions contemplated hereby, (iii)
declaration, setting aside or payment of any dividend or other
distribution with respect to its share capital, or (iv) change in
its accounting principles, practices or methods, except as
required by GAAP.
4.8 Undisclosed Liabilities. Except (i) as and to the
extent disclosed or reserved against on the consolidated balance
sheet of the Company as of March 31, 1996 or the notes thereto
included in the Company SEC Documents filed with the Commission
prior to the date hereof or (ii) as incurred after the date
thereof in the ordinary course of business and not prohibited by
this Agreement, neither the Company nor any of its subsidiaries
have any liabilities or obligations of any nature, whether known
or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due, that, individually or in the
aggregate, (i) have or would reasonably be expected to have a
material adverse effect on the Company or (ii) are required to be
reflected or reserved against on a consolidated balance sheet of
the Company and its subsidiaries (including the notes thereto)
prepared in accordance with GAAP.
4.9 Taxes. Except as set forth in Section 4.9 of the
Company Disclosure Schedule, (i) the Company and its subsidiaries
have duly filed all Bermuda, United States federal, state and
local and non-United States income, franchise, excise, real and
personal property and other tax returns and reports (including,
but not limited to, those filed on a consolidated, combined or
unitary basis) required to have been filed by the Company or its
subsidiaries with relevant tax authorities prior to the date
hereof, except those as to which the failure to file would not
have or would not reasonably be expected to have a material
adverse effect on the Company, (ii) all of the foregoing returns
and reports are true, complete and correct in all material
respects, and the Company and its subsidiaries have paid or,
prior to the Effective Time, will pay all taxes required to be
paid in respect of the periods covered by such returns or reports
to any Bermuda, United States federal, state and local or non-
United States taxing authority, except those as to which the
failure to pay would not reasonably be expected to have a
material adverse effect on the Company, (iii) the Company has
paid or made adequate provision (in accordance with GAAP) in the
financial statements of the Company included in the Company SEC
Documents filed with the Commission prior to the date hereof for
all taxes payable in respect of all periods ending on or prior to
December 31, 1995, except those as to which the failure to pay
would not reasonably be expected to have a material adverse
effect on the Company, (iv) neither the Company nor any of its
subsidiaries will have any material liability for any taxes in
excess of the amounts so paid or reserves so established and
neither the Company nor any of its subsidiaries is delinquent in
the payment of any material tax, assessment or governmental
charge, (v) no deficiencies for any tax, assessment or
governmental charge have been proposed in writing, asserted or
assessed (tentatively or definitely), in each case, by any taxing
authority, against the Company or any of its subsidiaries for
which there are not adequate reserves (in accordance with GAAP)
and (vi) as of the date of this Agreement, there are no pending
requests for waivers of the time to assess any such tax, other
than those made in the ordinary course and for which payment has
been made or there are adequate reserves (in accordance with
GAAP).
4.10 Litigation; Compliance with Law. Except as
disclosed in the Company SEC Documents filed prior to the date
hereof or as set forth in Section 4.10 of the Company Disclosure
Schedule, there is no Action pending or, to the knowledge of the
Company, threatened against the Company or any of its
subsidiaries which, individually or in the aggregate, would have
or reasonably be expected to have a material adverse effect on
the Company or a material adverse effect on the ability of the
Company to consummate the transactions contemplated hereby.
Neither the Company nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree which, individually
or in the aggregate, would have or reasonably be expected to have
a material adverse effect on the Company materially impair or
delay the ability of the Company to consummate the transactions
contemplated hereby. Each of the Company and its subsidiaries is
in compliance with, and at all times since January 1, 1995 has
been in compliance with, all Applicable Laws relating to it or
its business or properties, except for any such failures to be in
compliance therewith which, individually or in the aggregate,
would not have a material adverse effect on the Company. Each of
the Company and its subsidiaries is in possession of all Permits
necessary to own, lease and operate its properties and to carry
on its business as it is now being conducted, except for any such
Permits the failure of which to possess, individually or in the
aggregate, would not have or reasonably be expected to have a
material adverse effect on the Company.
4.11 Registration Statement. None of the information
provided by the Company or any of its subsidiaries for inclusion
in the Registration Statement at the time it becomes effective
or, in the case of the Joint Proxy Statement, at the date of
mailing, will contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The Joint Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act. No
representation or warranty is made by the Company in this Section
with respect to statements made or incorporated by reference in,
or omitted from, the Registration Statement or the Joint Proxy
Statement based on information supplied by Parent specifically
for inclusion or incorporation by reference therein.
4.12 Accounting Matters. To the best knowledge of the
Company, neither the Company nor any of its affiliates has taken
or agreed to take any action that (without giving effect to any
actions taken or agreed to be taken by Parent or any of its
affiliates) would prevent Parent from accounting for the business
combination to be effected by the Amalgamation as a pooling-of-
interests for financial reporting purposes in accordance with
Accounting Principles Board Opinion No. 16, the interpretative
releases issued pursuant thereto, and the pronouncements of the
Commission thereon.
4.13 Employee Benefit Plans. Section 4.13 of the
Company Disclosure Schedule sets forth the name of each Company
Plan and sets forth each employment, severance, termination,
option, benefit, consulting or retirement plan or agreement which
contains any special provision becoming effective upon the
occurrence of a change in control of the Company, copies of which
have heretofore been made available to Parent. Neither the
Company nor any of its ERISA Affiliates has any liabilities with
respect to any Company Plan, including without limitation, any
liabilities under ERISA, except for liabilities which would not
have or reasonably be expected to have a material adverse effect
on the Company. All Company Plans that are intended to be
qualified under Section 401(a) of the Code have received a
favorable determination letter as to such qualification from the
Internal Revenue Service, and no event has occurred, either by
reason of any action or failure to act, which would cause the
loss of any such qualification. As used herein: (i) "Company
Plan" means a "pension plan" (as defined in Section 3(2) of
ERISA, other than a Company Multiemployer Plan) or a "welfare
plan" (as defined in Section 3(1) of ERISA) established or
maintained by the Company or any of its ERISA Affiliates or to
which the Company or any of its ERISA Affiliates has contributed
or otherwise may have any liability; and (ii) "Company
Multiemployer Plan" means a "multiemployer plan" (as defined in
Section 4001 (a)(3) of ERISA) to which the Company or any of its
ERISA Affiliates is or has been obligated to contribute or
otherwise may have any liability.
4.14 Contracts. None of the Company, any of its
subsidiaries, or, to the knowledge of the Company, any other
party thereto is in violation of or in default in respect of, nor
has there occurred an event or condition which with the passage
of time or giving of notice (or both) would constitute a default
by the Company under, any Contract to which it is a party, except
such violations or defaults under such Contracts which,
individually or in the aggregate, would not have a material
adverse effect on the Company. Each contract to which the
Company or any of its subsidiaries is a party is valid, binding
and enforceable and in full force and effect, except where
failure to be valid, binding and enforceable and in full force
and effect would not have a material adverse effect on the
Company. Except as disclosed in the Company SEC Documents filed
with the Commission prior to the date hereof or as set forth in
Section 4.14 of the Company Disclosure Schedule, neither the
Company nor its subsidiaries is a party to any Contract that
expressly limits the ability of the Company or any subsidiary to
compete in or conduct any line of business or compete with any
person or in any geographic area or during any period of time.
4.15 Environmental Matters.
(a) Except as disclosed in the Company SEC Documents
filed with the Commission prior to the date hereof or as set
forth in Section 4.15(a) of the Company Disclosure Schedule,
there are, with respect to the Company, its subsidiaries or any
predecessor of the foregoing, no past or present violations of
Environmental Laws, releases of any material into the
environment, actions, omissions, activities, circumstances,
conditions, events, incidents, or contractual obligations which
may give rise to any common law environmental liability or any
liability under Environmental Laws or otherwise may require
remedial action in order to protect human health or the
environment, other than those which, individually or in the
aggregate, would not reasonably be expected to have a material
adverse effect on the Company, and none of the Company and its
subsidiaries has received any notice with respect to any of the
foregoing, nor is any Action pending or threatened in connection
with any of the foregoing, in each case, other than those which,
individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on the Company.
(b) Except as set forth in Section 4.15(b) of the
Company Disclosure Schedule, no Hazardous Materials are contained
on or about any real property currently owned, leased or used by
the Company or any of its subsidiaries and no Hazardous Materials
were released on or about any real property previously owned,
leased or used by the Company or any of its subsidiaries during
the period the property was so owned, leased or used, other than
those which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the
Company.
4.16 Parent Stock Ownership. Neither the Company nor
any of its subsidiaries owns any shares of Parent Common Stock or
other securities exercisable for, or convertible into, Parent
Common Stock.
4.17 Board Action. The Board of Directors of the
Company, at a meeting duly called and held, has duly adopted,
subject to confirmation by the Company Shareholders, an amendment
to the Company s Bye-Laws (the "Bye-Law Amendment") to provide
that the vote of holders of capital shares of the Company
required to approve an amalgamation shall be a simple majority of
the votes cast at a general meeting and a simple majority of the
votes cast by holders of shares of any class of capital shares of
the Company entitled to vote as a class, if a class meeting is
required.
4.18 Takeover Laws. Prior to the date hereof, the
Board of Directors of the Company has taken all action necessary
to exempt under or make not subject to any "fair price,"
"moratorium," "control share acquisition" or similar anti-
takeover statute or regulation enacted under any Bermuda law or
any other law that purports to limit or restrict business
combinations or the ability to acquire or vote shares: (i) the
execution of this Agreement, (ii) the Amalgamation and (iii) the
transactions contemplated hereby.
4.19 Brokerage and Finder's Fees; Expenses. Except
for the Company's obligation to an internationally recognized
investment banking firm (a copy of the written agreement relating
to such obligation having previously been provided to Parent),
the Company has not incurred and will not incur, directly or
indirectly, any brokerage, finder's or similar fee in connection
with the transactions contemplated by this Agreement. Other than
the foregoing obligation, the Company is not aware of any claim
for payment of any finder's fees, brokerage or agent's
commissions or other like payments in connection with the
negotiation of this Agreement or in connection with the
transactions contemplated hereby.
ARTICLE V
COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to the
period from and after the execution of this Agreement:
5.1 Mutual Covenants.
(a) General; HSR Act. Each of the parties hereto
shall (i) make promptly its respective filings, and thereafter
make any other required submissions under the HSR Act and
Competition Laws with respect to the transactions contemplated
hereby, (ii) use its reasonable best efforts to take, or cause to
be taken, all appropriate action, and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated herein, including, without limitation, using its
reasonable best efforts to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to Contracts with such party
or its subsidiaries as are necessary for the consummation of the
transactions contemplated herein and (iii) use its reasonable
best efforts to comply with the Securities Act, the Exchange Act
and applicable non-United States securities laws. Each party
shall use its reasonable best efforts not to take any action, or
enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be
untrue or result in a breach of any covenant made by it in this
Agreement.
(b) Pooling-of-Interests. Each of the parties shall
not take any action that would prevent the Amalgamation from
qualifying for, and shall use its reasonable best efforts to
cause the Amalgamation to qualify for, pooling-of-interests
accounting treatment for financial reporting purposes.
(c) Tax-Free Treatment. Each of the parties shall not
take any action that would prevent the Amalgamation from
constituting, and shall use its reasonable best efforts to cause
the Amalgamation to constitute, a tax-free "reorganization" under
Section 368(a) of the Code and to permit the legal counsel
referred to in Sections 6.2(e) and (f) and 6.3(g) and (h) to
issue their respective opinions provided for therein.
(d) Public Announcements. Unless otherwise required
by Applicable Laws or requirements of the National Association of
Securities Dealers, the New York Stock Exchange, Inc. or the
London Stock Exchange, as applicable (and in such events only if
time does not permit), at all times prior to the earlier of the
Effective Time or termination of this Agreement pursuant to
Section 7.1, Parent and the Company shall consult with each other
before issuing any press release with respect to the Amalgamation
and shall not issue any such press release prior to such
consultation.
(e) Access. From and after the date of this Agreement
until the Effective Time (or the termination of this Agreement),
Parent and the Company shall permit representatives of the other
to have appropriate access at all reasonable times to the other's
premises, properties, books, records, contracts, tax records and
documents. Information obtained by Parent and the Company
pursuant to this Section 5.1(e) shall be subject to the
provisions of the confidentiality agreement between them dated
June 28, 1996 (the "Confidentiality Agreement"), the terms of
which are incorporated herein by reference.
(f) Notification of Certain Matters. Each party shall
give prompt notice to the other parties of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of
which would cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate at or
prior to the Effective Time and (ii) any material failure of such
party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to
this Section 5.1(f) shall not limit or otherwise affect the
remedies available hereunder to the other parties. Each of the
parties shall promptly advise the others of (i) any notice or
communication from any person alleging that the consent of such
person may be required in connection with the transactions
contemplated by this Agreement and (ii) any notice or
communication received from any Governmental Authority in
connection with the transactions contemplated by this Agreement.
(g) Cooperation. Parent and the Company shall
together, or pursuant to an allocation of responsibility to be
agreed upon between them, coordinate and cooperate (i) with
respect to the timing of the Parent Meeting and the Company
Meeting (each as defined below), (ii) in determining whether any
action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material
Contracts, in connection with the consummation of the
transactions contemplated by this Agreement, (iii) in seeking any
such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith
and timely seeking to obtain any such actions, consents,
approvals or waivers, (iv) in assisting Parent in planning to
structure its holding of the Surviving Company and its
subsidiaries after the Amalgamation, and (v) in seeking to
satisfy the conditions set forth in Article VI, including by
providing information to the Company s financial advisor in order
to enable it to render the opinion referred to in Section 5.3(a).
5.2 Covenants of Parent.
(a) Parent Stockholders Meeting. Parent shall take
all action in accordance with Applicable Laws and its Certificate
of Incorporation and By-Laws necessary to convene a meeting of
Parent Stockholders (the "Parent Meeting") as promptly as
practicable to consider and vote upon the approval of the
issuance of shares of Parent Common Stock in the Amalgamation,
and subject to its directors' fiduciary duties, the Joint Proxy
Statement shall contain the recommendation of the Board of
Directors of Parent that Parent Stockholders vote in favor of
such issuance.
(b) Preparation of Joint Proxy Statement. Parent
shall cooperate with the Company to, and shall, as soon as is
reasonably practicable, prepare and file the Joint Proxy
Statement with the Commission on a confidential basis. Parent
shall cooperate with the Company to, and shall, prepare and file
the Registration Statement with the Commission as soon as is
reasonably practicable following clearance of the Joint Proxy
Statement by the Commission and shall cooperate with the Company
to, and shall, use all reasonable efforts to have the
Registration Statement declared effective by the Commission as
promptly as practicable and to maintain the effectiveness of the
Registration Statement through the Effective Time. Parent shall
use all reasonable efforts to mail at the earliest practicable
date to Parent Stockholders the Joint Proxy Statement, which
shall include all information required under Applicable Laws to
be furnished to Parent Stockholders in connection with the
Amalgamation and the transactions contemplated thereby. Parent
shall advise the Company promptly after it receives notice of (i)
the Registration Statement being declared effective or any
supplement or amendment thereto being filed with the Commission,
(ii) the issuance of any stop order in respect of the
Registration Statement, and (iii) the receipt of any
correspondence, comments or requests from the Commission in
respect of the Registration Statement. Parent also shall
cooperate with the Company to, and shall, take such other
reasonable actions (other than qualifying to do business in any
jurisdiction in which it is not so qualified) required to be
taken under any applicable securities laws in connection with the
issuance of shares of Parent Common Stock in the Amalgamation.
(c) Indemnification. Parent agrees with the Company
for the benefit of itself and as trustee for the present and
former directors and officers of the Company and its
subsidiaries, that for a period of six years from and after the
Effective Time, Parent shall cause the Surviving Company to
indemnify and hold harmless to the fullest extent permitted under
Applicable Law each person who is now, or has been at any time
prior to the Effective Time, an officer or director of the
Company or any of its subsidiaries (individually, an "Indemnified
Party" and collectively, the "Indemnified Parties"), against all
losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and
amounts paid in settlement in connection with any actual or
threatened claim, action, suit, proceeding or investigation
arising out of or pertaining to acts or omissions, or alleged
acts or omissions, by them in their capacities as such,
provided, however, that the Surviving Company shall not be liable
for any settlement effected without its written consent (which
consent shall not be unreasonably withheld). For a period of six
years from and after the Effective Time, Parent shall cause the
Surviving Company to keep in effect the Company's current
provisions in its Memorandum of Association and Bye-Laws
providing for exculpation of director and officer liability and
indemnification of the Indemnified Parties to the fullest extent
permitted under the Companies Act, which provisions shall not be
amended except as required by Applicable Law or except to make
changes permitted by law that would enlarge the Indemnified
Parties' right of indemnification.
(d) Directors' and Officers' Insurance. Parent agrees
with the Company for the benefit of itself and as trustee for the
present and former directors and officers of the Company and its
subsidiaries, to use its reasonable efforts to cause the
Surviving Company to maintain in effect for not less than six
years after the Effective Time the current policies of directors'
and officers' liability insurance maintained by the Company with
respect to matters occurring prior to the Effective Time;
provided, however, that (i) the Surviving Company may substitute
therefor policies of at least the same coverage containing terms
and conditions which are no less advantageous to the covered
officers and directors and (ii) the Surviving Company shall not
be required to pay an annual premium for such insurance coverage
in excess of one hundred-fifty percent of the current annual
premium paid by the Company for its existing coverage, but in
such case shall purchase as much coverage as possible for such
amount.
(e) Listing Application. Parent shall, as soon as
practicable following the date hereof, prepare and submit to the
National Association of Securities Dealers a listing application
covering the shares of Parent Common Stock issuable in the
Amalgamation, and shall use its reasonable best efforts to
obtain, prior to the Effective Time, approval for the inclusion
of such shares of Parent Common Stock on the Nasdaq National
Market.
(f) Affiliates of Parent. Parent shall use its
reasonable best efforts to cause each such person who may be at
the Effective Time or was on the date hereof an "affiliate" of
Parent within the meaning of Rule 145 under the Securities Act,
to execute and deliver to Parent not less than 35 days prior to
the date of the Parent Meeting written undertakings in form
reasonably acceptable to Parent.
(g) Parent Board. Immediately after the Effective
Time, Parent will take such action as may be necessary to cause
Michael A. Ashcroft to be elected to Parent's Board of Directors.
(h) Reservation of Shares. At or before the Effective
Time, Parent will reserve for issuance the number of shares of
Parent Common Stock then issuable upon exercise or conversion of
any securities options or warrants of the Company or its
subsidiaries which by their terms shall after the Effective Time
be exercisable for, or convertible into, Parent Common Stock.
(i) ASH Transaction. Parent will cooperate with the
Company with respect to completion of the Company s recently
announced proposed acquisition of Automated Security (Holdings)
PLC.
(j) Conduct of Parent's Operations. During the period
from the date of this Agreement to the Effective Time, Parent
shall conduct its operations in the ordinary course except as
expressly permitted by this Agreement and shall use its
reasonable efforts to maintain and preserve its business
organization and its material rights and franchises and to retain
the services of its officers and key employees and maintain
relationships with customers, suppliers and other third parties
to the end that their goodwill and ongoing business shall not be
impaired in any material respect, it being understood that the
foregoing shall not restrict Parent from making acquisitions of
companies in its existing lines of business (which for purposes
hereof consists of electronic security services, solid waste
services, outdoor advertising services, and automotive retailing
and related services), (i) in the case of publicly-traded
companies, with the consent of the Company (which consent shall
not unreasonably be withheld) and (ii) in the case of privately-
held companies, in which the consideration payable by Parent does
not exceed $50,000,000 for any individual acquisition or
$500,000,000 in the aggregate for all such acquisitions.
(k) No Solicitation. Parent agrees that, during the
term of this Agreement, it shall not, and shall not authorize or
permit any of its subsidiaries or any of its or its subsidiaries'
directors, officers, employees, agents or representatives,
directly or indirectly, to (i) solicit, initiate, encourage or
facilitate, or furnish access or provide information in
furtherance of, any inquiries or the making of any proposal with
respect to any amalgamation, recapitalization, merger,
consolidation or other business combination involving Parent, or
acquisition of any share capital or any material portion of the
assets of Parent, or any combination of the foregoing (a "Parent
Competing Transaction"), or (ii) negotiate, otherwise engage in
discussions with any person (other than the Company or its
directors, officers, employees, agents and representatives) with
respect to any Parent Competing Transaction; provided that the
Parent may (i) furnish information to, negotiate or otherwise
engage in discussions with, any party which delivers a written
proposal for a Parent Competing Transaction if and so long as (A)
the Board of Directors of Parent determines in good faith, based
upon advice of its outside legal counsel, that such action is
necessary to comply with its fiduciary duties under Applicable
Law and (B) prior to furnishing non-public information to such
person, Parent receives from such person an executed
confidentiality agreement with terms no less favorable to Parent
than those contained in the Confidentiality Agreement and (ii)
take a position with respect to the Amalgamation or a Parent
Competing Transaction or amend or withdraw such position, in
compliance with Rule 14d-9 or Rule 14e-2 promulgated under the
Exchange Act. From and after the execution of this Agreement,
Parent shall promptly advise the Company in writing of the
receipt, directly or indirectly, of any inquiries, discussions,
negotiations, or proposals relating to any Parent Competing
Transaction (including the status thereof).
(l) London Stock Exchange Listing. If requested by the
Company, Parent shall use its reasonable best efforts to cause
the Parent Common Stock to be listed on the London Stock
Exchange.
5.3 Covenants of the Company.
(a) Opinion of Financial Advisor. The Company shall
use its reasonable best efforts to cause an internationally
recognized investment banking firm to render, as promptly as
practicable, an opinion (the "Fairness Opinion") as to the
fairness, from a financial point of view, to the Company
Shareholders of the consideration to be received by the Company
Shareholders pursuant to the Amalgamation.
(b) Company Shareholders Meeting. The Company shall
take all action in accordance with Applicable Laws and its
Memorandum of Association, as altered, and Bye-Laws, necessary to
convene a meeting of Company Shareholders (the Company Meeting )
as promptly as practicable to consider and vote upon the Bye-Law
Amendment, the approval of the Amalgamation, this Agreement and
the transactions contemplated hereby and, subject to its
directors' fiduciary duties, the Joint Proxy Statement shall
contain the recommendation of the Board of Directors of the
Company that the Company Shareholders vote in favor of the Bye-
Law Amendment, the Amalgamation, this Agreement and the
transactions contemplated by this Agreement.
(c) Information for the Registration Statement and
Preparation of Joint Proxy Statement. The Company shall promptly
furnish Parent with all information concerning it as may be
required for inclusion in the Registration Statement. The
Company shall cooperate with Parent in the preparation of the
Registration Statement in a timely fashion and shall use all
reasonable efforts to have the Registration Statement declared
effective by the Commission as promptly as practicable. If at
any time prior to the Effective Time, any information pertaining
to the Company contained in or omitted from the Registration
Statement makes such statements contained in the Registration
Statement false or misleading, the Company shall promptly so
inform Parent and provide Parent with the information necessary
to make statements contained therein not false and misleading.
The Company shall use all reasonable efforts to cooperate with
Parent in the preparation and filing of the Joint Proxy Statement
with the Commission on a confidential basis. The Company shall
use all reasonable efforts to mail at the earliest practicable
date to Company Shareholders the Joint Proxy Statement, which
shall include all information required under Applicable Laws to
be furnished to Company Shareholders in connection with the
Amalgamation and the transactions contemplated thereby.
(d) Conduct of the Company's Operations. During the
period from the date of this Agreement to the Effective Time, the
Company shall conduct its operations in the ordinary course
except as expressly permitted by this Agreement and shall use its
reasonable efforts to maintain and preserve its business
organization and its material rights and franchises and to retain
the services of its officers and key employees and maintain
relationships with customers, suppliers and other third parties
to the end that their goodwill and ongoing business shall not be
impaired in any material respect. Without limiting the
generality of the foregoing, during the period from the date of
this Agreement to the Effective Time or the earlier termination
of this Agreement pursuant to Section 7.1, the Company shall not,
except as otherwise expressly permitted by this Agreement,
without the prior written consent of Parent:
(i) do or effect any of the following actions
with respect to its securities: (A) adjust, split, combine
or reclassify its share capital, (B) make, declare or pay
any dividend or distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any share capital or
any securities or obligations convertible into or
exchangeable for any share capital, (C) grant any person
(other than Parent) any right or option to acquire any share
capital, (D) issue, deliver or sell or agree to issue,
deliver or sell any additional share capital or any
securities or obligations convertible into or exchangeable
or exercisable for any share capital or such securities
(except pursuant to the exercise of options outstanding on
the date hereof), or (E) enter into any agreement,
understanding or arrangement with respect to the sale or
voting of its share capital;
(ii) make or propose any changes in its Memorandum
of Association, as altered, or Bye-Laws or other
organizational documents;
(iii) make any acquisitions, except for
acquisitions of companies in its existing lines of business
(which for purposes hereof consist of electronic security
services and automotive auction services), (a) in the case
of publicly-traded companies, with the consent of Parent
(which consent shall not unreasonably be withheld) and (b)
in the case of privately-held companies, in which the
consideration payable by the Company does not exceed
$50,000,000 for any individual acquisition or $500,000,000
in the aggregate for all such acquisitions;
(iv) enter into or modify any employment,
severance, termination or similar agreements or arrangements
with, or grant any bonuses, salary increases, severance or
termination pay to, any officer, director, consultant or
employee other than in the ordinary course of business
consistent with past practice or otherwise increase the
compensation or benefits provided to any officer, director,
consultant or employee other than in the ordinary course of
business consistent with past practice, except as may be
required by Applicable Law, any applicable collective
bargaining agreement or a binding written contract in effect
on the date of this Agreement (it being understood that no
changes may be made to the compensation and benefit
arrangements currently in effect for Michael A. Ashcroft or
Stephen J. Ruzika);
(v) change any method or principle of accounting
in a manner that is inconsistent with past practice (except
as may be required to conform with GAAP);
(vi) permit or cause any subsidiary to do any of
the foregoing or agree or commit to do any of the foregoing;
provided, that the foregoing shall not prohibit payment of
dividends by any subsidiary to the Company or wholly-owned
subsidiary of the Company; or
(vii) agree in writing or otherwise to take
any of the foregoing actions.
(e) No Solicitation. The Company agrees that, during
the term of this Agreement, it shall not, and shall not authorize
or permit any of its subsidiaries or any of its or its
subsidiaries' directors, officers, employees, agents or
representatives, directly or indirectly, to (i) solicit,
initiate, encourage or facilitate, or furnish access or provide
information in furtherance of, any inquiries or the making of any
proposal with respect to any amalgamation, recapitalization,
merger, consolidation or other business combination involving the
Company, or acquisition of any share capital or any material
portion of the assets of the Company, or any combination of the
foregoing (a "Company Competing Transaction"), or (ii) negotiate,
or otherwise engage in discussions with, any person (other than
Parent or its directors, officers, employees, agents and
representatives) with respect to any Company Competing
Transaction; provided that the Company may (i) furnish
information to, negotiate or otherwise engage in discussions
with, any party which delivers a written proposal for a Company
Competing Transaction if and so long as (A) the Board of
Directors of the Company determines in good faith, based upon
advice of its outside legal counsel, that such action is
necessary to comply with its fiduciary duties under Applicable
Law and (B) prior to furnishing non-public information to such
person, the Company receives from such person an executed
confidentiality agreement with terms no less favorable to the
Company than those contained in the Confidentiality Agreement and
(ii) take a position with respect to the Amalgamation or a
Company Competing Transaction or amend or withdraw such position,
in compliance with Rule 14d-9 or Rule 14e-2 promulgated under the
Exchange Act. The Company shall immediately cease all existing
activities, discussions and negotiations with any parties
relating to any of the foregoing. From and after the execution
of this Agreement, the Company shall promptly advise Parent in
writing of the receipt, directly or indirectly, of any inquiries,
discussions, negotiations, or proposals relating to any Company
Competing Transaction (including the status thereof).
(f) Redemption of Company Preference Shares. The
Company shall as promptly as practicable after the date hereof
call for redemption all outstanding Company Preference Shares so
that such shares shall have been redeemed and shall not be
outstanding as of the record date for the Company Meeting.
(g) Affiliates of the Company. The Company shall use
its reasonable best efforts to cause each such person who may be
at the Effective Time or was on the date hereof an "affiliate" of
the Company within the meaning of Rule 145 under the Securities
Act, to execute and deliver to Parent no less than 35 days prior
to the date of the Company Meeting written undertakings in the
form reasonably acceptable to Parent.
ARTICLE VI
CONDITIONS
6.1 Mutual Conditions. The obligations of the parties
hereto to consummate the Amalgamation shall be subject to
fulfillment of the following conditions:
(a) No temporary restraining order, preliminary or
permanent injunction or other order or decree which prevents the
consummation of the Amalgamation or the other transactions
contemplated by this Agreement shall have been issued and remain
in effect, and no statute, rule or regulation shall have been
enacted by any Governmental Authority which makes the
Amalgamation or such other transactions illegal.
(b) The Minister shall have consented to the
Amalgamation.
(c) All waiting periods applicable to the consummation
of the Amalgamation under the HSR Act shall have expired or been
terminated and all other material consents, approvals, permits or
authorizations required to be obtained prior to the Effective
Time from any Governmental Authority in connection with the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby shall have been obtained.
(d) The Amalgamation, this Agreement and the
transactions contemplated hereby shall have been duly approved by
the Company Shareholders and the issuance of shares of Parent
Common Stock in the Amalgamation shall have been duly approved by
Parent Stockholders.
(e) The Commission shall have declared the
Registration Statement effective and no stop order or similar
restraining order shall have been threatened by the Commission or
entered by the Commission or any state securities administrator.
(f) No Action shall be instituted by any Governmental
Authority which seeks to prevent consummation of the Amalgamation
or which seeks material damages in connection with the
transactions contemplated hereby which continues to be
outstanding.
(g) The shares of Parent Common Stock to be issued in
the Amalgamation shall have been authorized for inclusion on the
Nasdaq National Market.
(h) Parent shall have received a letter, in form and
substance reasonably satisfactory to Parent, from Arthur Andersen
LLP dated the date of the Joint Proxy Statement and confirmed in
writing at the Effective Time, stating that (i) to their
knowledge after due and diligent inquiry of management, there
have been no transactions or events with respect to Parent which
would, and the ownership structure and attributes of Parent and
its shareholders would not, proscribe the transactions
contemplated hereby, if consummated, from being considered as a
pooling of interests business combination and (ii) the
Amalgamation will qualify as a pooling of interests transaction
under Opinion 16 of the Accounting Principles Board.
(i) The Company shall have received a letter, in form
and substance reasonably satisfactory to the Company and Parent,
from Coopers & Lybrand (or another internationally recognized
accounting firm reasonably acceptable to Parent), dated the date
of the Joint Proxy Statement and confirmed in writing at the
Effective Time, stating that to their knowledge after due and
diligent inquiry of management, there have been no transactions
or events with respect to the Company which would, and the
ownership structure and attributes of the Company and its
shareholders would not, proscribe the transactions contemplated
hereby, if consummated, from being considered as a pooling of
interests business combination.
6.2 Additional Conditions to Obligations of the
Company. The obligations of the Company to consummate the
Amalgamation and the transactions contemplated hereby shall be
further subject to the fulfillment of the following conditions
unless waived by the Company:
(a) The representations and warranties of each of
Parent and Acquisition set forth in Article III shall be true and
correct on the date hereof and on and as of the Closing Date as
though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which
need be true and correct only as of the specified date), except
for such inaccuracies which, individually or in the aggregate,
have not had and would not reasonably be expected to have a
material adverse effect on Parent.
(b) Each of Parent and Acquisition shall have
performed in all material respects each obligation and agreement
and shall have complied in all material respects with each
covenant to be performed and complied with by it hereunder at or
prior to the Effective Time.
(c) Each of Parent and Acquisition shall have
furnished the Company with a certificate dated the Closing Date
signed on behalf of it by the Chairman, President or any Vice
President to the effect that the conditions set forth in Sections
6.2(a) and (b) have been satisfied.
(d) There shall have been no material adverse change
in, and no event, occurrence or development in the business of
Parent or its subsidiaries that, individually, or in the
aggregate, would have or would reasonably be expected to have a
material adverse effect on Parent.
(e) The Company shall have received an opinion of
reputable Bermuda counsel substantially to the effect that, under
Applicable Laws, for Bermuda tax purposes, the Amalgamation will
not be taxable to Parent, Acquisition, the Company or Company
Shareholders.
(f) The Company shall have received an opinion of
Weinberg & Green (or other counsel reasonably acceptable to the
Company) substantially to the effect that, on the basis of the
facts, representations and assumptions set forth in such opinion
which are consistent with the state of the facts then existing,
under Applicable Law, for United States federal income tax
purposes, the Amalgamation will constitute a reorganization under
Section 368 (a) of the Code and that no gain, loss or income will
be recognized by Parent, Acquisition, the Company or Company
Shareholders (other than in respect of cash received for
fractional shares). In rendering such opinion, Weinberg & Green
(or such other counsel) may require and rely on representations
contained in certificates of the Company and others, as they deem
reasonably appropriate.
(g) The Company shall have received a favorable
Fairness Opinion.
6.3 Additional Conditions to Obligations of Parent and
Acquisition. The obligations of Acquisition to consummate the
Amalgamation and the other transactions contemplated hereby shall
be further subject to the fulfillment of the following conditions
unless waived by each of Parent and Acquisition:
(a) The representations and warranties of the Company
set forth in Article IV shall be true and correct on the date
hereof and on and as of the Closing Date as though made on and as
of the Closing Date (except for representations and warranties
made as of a specified date, which need be true and correct only
as of the specified date), except for such inaccuracies which,
individually or in the aggregate, have not had and would not
reasonably be expected to have a material adverse effect on the
Company.
(b) The Company shall have performed in all material
respects each obligation and agreement and shall have complied in
all material respects with each covenant to be performed and
complied with by it hereunder at or prior to the Effective Time.
(c) The Company shall have furnished Parent with a
certificate dated the Closing Date signed on its behalf by its
Chairman, President or any Vice President to the effect that the
conditions set forth in Sections 6.3(a) and (b) have been
satisfied.
(d) Each person who may be at the Effective Time or
was on the date of this Agreement an "affiliate" of the Company
within the meaning of Rule 145 under the Securities Act, shall
have executed and delivered to Parent at least 35 days prior to
the date of the Company Meeting written undertakings in the form
reasonably acceptable to Parent.
(e) The holders of not more than five percent of the
outstanding Company Common Shares shall have complied with the
procedures set forth in Section 106 of the Companies Act with
respect to appraisal rights.
(f) There shall have been no material adverse change
in, and no event, occurrence or development in the business of
the Company or its subsidiaries that, individually or in the
aggregate, would have or would reasonably be expected to have a
material adverse effect on the Company.
(g) Parent shall have received an opinion of reputable
Bermuda counsel and the Company shall have received an opinion of
reputable Bermuda counsel (reasonably acceptable to Parent),
substantially to the effect that, under Applicable Law, for
Bermuda tax purposes, the Amalgamation will not be taxable to
Parent, Acquisition, the Company or Company Shareholders.
(h) Parent shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom and the Company shall have received
an opinion of Weinberg & Green (or other counsel to the Company
reasonably acceptable to Parent) substantially to the effect
that, on the basis of the facts, representations and assumptions
set forth in such opinion which are consistent with the state of
the facts then existing, under Applicable Law, for United States
federal income tax purposes, the Amalgamation will constitute a
reorganization under Section 368(a) of the Code and that no gain,
loss or income will be recognized by Parent, Acquisition, the
Company or Company Shareholders (other than in respect of cash
received for fractional shares). In rendering such opinions,
Skadden, Arps, Slate, Meagher & Flom and Weinberg & Green (or
such other counsel) may require and rely on representations
contained in certificates of Parent, the Company, Acquisition
and others, as they deem reasonably appropriate.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after
approval and adoption of this Agreement by Company Shareholders
and Parent Stockholders:
(a) by mutual consent of Parent and the Company;
(b) by either Parent or the Company, if any permanent
injunction or other order or decree of a court or other competent
Governmental Authority preventing the consummation of the
Amalgamation shall have become final and nonappealable, provided
that the party seeking to terminate this Agreement under this
Section 7.1(b) shall have used its reasonable efforts to remove
such injunction, order or decree;
(c) by either Parent or the Company, if the Effective
Time shall not have occurred before December 31, 1996, unless
extended by the Boards of Directors of both Parent and the
Company (provided that the right to terminate this Agreement
under this Section 7.1(c) shall not be available to any party
whose failure or whose affiliate's failure to perform any
material covenant or obligation under this Agreement has been the
cause of or resulted in the failure of the Amalgamation to occur
on or before such date);
(d) by Parent or the Company, if at the Company
Meeting (including any adjournment or postponement thereof) the
requisite vote of the Company Shareholders to approve the
Amalgamation, this Agreement and the transactions contemplated
hereby shall not have been obtained;
(e) by Parent or the Company, if at the Parent Meeting
(including any adjournment or postponement thereof) the requisite
vote of the Parent Stockholders to approve the issuance of Parent
Common Stock in the Amalgamation shall not have been obtained;
(f) by Parent or the Company (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein), if there shall have been a material breach of any of the
covenants or agreements or any of the representations or
warranties set forth in this Agreement on the part of the other
party, which breach is not cured within thirty days following
written notice given by the terminating party to the party
committing such breach, or which breach, by its nature, cannot be
cured prior to the Closing;
(g) by Parent or the Company at any time at or before
the opening of business on July 17, 1996 if the Company shall not
have received a favorable Fairness Opinion on or before the
opening of business on July 15, 1996;
(h) by Parent, if the holders of more than five
percent of the outstanding Company Common Shares shall have
complied with the procedures set forth in Section 106 of the
Companies Act with respect to appraisal rights;
(i) by the Company, in order to accept a proposal for a
Company Competing Transaction that the Board of Directors of the
Company has determined in good faith, based on a written opinion
of an internationally recognized investment banking firm, is more
favorable to the Company Shareholders, from a financial point of
view, than the Amalgamation contemplated by this Agreement
(including any adjustment to the terms and conditions of the
Amalgamation proposed by Parent in response to such proposal for
a Company Competing Transaction), provided that the Company shall
have given Parent written notice of such proposal at least
twenty-four hours prior to such termination, setting forth in
reasonable detail the material terms and provisions (including
price) of such Company Competing Transaction;
(j) by Parent, if the Company s Board of Directors
shall have (a) withdrawn or modified in a manner adverse to
Parent its recommendation that Company Shareholders approve the
Bye-Law Amendment, the Amalgamation, this Agreement and the
transactions contemplated hereby or (b) recommended a Company
Competing Transaction; or
(k) by the Company, if Parent's Board of Directors
shall have withdrawn or modified in a manner adverse to the
Company its recommendation that Parent Stockholders approve the
issuance of shares of Parent Common Stock in the Amalgamation.
7.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 7.1, this
Agreement, except for the provisions of the last sentence of
Section 5.1(e) and the provisions of this Section 7.2 and Section
8.10, shall become void and have no effect, without any liability
on the part of any party or its directors, officers or
stockholders. Notwithstanding the foregoing, nothing in this
Section 7.2 shall relieve any party to this Agreement of
liability for a material breach of any provision of this
Agreement.
7.3 Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective
Boards of Directors, at any time before or after adoption of this
Agreement by Company Shareholders or authorization of issuance of
shares of Parent Common Stock in the Amalgamation by Parent
Stockholders, but after each such approval or authorization, no
amendment shall be made which by law requires further approval or
authorization by the Company Shareholders or Parent Stockholders,
as the case may be, without such further approval or
authorization. Notwithstanding the foregoing, this Agreement may
not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the
Effective Time, Parent (with respect to the Company) and the
Company (with respect to Parent and Acquisition) by action taken
or authorized by their respective Boards of Directors, may, to
the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of such
party, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such
party.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations and Warranties. The
representations, warranties and covenants made herein by the
parties hereto shall not survive the Effective Time, except those
covenants and agreements of the parties hereto which by their
terms expressly contemplate performance after the Effective Time,
which shall survive for the periods set forth therein
8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed) or
dispatched by a nationally recognized overnight courier service
to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Acquisition:
Republic Industries, Inc.
200 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, FL 33301
Attention: Richard L. Handley, Esq.
Telecopy No.: 954-522-8219
with a copy to
Roger S. Aaron, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telecopy No.: 212-735-2000
(b) if to the Company:
ADT Limited
Cedar House
41 Cedar Avenue
Hamilton HM 12
Bermuda
Attention: John D. Campbell, Esq.
Telecopy No.: 441-292-8666
with a copy to
J.J. McCarthy, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10007
Telecopy No.: 212-450-5648
8.3 Interpretation. When a reference is made in this
Agreement to an Article or Section, such reference shall be to an
Article or Section of this Agreement unless otherwise indicated.
The headings and the table of contents contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
8.4 Counterparts. This Agreement may be executed in
counterparts, which together shall constitute one and the same
Agreement. The parties may execute more than one copy of the
Agreement, each of which shall constitute an original.
8.5 Entire Agreement. This Agreement (including the
documents and the instruments referred to herein), the Warrant
and the Confidentiality Agreement constitute the entire agreement
among the parties and supersede all prior agreements and
understandings, agreements or representations by or among the
parties, written and oral, with respect to the subject matter
hereof and thereof.
8.6 No Third Party Beneficiaries. Nothing in this
Agreement, express or implied, is intended to or shall confer
upon any person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
8.7 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of Bermuda without
regard to principles of conflicts of law.
8.8 Specific Performance. The transactions
contemplated by this Agreement are unique. Accordingly, each of
the parties acknowledges and agrees that, in addition to all
other remedies to which it may be entitled, each of the parties
hereto is entitled to a decree of specific performance, provided
that such party is not in material default hereunder.
8.9 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other
parties.
8.10 Expenses. Parent and the Company shall pay their
own costs and expenses associated with the transactions
contemplated by this Agreement, except that the Company and
Parent shall share equally (i) the filing fees in connection with
the filing of the Joint Proxy Statement and Registration
Statement with the Commission, and (ii) the expenses incurred in
connection with printing and mailing the Joint Proxy Statement to
the Parent Stockholders and the Company Shareholders.
8.11 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
8.12 Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the
transactions contemplated by this Agreement may be brought
against any of the parties in the courts of Bermuda, and each of
the parties hereto hereby consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such
suit, action or proceeding and waives any objection to venue laid
therein.
8.13 Joinder by Acquisition. Parent and the Company
acknowledge that as of the date hereof Acquisition has not yet
been formed. As promptly as practicable after the date hereof,
Parent shall cause Acquisition to be formed and to become a party
to this Agreement by execution of this Agreement. Upon execution
of this Agreement, Acquisition shall be a party to this Agreement
for all purposes as if it had executed this Agreement as of the
date hereof. Prior to such execution of this Agreement by
Acquisition, (i) no representation or warranty, covenant or other
agreement of Acquisition shall be of any force and no
representation or warranty of Parent relating to Acquisition
shall be of any force or effect and (ii) this Agreement shall be
the valid and binding agreement of Parent and the Company.
IN WITNESS WHEREOF, the undersigned parties hereto have
executed this Agreement as of the date first written above.
REPUBLIC INDUSTRIES, INC.
By: /s/ H. Wayne Huizenga
Name: H. Wayne Huizenga
Title: Chief Executive Officer
[SEAL]
R.I./TRIANGLE, LTD.
By: /s/ Thomas Clements
Name: Thomas Clements
Title: Vice President [SEAL]
ADT LIMITED
By: /s/ Michael A. Ashcroft
Name: Michael A. Ashcroft
Title: Director [SEAL]
SCHEDULE A
Initial Directors of the Surviving Company
Ernest A. Morrison
Hallet, Whitney & Patton
The Corner House
20 Parliament Street
Hamilton, MM 12 Bermuda
Helen C. Adderley
Hallet, Whitney & Patton
The Corner House
20 Parliament Street
Hamilton, MM 12 Bermuda
EXHIBIT B
ADT LIMITED
Common Share Purchase Warrant
No. W-1 July 1, 1996
ADT Limited (the "Company"), a Bermuda company
limited by shares, for value received, hereby certifies
that Republic Industries, Inc., a Delaware corporation
("Parent Co."), or registered assigns, is entitled to
purchase from the Company 15,000,000 duly authorized,
validly issued, fully paid and nonassessable Common
Shares, nominal value $0.10 per share (the "Common
Stock") of the Company at the purchase price per share of
$20, during the Exercise Period, subject to the terms,
conditions and adjustments set forth below in this Warrant.
This Warrant was issued in connection with the
Agreement and Plan of Amalgamation (the "Amalgamation
Agreement"), dated July 1, 1996, by and among Parent Co.,
Acquisition, a Bermuda company limited by shares and a
wholly owned subsidiary of Parent Co., and the Company.
As used herein, the term "Warrant" shall refer, as appli-
cable, to such Warrant, as initially granted to Parent
Co., or to any Warrants issued in substitution therefor
or in connection with a transfer thereof. The Warrant
originally so issued evidences rights to purchase an
aggregate of 15,000,000 shares of Common Stock subject to
adjustment as provided herein. Certain capitalized terms
used in this Warrant are defined in section 14; referenc-
es to an "Exhibit" are, unless otherwise specified, to
one of the Exhibits attached to this Warrant and refer-
ences to a "section" are, unless otherwise specified, to
one of the sections of this Warrant.
1. Exercise of Warrant. 1.1. Manner of
Exercise. During the Exercise Period, this Warrant may
be exercised by the holder hereof, in whole but not in
part, during normal business hours on any Business Day,
by surrender of this Warrant to the Company, accompanied
by a subscription in substantially the form attached to
this Warrant (or a reasonable facsimile thereof) duly
executed by such holder and accompanied by payment, in
cash, by wire transfer of immediately available funds or
by certified or official bank check payable to the order
of the Company, in the amount obtained by multiplying (a)
the number of shares of Common Stock (without giving
effect to any adjustment thereof) designated in such
subscription by (b) $20, and such holder shall thereupon
be entitled to receive the number of duly authorized,
validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) determined as provided
in sections 2 through 4.
1.2. When Exercise Effective. The exercise of
this Warrant shall be deemed to have been effected imme-
diately prior to the close of business on the Business
Day on which this Warrant shall have been surrendered to
the Company as provided in section 1.1, and at such time
the Person or Persons in whose name or names any certifi-
cate or certificates for shares of Common Stock (or Other
Securities) shall be issuable upon such exercise as
provided in section 1.3 shall be deemed to have been
entered in the register of members of the Company and to
have become the holder or holders of record thereof.
1.3. Delivery of Stock Certificates, etc. As
soon as practicable after the exercise of this Warrant,
and in any event within three Business Days thereafter,
the Company at its expense (including the payment by it
of any applicable issue taxes) will cause to be issued in
the name of and delivered to the holder hereof or, as
such holder (upon payment by such holder of any applica-
ble transfer taxes) may direct, a certificate or certifi-
cates for the number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such holder shall be entitled
upon such exercise plus, in lieu of any fractional share
to which such holder would otherwise be entitled, cash in
an amount equal to the same fraction of the Market Price
per share on the Business Day next preceding the date of
such exercise.
1.4. Company to Reaffirm Obligations. The
Company will, at the time of the exercise of this War-
rant, upon the request of the holder hereof, acknowledge
in writing its continuing obligation to afford to such
holder all rights (including, without limitation, any
rights to registration under the Securities Act of the
shares of Common Stock or Other Securities issued upon
such exercise) to which such holder shall continue to be
entitled after such exercise in accordance with the terms
of this Warrant, provided that if the holder of this
Warrant shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company
to afford such rights to such holder.
1.5. Conditions to Exercise of Warrant. This
Warrant shall become exercisable from and after the
termination of the Amalgamation Agreement in accordance
with its terms.
1.6. Grant of Proxy.
(a) Upon the exercise of this Warrant, the
holder shall grant to the Chairman of the Company, a
proxy, irrevocable for a term of two years following the
commencement of the Exercise Period, to vote, at any
meeting of the shareholders of the Company, any shares of
Common Stock (or Other Securities) issued upon exercise
of this Warrant with respect to any matter which shall be
voted upon by the shareholders of the Company. Notwith-
standing the foregoing, such proxy shall automatically be
revoked with respect to any shares of Common Stock (or
Other Securities) at such time as such shares or Other
Securities are no longer held by Parent Co., its Affili-
ates or nominees thereof.
(b) Parent shall, and shall cause its
Affiliates or nominees, to tender any shares of Common
Stock (or Other Securities) received by Parent or such
Person upon exercise of the Warrant and then owned by
Parent or such Person in any tender offer in respect of
which the Board of Directors of the Company shall have
recommended that shareholders of the Company tender their
shares.
2. Adjustment of Common Stock Issuable Upon
Exercise.
2.1. General; Warrant Price. The number of
shares of Common Stock which the holder of this Warrant
shall be entitled to receive upon the exercise hereof
shall be determined by multiplying the number of shares
of Common Stock which would otherwise (but for the provi-
sions of this section 2) be issuable upon such exercise,
as designated by the holder hereof pursuant to section
1.1, by the fraction of which (a) the numerator is $20.00
and (b) the denominator is the Warrant Price in effect on
the date of such exercise. The "Warrant Price" shall
initially be $20.00 per share, shall be adjusted and
readjusted from time to time as provided in this section
2 and, as so adjusted or readjusted, shall remain in
effect until a further adjustment or readjustment thereof
is required by this section 2.
2.2. Adjustment of Warrant Price.
2.2.1 Issuance of Additional Shares of Common
Stock. In case the Company at any time or from time to
time after the date hereof shall issue or sell Additional
Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to section 2.3
or 2.4) without consideration or for a consideration per
share less than the greater of the Current Market Price
and the Warrant Price in effect immediately prior to such
issue or sale, other than any shares of Common Stock
issued in connection with the acquisition by the Company
of Automated Security (Holdings) PLC ( ASH ), then, and
in each such case, subject to section 2.8, such Warrant
Price shall be reduced, concurrently with such issue or
sale, to a price (calculated to the nearest $.001)
determined by multiplying such Warrant Price by a
fraction
(a) the numerator of which shall be (i) the
number of shares of Common Stock outstanding
immediately prior to such issue or sale plus (ii)
the number of shares of Common Stock which the
aggregate consideration received by the Company for
the total number of such Additional Shares of Common
Stock so issued or sold would purchase at the
greater of such Current Market Price and such
Warrant Price, and
(b) the denominator of which shall be the
number of shares of Common Stock outstanding
immediately after such issue or sale,
provided that, for the purposes of this section 2.2.1,
(x) immediately after any Additional Shares of Common
Stock are deemed to have been issued pursuant to section
2.3 or 2.4, such Additional Shares shall be deemed to be
outstanding, and (y) treasury shares shall not be deemed
to be outstanding.
2.2.2 Extraordinary Dividends and
Distributions. In case the Company at any time or from
time to time after the date hereof shall declare, order,
pay or make a dividend or other distribution (including,
without limitation, any distribution of other or
additional stock or other securities or property or
Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on
the Common Stock, other than (a) a dividend payable in
Additional Shares of Common Stock, or (b) a regular
periodic dividend payable in cash out of earned surplus
at a rate not in excess of the last regular periodic cash
dividend theretofore paid, then, subject to section 2.8,
the Warrant Price in effect immediately prior to the
close of business on the record date fixed for the
determination of holders of any class of securities
entitled to receive such dividend or distribution shall
be reduced, effective as of the close of business on such
record date, to a price (calculated to the nearest .001
of a cent) determined by multiplying such Warrant Price
by a fraction
(x) the numerator of which shall be the
Current Market Price in effect on such record date
or, if the Common Stock trades on an ex-dividend
basis, on the date prior to the commencement of ex-
dividend trading, less the amount of such dividend
or distribution (as determined in good faith by the
Board of Directors of the Company) applicable to one
share of Common Stock, and
(y) the denominator of which shall be such
Current Market Price.
, provided that, in the event that the amount of such
dividend as so determined is equal to or greater than 50%
of such Current Market Price, in lieu of the foregoing
adjustment, adequate provision shall be made so that the
holder of this Warrant shall receive a pro rata share of
such dividend based upon the maximum number of shares of
Common Stock at the time issuable to such holder
(determined without regard to whether the Warrant is
exercisable at such time).
2.3. Treatment of Options and Convertible
Securities. In case the Company at any time or from time
to time after the date hereof shall issue, sell, grant or
assume, or shall fix a record date for the determination
of holders of any class of securities entitled to
receive, any Options or Convertible Securities, other
than any such securities issued in connection with the
acquisition by the Company of ASH then, and in each such
case, for the purposes of the adjustment pursuant to
Section 2.2.1, the maximum number of Additional Shares of
Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained
therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue, sale, grant or
assumption or, in case such a record date shall have been
fixed, as of the close of business on such record date
(or, if the Common Stock trades on an ex-dividend basis,
on the date prior to the commencement of ex-dividend
trading), provided that such Additional Shares of Common
Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to section
2.5) of such shares would be less than the greater of the
Current Market Price and the Warrant Price in effect on
the date of and immediately prior to such issue, sale,
grant or assumption or immediately prior to the close of
business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading), as the case may be,
and provided, further, that in any such case in which
Additional Shares of Common Stock are deemed to be issued
(a) no further adjustment of the Warrant Price
shall be made upon the subsequent issue or sale of
Convertible Securities or shares of Common Stock
upon the exercise of such Options or the conversion
or exchange of such Convertible Securities, except
in the case of any such Options or Convertible
Securities which contain provisions requiring an
adjustment, subsequent to the date of the issue or
sale thereof, of the number of Additional Shares of
Common Stock issuable upon the exercise of such
Options or the conversion or exchange of such
Convertible Securities by reason of (x) a change of
control of the Company, (y) the acquisition by any
Person or group of Persons of any specified number
or percentage of the Voting Securities of the
Company or (z) any similar event or occurrence, each
such case to be deemed hereunder to involve a
separate issuance of Additional Shares of Common
Stock, Options or Convertible Securities, as the
case may be;
(b) if such Options or Convertible Securities
by their terms provide, with the passage of time or
otherwise, for any increase (or decrease) in the
consideration payable to the Company, or decrease
(or increase) in the number of Additional Shares of
Common Stock issuable, upon the exercise, conversion
or exchange thereof (by change of rate or
otherwise), the Warrant Price computed upon the
original issue, sale, grant or assumption thereof
(or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as
the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon
any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease
insofar as it affects such Options, or the rights of
conversion or exchange under such Convertible
Securities, which are outstanding at such time;
(c) upon the expiration (or purchase by the
Company and cancellation or retirement) of any such
Options which shall not have been exercised or the
expiration of any rights of conversion or exchange
under any such Convertible Securities which (or
purchase by the Company and cancellation or
retirement of any such Convertible Securities the
rights of conversion or exchange under which) shall
not have been exercised, the Warrant Price computed
upon the original issue, sale, grant or assumption
thereof (or upon the occurrence of the record date,
or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto),
and any subsequent adjustments based thereon, shall,
upon such expiration (or such cancellation or
retirement, as the case may be), be recomputed as
if:
(i) in the case of Options for Common
Stock or Convertible Securities, the only
Additional Shares of Common Stock issued or
sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the
exercise of such Options or the conversion or
exchange of such Convertible Securities and the
consideration received therefor was the
consideration actually received by the Company
for the issue, sale, grant or assumption of all
such Options, whether or not exercised, plus
the consideration actually received by the
Company upon such exercise, or for the issue or
sale of all such Convertible Securities which
were actually converted or exchanged, plus the
additional consideration, if any, actually
received by the Company upon such conversion or
exchange, and
(ii) in the case of Options for
Convertible Securities, only the Convertible
Securities, if any, actually issued or sold
upon the exercise of such Options were issued
at the time of the issue, sale, grant or
assumption of such Options, and the
consideration received by the Company for the
Additional Shares of Common Stock deemed to
have then been issued was the consideration
actually received by the Company for the issue,
sale, grant or assumption of all such Options,
whether or not exercised, plus the
consideration deemed to have been received by
the Company (pursuant to section 2.5) upon the
issue or sale of such Convertible Securities
with respect to which such Options were
actually exercised;
(d) no readjustment pursuant to subdivision
(b) or (c) above shall have the effect of increasing
the Warrant Price by an amount in excess of the
amount of the adjustment thereof originally made in
respect of the issue, sale, grant or assumption of
such Options or Convertible Securities; and
(e) in the case of any such Options which
expire by their terms not more than 30 days after
the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Price shall be
made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in
the manner provided in subdivision (c) above.
2.4. Treatment of Stock Dividends, Stock
Splits, etc. In case the Company at any time or from
time to time after the date hereof shall declare or pay
any dividend on the Common Stock payable in Common Stock,
or shall effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common
Stock (by reclassification or otherwise than by payment
of a dividend in Common Stock), then, and in each such
case, Additional Shares of Common Stock shall be deemed
to have been issued (a) in the case of any such dividend,
immediately after the close of business on the record
date for the determination of holders of any class of
securities entitled to receive such dividend, or (b) in
the case of any such subdivision, at the close of
business on the day immediately prior to the day upon
which such corporate action becomes effective.
2.5. Computation of Consideration. For the
purposes of this section 2,
(a) the consideration for the issue or sale of
any Additional Shares of Common Stock shall,
irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, be
computed at the net amount of cash received by
the Company without deducting any expenses paid
or incurred by the Company or any commissions
or compensations paid or concessions or
discounts allowed to underwriters, dealers or
other Persons performing similar services in
connection with such issue or sale,
(ii) insofar as it consists of property
(including securities) other than cash, be
computed at the fair value thereof at the time
of such issue or sale, as determined in good
faith by the Board of Directors of the Company,
and
(iii) in case Additional Shares of Common
Stock are issued or sold together with other
stock or securities or other assets of the
Company for a consideration which covers both,
be the portion of such consideration so
received, computed as provided in clauses (i)
and (ii) above, allocable to such Additional
Shares of Common Stock, all as determined in
good faith by the Board of Directors of the
Company;
(b) Additional Shares of Common Stock deemed
to have been issued pursuant to section 2.3,
relating to Options and Convertible Securities,
shall be deemed to have been issued for a
consideration per share determined by dividing
(i) the total amount, if any, received
and receivable by the Company as consideration
for the issue, sale, grant or assumption of the
Options or Convertible Securities in question,
plus the minimum aggregate amount of additional
consideration (as set forth in the instruments
relating thereto, without regard to any
provision contained therein for a subsequent
adjustment of such consideration to protect
against dilution) payable to the Company upon
the exercise in full of such Options or the
conversion or exchange of such Convertible
Securities or, in the case of Options for
Convertible Securities, the exercise of such
Options for Convertible Securities and the
conversion or exchange of such Convertible
Securities, in each case computing such
consideration as provided in the foregoing
subdivision (a),
by
(ii) the maximum number of shares of
Common Stock (as set forth in the instruments
relating thereto, without regard to any
provision contained therein for a subsequent
adjustment of such number to protect against
dilution) issuable upon the exercise of such
Options or the conversion or exchange of such
Convertible Securities; and
(c) Additional Shares of Common Stock deemed
to have been issued pursuant to section 2.4,
relating to stock dividends, stock splits, etc.,
shall be deemed to have been issued for no
consideration.
2.6. Adjustments for Combinations, etc. In
case the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common
Stock, the Warrant Price in effect immediately prior to
such combination or consolidation shall, concurrently
with the effectiveness of such combination or
consolidation, be proportionately increased.
2.7. Dilution in Case of Other Securities. In
case any Other Securities shall be issued or sold or
shall become subject to issue or sale upon the conversion
or exchange of any stock (or Other Securities) of the
Company (or any issuer of Other Securities or any other
Person referred to in section 3) or to subscription,
purchase or other acquisition pursuant to any Options
issued or granted by the Company (or any such other
issuer or Person) for a consideration such as to dilute,
on a basis consistent with the standards established in
the other provisions of this section 2, the purchase
rights granted by this Warrant, then, and in each such
case, the computations, adjustments and readjustments
provided for in this section 2 with respect to the
Warrant Price shall be made as nearly as possible in the
manner so provided and applied to determine the amount of
Other Securities from time to time receivable upon the
exercise of the Warrants, so as to protect the holder of
the Warrants against the effect of such dilution.
2.8. Minimum Adjustment of Warrant Price. If
the amount of any adjustment of the Warrant Price
required pursuant to this section 2 would be less than
one half (1/2) of one percent (1%) of the Warrant Price in
effect at the time such adjustment is otherwise so
required to be made, such amount shall be carried forward
and adjustment with respect thereto made at the time of
and together with any subsequent adjustment which,
together with such amount and any other amount or amounts
so carried forward, shall aggregate at least one half (1/2)
of one percent (1%) of such Warrant Price.
2.9. No Adjustments. No adjustments shall be made
pursuant to this Section 2 in connection with (a) the
exercise, conversion or exchange into or for shares of
Common Stock of any of the Securities of the Company or
(b) the redemption of any of its preference shares, in
each case outstanding as of the date hereof.
3. Consolidation, Merger, etc. 3.1.
Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Company after the date
hereof (a) shall consolidate with or merge into any other
Person and shall not be the continuing or surviving
corporation of such consolidation or merger, or (b) shall
permit any other Person to consolidate with or merge into
the Company and the Company shall be the continuing or
surviving Person but, in connection with such
consolidation or merger, the Common Stock or Other
Securities shall be changed into or exchanged for stock
or other securities of any other Person or cash or any
other property, or (c) shall transfer all or
substantially all of its properties or assets to any
other Person, or (d) shall effect a capital
reorganization or reclassification of the Common Stock or
Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional
Shares of Common Stock for which adjustment in the
Warrant Price is provided in section 2.2.1 or 2.2.2),
then, and in the case of each such transaction, proper
provision shall be made so that, upon the basis and the
terms and in the manner provided in this Warrant, the
holder of this Warrant, upon the exercise hereof at any
time after the consummation of such transaction, shall be
entitled to receive (at the aggregate Warrant Price in
effect at the time of such consummation for all Common
Stock or Other Securities issuable upon such exercise
immediately prior to such consummation), in lieu of the
Common Stock or Other Securities issuable upon such
exercise prior to such consummation, the highest amount
of securities, cash or other property to which such
holder would actually have been entitled as a shareholder
upon such consummation if such holder had exercised the
rights represented by this Warrant immediately prior
thereto, subject to adjustments (subsequent to such
consummation) as nearly equivalent as possible to the
adjustments provided for in sections 2 through 4,
provided that if a purchase, tender or exchange offer
shall have been made to and accepted by the holders of
more than 50% of the outstanding shares of Common Stock,
and if the holder of such Warrants so designates in a
notice given to the Company on or before the date
immediately preceding the date of the consummation of
such transaction, the holder of such Warrants shall be
entitled to receive the highest amount of securities,
cash or other property to which such holder would
actually have been entitled as a shareholder if the
holder of such Warrants had exercised such Warrants prior
to the expiration of such purchase, tender or exchange
offer and accepted such offer, subject to adjustments
(from and after the consummation of such purchase, tender
or exchange offer) as nearly equivalent as possible to
the adjustments provided for in sections 2 through 4.
3.2. Assumption of Obligations.
Notwithstanding anything contained in the Warrants or in
the Amalgamation Agreement to the contrary, the Company
will not effect any of the transactions described in
clauses (a) through (d) of section 3.1 unless, prior to
the consummation thereof, each Person (other than the
Company) which may be required to deliver any stock,
securities, cash or property upon the exercise of this
Warrant as provided herein shall assume, by written
instrument delivered to, and reasonably satisfactory to,
the holder of this Warrant, (a) the obligations of the
Company under this Warrant (and if the Company shall
survive the consummation of such transaction, such
assumption shall be in addition to, and shall not release
the Company from, any continuing obligations of the
Company under this Warrant) and (b) the obligation to
deliver to such holder such shares of stock, securities,
cash or property as, in accordance with the foregoing
provisions of this section 3, such holder may be entitled
to receive, and such Person shall have similarly
delivered to such holder an opinion of counsel for such
Person, which counsel shall be reasonably satisfactory to
such holder, stating that this Warrant shall thereafter
continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of
this section 3) shall be applicable to the stock,
securities, cash or property which such Person may be
required to deliver upon any exercise of this Warrant or
the exercise of any rights pursuant hereto. Nothing in
this section 3 shall be deemed to authorize the Company
to enter into any transaction not otherwise permitted by
the Amalgamation Agreement.
4. Other Dilutive Events. In case any event
shall occur as to which the provisions of section 2 or
section 3 are not strictly applicable but the failure to
make any adjustment would not fairly protect the purchase
rights represented by this Warrant in accordance with the
essential intent and principles of such sections, then,
in each such case, the Company shall appoint a firm of
independent certified public accountants of recognized
international standing (which may be the regular auditors
of the Company), which shall give their opinion upon the
adjustment, if any, on a basis consistent with the
essential intent and principles established in sections 2
and 3, necessary to preserve, without dilution, the
purchase rights represented by this Warrant. Upon
receipt of such opinion, the Company will promptly mail a
copy thereof to the holder of this Warrant and shall make
the adjustments described therein.
5. No Dilution or Impairment. The Company
will not, by amendment of its certificate of
incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or
sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder
of this Warrant against dilution or other impairment.
Without limiting the generality of the foregoing, the
Company (a) will not permit the par value of any shares
of stock receivable upon the exercise of this Warrant to
exceed the amount payable therefor upon such exercise,
(b) will take all such action as may be necessary or
appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of
stock on the exercise of the Warrants from time to time
outstanding, (c) will not take any action which results
in any adjustment of the Warrant Price if the total
number of shares of Common Stock (or Other Securities)
issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of
Common Stock (or Other Securities) then authorized by the
Company's certificate of incorporation and available for
the purpose of issue upon such exercise, and (d) will not
issue any capital stock of any class which is preferred
as to dividends or as to the distribution of assets upon
voluntary or involuntary dissolution, liquidation or
winding-up, unless the rights of the holders thereof
shall be limited to a fixed sum or percentage of par
value or a sum determined by reference to a formula based
on a published index of interest rates, an interest rate
publicly announced by a financial institution or a
similar indicator of interest rates in respect of
participation in dividends and to a fixed sum or
percentage of par value in any such distribution of
assets.
6. Accountants' Report as to Adjustments. In
each case of any adjustment or readjustment in the shares
of Common Stock (or Other Securities) issuable upon the
exercise of this Warrant, the Company at its expense will
promptly compute such adjustment or readjustment in
accordance with the terms of this Warrant and cause
independent certified public accountants of recognized
international standing (which may be the regular auditors
of the Company) selected by the Company to verify such
computation (other than any computation of the fair value
of property as determined in good faith by the Board of
Directors of the Company) and prepare a report setting
forth such adjustment or readjustment and showing in
reasonable detail the method of calculation thereof and
the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration
received or to be received by the Company for any
Additional Shares of Common Stock issued or sold or
deemed to have been issued, (b) the number of shares of
Common Stock outstanding or deemed to be outstanding, and
(c) the Warrant Price in effect immediately prior to such
issue or sale and as adjusted and readjusted (if required
by section 2) on account thereof. The Company will
forthwith mail a copy of each such report to the holder
of the Warrant and will, upon the written request at any
time of the holder of the Warrant, furnish to such holder
a like report setting forth the Warrant Price at the time
in effect and showing in reasonable detail how it was
calculated. The Company will also keep copies of all
such reports at its principal office and will cause the
same to be available for inspection at such office during
normal business hours by the holder of the Warrant or any
prospective purchaser of the Warrant designated by the
holder thereof.
7. Notices of Corporate Action. In the event
of
(a) any taking by the Company of a record of
the holders of any class of securities for the
purpose of determining the holders thereof who are
entitled to receive any dividend (other than a
regular periodic dividend payable in cash out of
earned surplus in an amount not exceeding the amount
of the immediately preceding cash dividend for such
period) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities
or property, or to receive any other right, or
(b) any capital reorganization of the Company,
any reclassification or recapitalization of the
capital share of the Company or any consolidation or
merger involving the Company and any other Person or
any transfer of all or substantially all the assets
of the Company to any other Person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
the Company will mail to the holder of the Warrant a
notice specifying (i) the date or expected date on which
any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and
character of such dividend, distribution or right, and
(ii) the date or expected date on which any such
reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation
or winding-up is to take place and the time, if any such
time is to be fixed, as of which the holders of record of
Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other
Securities) for the securities or other property
deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice
shall be mailed at least 30 days prior to the date
therein specified.
8. Registration of Common Stock. If any
shares of Common Stock required to be reserved for
purposes of exercise of this Warrant require registration
with or approval of any governmental authority under any
federal or state law (other than the Securities Act)
before such shares may be issued upon exercise, the
Company will, at its expense and as promptly as
practicable, use its reasonable best efforts to cause
such shares to be duly registered or approved, as the
case may be. At any such time as Common Stock is listed
on any national securities exchange in the United States,
the Company will, at its expense, obtain promptly and
maintain the approval for listing on each such exchange,
upon official notice of issuance, the shares of Common
Stock issuable upon exercise of the then outstanding
Warrants and maintain the listing of such shares after
their issuance; and the Company will also list on such
national securities exchange, will register under the
Exchange Act and will maintain such listing of, any Other
Securities that at any time are issuable upon exercise of
the Warrants, if and at the time that any securities of
the same class shall be listed on such national
securities exchange by the Company.
9. Restrictions on Transfer. 9.1.
Restrictive Legends. Except as otherwise permitted by
this section 9, the Warrant (including any Warrant issued
upon the transfer of the Warrant) shall be stamped or
otherwise imprinted with a legend in substantially the
following form:
"This Warrant and any shares acquired upon
the exercise of this Warrant have not been
registered under the Securities Act of 1933, as
amended, and may not be transferred, sold or
otherwise disposed of except while a
registration under such Act is in effect or
pursuant to an exemption therefrom under such
Act. This Warrant and such shares may be
transferred only in compliance with the
conditions specified in this Warrant."
Except as otherwise permitted by this section 9, each
certificate for Common Stock (or Other Securities) issued
upon the exercise of the Warrant, and each certificate
issued upon the transfer of any such Common Stock (or
Other Securities), shall be stamped or otherwise
imprinted with a legend in substantially the following
form:
"The shares represented by this
certificate have not been registered under the
Securities Act of 1933 and may not be
transferred in the absence of such registration
statement or an exemption therefrom under such
Act. Such shares may be transferred only in
compliance with the conditions specified in a
certain Common Stock Purchase Warrant issued by
ADT Limited (the "Company"), dated July 1,
1996. A complete and correct copy of the form
of such Warrant is available for inspection at
the principal office of Company or at the
office or agency maintained by Company as
provided in such Warrant and will be furnished
to the holder of such shares upon written
request and without charge."
9.2. Notice of Proposed Transfer; Opinions of
Counsel. Prior to any transfer of any Restricted
Securities which are not registered under an effective
registration statement under the Securities Act, the
holder thereof will give written notice to the Company of
such holder's intention to effect such transfer and to
comply in all other respects with this section 9.2. Each
such notice (a) shall describe the manner and
circumstances of the proposed transfer in sufficient
detail to enable counsel to render the opinions referred
to below, and (b) shall designate counsel for the holder
giving such notice (who may be house counsel for such
holder). The holder giving such notice will submit a
copy thereof to the counsel designated in such notice and
the Company will promptly submit a copy thereof to its
counsel. The following provisions shall then apply:
(i) If (A) in the opinion of such counsel
for the holder the proposed transfer may be
effected without registration of such
Restricted Securities under the Securities Act,
and (B) counsel for the Company shall not have
rendered an opinion within 15 days after the
receipt by the Company of such written notice
that such registration is required, such holder
shall thereupon be entitled to transfer such
securities in accordance with the terms of the
notice delivered by such holder to the Company.
Each warrant or certificate, if any,
representing such securities issued upon or in
connection with such transfer shall bear the
appropriate restrictive legend required by
section 9.1, unless in the opinion of each such
counsel such legend is no longer required to
insure compliance with the Securities Act. If
for any reason counsel for the Company (after
having been furnished with the information
required to be furnished by clause (a) of this
section 9.2) shall fail to deliver an opinion
to the Company as aforesaid, then for all
purposes of this Warrant the opinion of counsel
for the Company shall be deemed to be the same
as the opinion of counsel for such holders.
(ii) If in the opinion of either of or
both such counsel the proposed transfer may not
legally be effected without registration of
such Restricted Securities under the Securities
Act (such opinion or opinions to state the
basis of the legal conclusions reached
therein), the Company will promptly so notify
the holder thereof and thereafter such holder
shall not be entitled to transfer such
Restricted Securities until either (x) receipt
by the Company of a further notice from such
holder pursuant to the foregoing provisions of
this section 9.2 and fulfillment of the
provisions of clause (i) above or (y) such
shares have been effectively registered under
the Securities Act.
Notwithstanding the foregoing provisions of this section
9.2(ii), the holder of a Warrant shall be permitted to
transfer any Restricted Securities to a limited number of
institutional investors, provided that (A) each such
investor represents in writing that it will only transfer
or otherwise dispose of such securities in compliance
with the Securities Act (subject, however, to any
requirement of law that the disposition thereof shall at
all times be within the control of such transferee), (B)
each such investor agrees in writing to be bound by all
the restrictions on transfer of such Restricted
Securities contained in this section 9.2 and (C) the
holder of such Warrant delivers to the Company an opinion
of counsel reasonably satisfactory to the Company,
stating that such transfer may be effected without
registration under the Securities Act. The Company will
pay the reasonable fees and disbursements of counsel
(other than house counsel) for any holder of Restricted
Securities and of counsel for the Company in connection
with all opinions rendered by them pursuant to this
section 9.2 and pursuant to section 9.3.
9.3. Termination of Restrictions. The
restrictions imposed by this section 9 upon the
transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a)
when a registration statement under the Securities Act in
relation to such securities shall have become effective,
or (b) when, in the opinions of both counsel for the
holder thereof and counsel for the Company, such
restrictions are no longer required in order to insure
compliance with the Securities Act. Whenever such
restrictions shall cease and terminate as to any
Restricted Securities, the holder thereof shall be
entitled to receive from the Company, without expense
(other than applicable transfer taxes, if any), new
securities of like tenor not bearing the applicable
legends required by section 9.1.
9.4. Additional Restrictions. Subject to the
restrictions set forth in section 9.1, the Warrant may
not be sold, assigned or otherwise transferred without
the prior written consent of the Company, which consent
shall not be unreasonably withheld or delayed in the
event that the proposed transferee is an institutional
investor. Any Common Stock issued upon the exercise of
this Warrant shall be freely transferable, provided,
however, that Parent Co. shall not sell in excess of
5,000,000 shares (subject to adjustment if the number of
shares obtained upon exercise of the Warrant is adjusted)
of such Common Stock to any single Person or Affiliates
of such Person in one or a series of related
transactions.
10. Availability of Information. So long as
the Company shall not have filed a registration statement
pursuant to section 12 of the Exchange Act or a
registration statement pursuant to the requirements of
the Securities Act, the Company shall, at any time and
from time to time, upon the request of any holder of
Registrable Securities and upon the request of any Person
designated by such holder as a prospective purchaser of
any Registrable Securities, furnish in writing to such
holder or such prospective purchaser, as the case may be,
a statement as of a date not earlier than 12 months prior
to the date of such request of the nature of the business
of the Company and the products and services it offers
and copies of the Company's most recent balance sheet and
profit and loss and retained earnings statements,
together with similar financial statements for such part
of the two preceding fiscal years as the Company shall
have been in operation, all such financial statements to
be audited to the extent audited statements are
reasonably available, provided that, in any event the
most recent financial statements so furnished shall
include a balance sheet as of a date less than 16 months
prior to the date of such request, statements of profit
and loss and retained earnings for the 12 months
preceding the date of such balance sheet, and, if such
balance sheet is not as of a date less than 6 months
prior to the date of such request, additional statements
of profit and loss and retained earnings for the period
from the date of such balance sheet to a date less than 6
months prior to the date of such request. If the Company
shall have filed a registration statement pursuant to the
requirements of section 12 of the Exchange Act or a
registration statement pursuant to the requirements of
the Securities Act, the Company shall timely file the
reports required to be filed by it under the Securities
Act and the Exchange Act (including but not limited to
the reports under sections 13 and 15(d) of the Exchange
Act referred to in subparagraph (c) of Rule 144 adopted
by the Commission under the Securities Act) and the rules
and regulations adopted by the Commission thereunder (or,
if the Company is not required to file such reports,
will, upon the request of any holder of Registrable
Securities, make publicly available other information)
and will take such further action as any holder of
Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holder
to sell Registrable Securities without registration under
the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or
(b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any holder of
Registrable Securities, the Company will deliver to such
holder a written statement as to whether it has complied
with the requirements of this section 10.
11. Reservation of Stock, etc. The Company
will at all times reserve and keep available, solely for
issuance and delivery upon exercise of the Warrants, the
number of shares of Common Stock (or Other Securities)
from time to time issuable upon exercise of all Warrants
at the time outstanding. All shares of Common Stock (or
Other Securities) issuable upon exercise of any Warrants
shall be duly authorized and, when issued upon such
exercise, shall be validly issued and, in the case of
shares, fully paid and nonassessable with no liability on
the part of the holders thereof.
12. Registration and Transfer of Warrants,
etc.
12.1. Warrant Register; Ownership of Warrants.
The Company will keep at its principal office a register
in which the Company will provide for the registration of
Warrants and the registration of transfers of Warrants.
The Company may treat the Person in whose name any
Warrant is registered on such register as the owner
thereof for all other purposes, and the Company shall not
be affected by any notice to the contrary, except that,
if and when any Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all
purposes. Subject to section 9, a Warrant, if properly
assigned, may be exercised by a new holder without a new
Warrant first having been issued.
12.2. Transfer and Exchange of Warrants. Upon
surrender of any Warrant for registration of transfer or
for exchange to the Company at its principal office, the
Company at its expense will (subject to compliance with
section 9, if applicable) execute and deliver in exchange
therefor a new Warrant or Warrants of like tenor, in the
name of such holder or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock called for on the
face or faces of the Warrant or Warrants so surrendered.
12.3. Replacement of Warrants. Upon receipt
of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of any Warrant
and, in the case of any such loss, theft or destruction
of any Warrant, upon delivery of an indemnity bond in
such reasonable amount as the Company may determine (or,
in the case of any Warrant held by any Institutional
Holder or its nominee, of an indemnity agreement from
such Institutional Holder reasonably satisfactory to the
Company), or, in the case of any such mutilation, upon
the surrender of such Warrant for cancellation to the
Company at its principal office, the Company at its
expense will execute and deliver, in lieu thereof, a new
Warrant of like tenor.
13. Registration under Securities Act, etc.
13.1. Registration on Request.
(a) Request. Upon the written request of one
or more Initiating Holders, requesting that the
Company effect the registration under the Securities
Act of all or part of such Initiating Holders'
Registrable Securities and specifying the intended
method of disposition thereof, the Company will,
subject to the terms of this Warrant, promptly give
written notice of such requested registration to all
registered holders of Registrable Securities, and
thereupon the Company will effect the registration
under the Securities Act of
(i) the Registrable Securities which the
Company has been so requested to register by
such Initiating Holders for disposition in
accordance with the intended method of
disposition stated in such request;
(ii) all other Registrable Securities the
holders of which shall have made a written
request to the Company for registration thereof
within 30 days after the giving of such written
notice by the Company (which request shall
specify the intended method of disposition of
such Registrable Securities); and
(iii) all shares of Common Stock which
the Company may elect to register in connection
with the offering of Registrable Securities
pursuant to this section 13.1;
in each case, to the extent required to permit the
disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities and
the additional shares of Common Stock, if any so to be
registered. Initiating Holders shall be entitled to only
three registrations pursuant to this section 13.1, and
the Company shall not be obligated to effect any
registration unless the number of shares requested to be
included in such registration statement shall exceed
3,000,000.
(b) Registration Statement Form.
Registrations under this section 13.1 shall be on
such appropriate registration form of the Commission
(i) as shall be selected by the Company and as shall
be reasonably acceptable to the holders of more than
50% (by number of shares) of the Registrable
Securities so to be registered and (ii) as shall
permit the disposition of such Registrable
Securities in accordance with the intended method or
methods of disposition specified in their request
for such registration. The Company agrees to
include in any such registration statement all
information which holders of Registrable Securities
being registered shall reasonably request.
(c) Expenses. Subject to applicable law, the
Company will pay all Registration Expenses in
connection with any registration requested pursuant
to this section 13.1 by any Initiating Holders of
Registrable Securities prior to the time at which
three such registrations shall have been effected
pursuant to this section 13.1. The Registration
Expenses (and underwriting discounts and commissions
and transfer taxes, if any) in connection with each
other registration requested under this section 13.1
shall be allocated pro rata among all Persons on
whose behalf securities of the Company are included
in such registration, on the basis of the respective
amounts of the securities then being registered on
their behalf.
(d) Effective Registration Statement. A
registration requested pursuant to this section 13.1
shall not be deemed to have been effected (i) unless
a registration statement with respect thereto has
become effective, provided that a registration which
does not become effective after the Company has
filed a registration statement with respect thereto
solely by reason of the refusal to proceed of the
Initiating Holders (other than a refusal to proceed
based upon the advice of counsel relating to a
matter with respect to the Company) shall be deemed
to have been effected by the Company at the request
of such Initiating Holders unless the Initiating
Holders shall have elected to pay all Registration
Expenses in connection with such registration, (ii)
if, after it has become effective, such registration
becomes subject to any stop order, injunction or
other order or requirement of the Commission or
other governmental agency or court for any reason,
or (iii) the conditions to closing specified in the
purchase agreement or underwriting agreement entered
into in connection with such registration are not
satisfied, other than by reason of some act or
omission by such Initiating Holders.
(e) Selection of Underwriters. If a requested
registration pursuant to this section 13.1 involves
an underwritten offering, the managing or lead
underwriter or underwriters thereof shall be
selected, after consultation with the Company, by
the holders of at least a majority (by number of
shares) of the Registrable Securities as to which
registration has been requested and shall be
acceptable to the Company, which shall not
unreasonably withhold its acceptance of any such
underwriters.
(f) Priority in Requested Registrations. If a
requested registration pursuant to this section 13.1
involves an underwritten offering, and the managing
underwriter shall advise the Company in writing
(with a copy to each holder of Registrable
Securities requesting registration) that, in its
opinion, the number of securities requested to be
included in such registration (including securities
of the Company which are not Registrable Securities)
exceeds the number which can be sold in such
offering within a price range acceptable to the
holders of a majority of the Registrable Securities
requested to be included in such registration, the
Company will include in such registration, to the
extent of the number which the Company is so advised
can be sold in such offering, (i) first, Registrable
Securities requested to be included in such
registration by the holder or holders of Registrable
Securities, pro rata among the holders thereof
requesting such registration on the basis of the
number of such securities requested to be included
by such holders and (ii) second, securities the
Company proposes to sell and other securities of the
Company included in such registration by the holders
thereof. In connection with any such registration,
no securities other than Registrable Securities or
securities sold by the Company for its own account
shall be covered by such registration.
13.2. Incidental Registration.
(a) Right to Include Registrable Securities.
If the Company at any time proposes to register any
of its securities under the Securities Act (other
than by a registration on Form S-4 or S-8 or any
successor or similar forms and other than pursuant
to section 13.1), whether or not for sale for its
own account, it will each such time give prompt
written notice to all holders of Registrable
Securities of its intention to do so and of such
holders' rights under this section 13.2. Upon the
written request of any such holder made within 20
days after the receipt of any such notice (which
request shall specify the Registrable Securities
intended to be disposed of by such holder and the
intended method of disposition thereof), the Company
will, subject to the terms of this Agreement, effect
the registration under the Securities Act of all
Registrable Securities which the Company has been so
requested to register by the holders thereof, to the
extent requisite to permit the disposition (in
accordance with the intended methods thereof as
aforesaid) of the Registrable Securities so to be
registered, by inclusion of such Registrable
Securities in the registration statement which
covers the securities which the Company proposes to
register, provided that if, at any time after giving
written notice of its intention to register any
securities and prior to the effective date of the
registration statement filed in connection with such
registration, the Company shall determine for any
reason either not to register or to delay
registration of such securities, the Company may, at
its election, give written notice of such
determination to each holder of Registrable
Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of
its obligation to register any Registrable
Securities in connection with such registration (but
not from its obligation to pay the Registration
Expenses in connection therewith), without
prejudice, however, to the rights of any holder or
holders of Registrable Securities entitled to do so
to request that such registration be effected as a
registration under section 13.1, and (ii) in the
case of a determination to delay registering, shall
be permitted to delay registering any Registrable
Securities, for the same period as the delay in
registering such other securities. No registration
effected under this section 13.2 shall relieve the
Company of its obligation to effect any registration
upon request under section 13.1 nor shall any such
registration hereunder be deemed to have been
effected pursuant to section 13.1. The Company will
pay all Registration Expenses in connection with
each registration of Registrable Securities
requested pursuant to this section 13.2.
(b) Priority in Incidental Registrations. If
(i) a registration pursuant to this section 13.2
involves an underwritten offering of the securities
so being registered, whether or not for sale for the
account of the Company, to be distributed (on a firm
commitment basis) by or through one or more
underwriters of recognized standing under
underwriting terms appropriate for such a
transaction, (ii) the Registrable Securities so
requested to be registered for sale for the account
of holders of Registrable Securities are not also to
be included in such underwritten offering (either
because the Company has not been requested so to
include such Registrable Securities pursuant to
section 13.4(b) or, if requested to do so, is not
obligated to do so under section 13.4(b)), and (iii)
the managing underwriter of such underwritten
offering shall inform the Company and holders of the
Registrable Securities requesting such registration
by letter of its belief that the distribution of all
or a specified number of such Registrable Securities
concurrently with the securities being distributed
by such underwriters would interfere with the
successful marketing of the securities being
distributed by such underwriters (such writing to
state the basis of such belief and the approximate
number of such Registrable Securities which may be
distributed without such effect), then the Company
may, upon written notice to all holders of such
Registrable Securities, reduce pro rata (if and to
the extent stated by such managing underwriter to be
necessary to eliminate such effect) the number of
such Registrable Securities the registration of
which shall have been requested by each holder of
Registrable Securities so that the resultant
aggregate number of such Registrable Securities so
included in such registration shall be equal to the
number of shares stated in such managing underwriter's letter.
13.3. Registration Procedures. If and
whenever the Company is required to use its best efforts
to effect the registration of any Registrable Securities
under the Securities Act as provided in sections 13.1 and
13.2, the Company shall, as expeditiously as possible:
(i) prepare and (within 30 days after the
end of the period within which requests for
registration may be given to the Company or in
any event as soon thereafter as possible) file
with the Commission the requisite registration
statement to effect such registration
(including such audited financial statements as
may be required by the Securities Act or the
rules and regulations promulgated thereunder)
and thereafter use its reasonable best efforts
to cause such registration statement to become
and remain effective, provided, however, that
the Company may (x) postpone filing of any
registration statement otherwise required to be
filed by the Company pursuant to the provisions
of Section 13.1 or suspend the use of any
effective registration statement for a
reasonable period of time not to exceed 75 days
in any 12-month period, if the Chairman of the
Company determines in his good-faith reasonable
judgement that such registration or
distribution would be materially detrimental to
the Company or because the Company is in
possession of material non-public information
the disclosure of which would be materially
detrimental to the Company and (y) discontinue
any registration of its securities which are
not Registrable Securities (and, under the
circumstances specified in section 13.2(a), its
securities which are Registrable Securities) at
any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the Commission
such amendments and supplements to such
registration statement and the prospectus used
in connection therewith as may be necessary to
keep such registration statement effective and
to comply with the provisions of the Securities
Act with respect to the disposition of all
securities covered by such registration
statement until the earlier of such time as all
of such securities have been disposed of in
accordance with the intended methods of
disposition by the seller or sellers thereof
set forth in such registration statement or (i)
in the case of a registration pursuant to
section 13.1, the expiration of 120 days after
such registration statement becomes effective,
or (ii) in the case of a registration pursuant
to section 13.2, the expiration of 75 days
after such registration statement becomes
effective;
(iii) furnish to each seller of
Registrable Securities covered by such
registration statement, each underwriter, if
any, of the securities being sold by such
seller, such number of conformed copies of such
registration statement and of each such
amendment and supplement thereto (in each case
including all exhibits), such number of copies
of the prospectus contained in such
registration statement (including each
preliminary prospectus and any summary
prospectus) and any other prospectus filed
under Rule 424 under the Securities Act, in
conformity with the requirements of the
Securities Act, and such other documents, as
such seller or underwriter, if any, may
reasonably request in order to facilitate the
public sale or other disposition of the
Registrable Securities owned by such seller;
(iv) use its reasonable best efforts to
register or qualify all Registrable Securities
and other securities covered by such
registration statement under such other
securities laws or blue sky laws of such
jurisdictions as any seller thereof or any
underwriter of the securities being sold by
such seller shall reasonably request, to keep
such registrations or qualifications in effect
for so long as such registration statement
remains in effect, and take any other action
which may be reasonably necessary or advisable
to enable such seller or underwriter to
consummate the disposition in such
jurisdictions of the securities owned by such
seller, except that the Company shall not for
any such purpose be required to qualify
generally to do business as a foreign
corporation in any jurisdiction wherein it
would not but for the requirements of this
subdivision (iv) be obligated to be so
qualified, to subject itself to taxation in any
such jurisdiction, or to consent to general
service of process in any such jurisdiction;
(v) use its reasonable best efforts to
cause all Registrable Securities covered by
such registration statement to be registered
with or approved by such other governmental
agencies or authorities as may be necessary to
enable the seller or sellers thereof to
consummate the disposition of such Registrable
Securities;
(vi) furnish to each seller of
Registrable Securities a signed counterpart,
addressed to such seller and the underwriters,
if any of
(x) an opinion of counsel for the
Company, dated the effective date of such
registration statement (or, if such
registration includes an underwritten public
offering, an opinion dated the date of the
closing under the underwriting agreement),
reasonably satisfactory in form and substance
to such seller, and
(y) a "comfort" letter (or, in the
case of such Person which does not satisfy the
conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards
No. 72, an "agreed upon procedures" letter),
dated the effective date of such registration
statement (and, if such registration includes
an underwritten public offering, a letter dated
the date of the closing under the underwriting
agreement), signed by the independent public
accountants who have certified the Company's
financial statements included in such
registration statement, covering substantially
the same matters with respect to such
registration statement (and the prospectus
included therein) and, in the case of the
accountants' letter, with respect to events
subsequent to the date of such financial
statements, as are customarily covered in
opinions of issuer's counsel and in
accountants' letters delivered to the
underwriters in underwritten public offerings
of securities (with, in the case of an "agreed
upon procedures" letter, such modifications or
deletions as may be required under Statement on
Auditing Standards No. 35) and, in the case of
the accountants' letter, such other financial
matters, and, in the case of the legal opinion,
such other legal matters, as such seller or the
underwriters, if any, may reasonably request;
(vii) notify the holders of Registrable
Securities and the managing underwriter or
underwriters, if any, promptly and confirm such
advice in writing promptly thereafter:
(v) when the registration statement, the
prospectus or any prospectus supplement related thereto
or post-effective amendment to the registration statement
has been filed, and, with respect to the registration
statement or any post-effective amendment thereto, when
the same has become effective;
(w) of any request by the Commission for
amendments or supplements to the registration statement
or the prospectus or for additional information;
(x) of the issuance by the Commission of any
stop order suspending the effectiveness of the
registration statement or the initiation of any
proceedings by any Person for that purpose;
(y) if at any time the representations and
warranties of the Company made as contemplated by section
13.4 below cease to be true and correct;
(z) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of any Registrable Securities for sale
under the securities or blue sky laws of any jurisdiction
or the initiation or threat of any proceeding for such
purpose;
(viii) notify each seller of Registrable
Securities covered by such registration
statement, at any time when a prospectus
relating thereto is required to be delivered
under the Securities Act, upon the discovery
that, or upon the happening of any event as a
result of which, the prospectus included in
such registration statement, as then in effect,
includes an untrue statement of a material fact
or omits to state any material fact required to
be stated therein or necessary to make the
statements therein not misleading in the light
of the circumstances then existing or under
which they were made, and at the request of any
such seller promptly prepare and furnish to
such seller and each underwriter, if any, a
reasonable number of copies of a supplement to
or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to
the purchasers of such securities, such
prospectus shall not include an untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading in the light of the circumstances
then existing or under which they were made;
(ix) otherwise use its best efforts to
comply with all applicable rules and
regulations of the Commission, and make
available to its security holders, as soon as
reasonably practicable, an earnings statement
covering the period of at least twelve months,
but not more than eighteen months, beginning
with the first full quarter after the effective
date of such registration statement, which
earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule
158 thereunder, and will furnish to each such
seller and at least five business days prior to
the filing thereof a copy of any amendment or
supplement to such registration statement or
prospectus and shall not file any thereof to
which any such seller shall have reasonably
objected on the grounds that such amendment or
supplement does not comply in all material
respects with the requirements of the
Securities Act or of the rules or regulations
thereunder;
(x) make available for inspection by a
representative or representatives of the
holders of Registrable Securities, any
underwriter participating in any disposition
pursuant to the registration statement and any
attorney or accountant retained by such selling
holders or underwriter (each, an "Inspector"),
all financial and other records, pertinent
corporate documents and properties of the
Company (the "Records"), and cause the
Company's officers, directors and employees to
supply all information reasonably requested by
any such Inspector in connection with such
registration in order to permit a reasonable
investigation within the meaning of Section 11
of the Securities Act;
(xi) provide and cause to be maintained a
transfer agent and registrar for all
Registrable Securities covered by such
registration statement from and after a date
not later than the effective date of such
registration statement;
(xii) enter into such agreements,
including any underwriting agreements
contemplated by section 13.4, and take such
other actions as sellers of such Registrable
Securities holding 51% of the shares so to be
sold shall reasonably request in order to
permit the disposition of such Registrable
Securities;
(xiii) use its reasonable best efforts to
list all Registrable Securities covered by such
registration statement on any securities
exchange on which any of the securities of the
same class as the Registrable Securities are
then listed; and
(xiv) use its reasonable best efforts to
provide a CUSIP number for the Registrable
Securities, not later than the effective date
of the registration statement.
The Company may require each seller of Registrable
Securities as to which any registration is being effected
to furnish the Company such information regarding such
seller and the distribution of such securities as the
Company may from time to time reasonably request in
writing.
Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities that, upon
receipt of any notice from the Company of the occurrence
of any event of the kind described in subdivision (viii)
of this section 13.3, such holder will forthwith
discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement
relating to such Registrable Securities until such
holder's receipt of the copies of the supplemented or
amended prospectus contemplated by subdivision (viii) of
this section 13.3 and, if so directed by the Company,
will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to
such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall
give any such notice, the period mentioned in paragraph
(ii) of this section 13.3 shall be extended by the length
of the period from and including the date when each
seller of any Registrable Securities covered by such
registration statement shall have received such notice to
the date on which each such seller has received the
copies of the supplemented or amended prospectus
contemplated by paragraph (viii) of this section 13.3.
13.4. Underwritten Offerings.
(a) Requested Underwritten Offerings. If
requested by the underwriters for any underwritten
offering by holders of Registrable Securities
pursuant to a registration requested under section
13.1, the Company will enter into an underwriting
agreement with such underwriters for such offering,
such agreement to be reasonably satisfactory in
substance and form to the Company, each such holder
and the underwriters, and to contain such
representations and warranties by the Company and
such other terms as are generally prevailing in
agreements of this type, including, without
limitation, indemnities to the effect and to the
extent provided in section 13.6. The holders of the
Registrable Securities will cooperate with the
Company in the negotiation of the underwriting
agreement and will give consideration to the
reasonable suggestions of the Company regarding the
form thereof, provided that nothing herein contained
shall diminish the foregoing obligations of the
Company. The holders of Registrable Securities to
be distributed by such underwriters shall be parties
to such underwriting agreement and may, at their
option, require that any or all of the
representations and warranties by, and the other
agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made
to and for the benefit of such holders of
Registrable Securities and that any or all of the
conditions precedent to the obligations of such
underwriters under such underwriting agreement be
conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder
of Registrable Securities shall not be required to
make any representations or warranties other than
representations and warranties or agreements
regarding such holder, such holder's Registrable
Securities and such holder's intended method of
distribution and any other representation required
by law.
(b) Incidental Underwritten Offerings. If the
Company at any time proposes to register any of its
securities under the Securities Act as contemplated
by section 13.2 and such securities are to be
distributed by or through one or more underwriters,
the Company will, if requested by any holder of
Registrable Securities as provided in section 13.2
and subject to the provisions of section 13.2(b),
use its best efforts to arrange for such
underwriters to include all the Registrable
Securities to be offered and sold by such holder
among the securities to be distributed by such
underwriters.
(c) Holdback Agreements.
(i) Each holder of Registrable Securities
agrees by acquisition of such Registrable
Securities, if so required by the managing
underwriter, not to sell, make any short sale
of, loan, grant any option for the purchase of,
effect any public sale or distribution of or
otherwise dispose of any equity securities of
the Company, during the seven days prior to and
the 90 days after any underwritten registration
pursuant to section 13.1 or 13.2 has become
effective, except as part of such underwritten
registration. Notwithstanding the foregoing
sentence, each holder of Registrable Securities
subject to the foregoing sentence shall be
entitled to sell during the foregoing period
securities in a private sale.
(ii) The Company agrees (x) if so
required by the managing underwriter, not to
sell, make any short sale of, loan, grant any
option for the purchase of, effect any public
sale or distribution of or otherwise dispose of
its equity securities or securities convertible
into or exchangeable or exercisable for any of
such securities during the seven days prior to
and the 90 days after any underwritten
registration pursuant to section 13.1 or 13.2
has become effective, except as part of such
underwritten registration and except pursuant
to registrations on Form S-4, S-8 or any
successor or similar forms thereto, and (y) to
the extent reasonably practicable to cause each
holder of its equity securities or any
securities convertible into or exchangeable or
exercisable for any of such securities, in each
case purchased from the Company at any time
after the date of this Agreement (other than in
a public offering) to agree not to sell, make
any short sale of, loan, grant any option for
the purchase of, effect any such public sale or
distribution of or otherwise dispose of such
securities during such period except as part of
such underwritten registration.
(d) Participation in Underwritten
Offerings. No Person may participate in any underwritten
offering hereunder unless such Person (i) agrees to sell
such Person's securities on the basis provided in any
underwriting arrangements approved, subject to the terms
and conditions hereof, by the Company and the holders of
a majority of Registrable Securities to be included in
such underwritten offering and (ii) completes and
executes all questionnaires, indemnities, underwriting
agreements and other documents (other than powers of
attorney) required under the terms of such underwriting
arrangements. Notwithstanding the foregoing, no
underwriting agreement (or other agreement in connection
with such offering) shall require any holder of
Registrable Securities to make any representations or
warranties to or agreements with the Company or the
underwriters other than representations and warranties
contained in writing furnished by such holder expressly
for use in the related registration statement or
agreements regarding such holder, such holder's
Registrable Securities and such holder's intended method
of distribution and any other representation required by
law.
13.5. Preparation; Reasonable Investigation.
In connection with the preparation and filing of each
registration statement under the Securities Act pursuant
to this Agreement, the Company will give the holders of
Registrable Securities registered under such registration
statement, their underwriters, if any, and their
respective counsel and accountants, the opportunity to
participate in the preparation of such registration
statement, each prospectus included therein or filed with
the Commission, and each amendment thereof or supplement
thereto, and will give each of them such access to its
books and records and such opportunities to discuss the
business of the Company with its officers and the
independent public accountants who have certified its
financial statements as shall be necessary, in the
opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
13.6. Indemnification.
(a) Indemnification by the Company. In the
event of any registration of any securities of the
Company under the Securities Act, the Company will,
and hereby does, indemnify and hold harmless in the
case of any registration statement filed pursuant to
section 13.1 or 13.2, the holder of any Registrable
Securities covered by such registration statement,
its directors and officers, each other Person who
participates as an underwriter in the offering or
sale of such securities and each other Person, if
any, who controls such holder or any such
underwriter within the meaning of the Securities
Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder
or any such director or officer or underwriter or
controlling person may become subject under the
Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any
material fact contained in any registration
statement under which such securities were
registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement
thereto, or any omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein
not misleading, and the Company will reimburse such
holder, and each such director, officer, underwriter
and controlling person for any legal or any other
expenses reasonably incurred by them in connection
with investigating or defending any such loss,
claim, liability, action or proceeding, provided
that the Company shall not be liable in any such
case to the extent that any such loss, claim,
damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is
based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in
such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in
conformity with written information furnished to the
Company through an instrument duly executed by such
holder specifically stating that it is for use in
the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any
investigation made by or on behalf of such holder or
any such director, officer, underwriter or
controlling person and shall survive the transfer of
such securities by such holder.
(b) Indemnification by the Sellers. The
Company may require, as a condition to including any
Registrable Securities in any registration statement
filed pursuant to section 13.3, that the Company
shall have received an undertaking satisfactory to
it from the prospective seller of such Registrable
Securities, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in
subdivision (a) of this section 13.6) the Company,
each director of the Company, each officer of the
Company and each other person, if any, who controls
the Company within the meaning of the Securities
Act, with respect to any statement or alleged
statement in or omission or alleged omission from
such registration statement, any preliminary
prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement
thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance
upon and in conformity with written information
furnished to the Company through an instrument duly
executed by such seller specifically stating that it
is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Any
such indemnity shall remain in full force and
effect, regardless of any investigation made by or
on behalf of the Company or any such director,
officer or controlling person and shall survive the
transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after
receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of
this section 13.6, such indemnified party will, if a
claim in respect thereof is to be made against an
indemnifying party, give written notice to the
latter of the commencement of such action, provided
that the failure of any indemnified party to give
notice as provided herein shall not relieve the
indemnifying party of its obligations under this
section 13.6, except to the extent that the
indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is
brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict
of interest between such indemnified and
indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof,
jointly with any other indemnifying party similarly
notified, to the extent that the indemnifying party
may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the
indemnifying party to such indemnified party of its
election so to assume the defense thereof, the
indemnifying party shall not be liable to such
indemnified party for any legal or other expenses
subsequently incurred by the latter in connection
with the defense thereof other than reasonable costs
of investigation. No indemnifying party shall,
without the consent of the indemnified party,
consent to entry of any judgment or enter into any
settlement of any such action which does not include
as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim
or litigation. No indemnified party shall consent
to entry of any judgment or enter into any
settlement of any such action the defense of which
has been assumed by an indemnifying party without
the consent of such indemnifying party.
(d) Other Indemnification. Indemnification
similar to that specified in the preceding
subdivisions of this section 13.6 (with appropriate
modifications) shall be given by the Company and
each seller of Registrable Securities with respect
to any required registration or other qualification
of securities under any Federal or state law or
regulation of any governmental authority, other than
the Securities Act.
(e) Indemnification Payments. The
indemnification required by this section 13.6 shall
be made by periodic payments of the amount thereof
during the course of the investigation or defense,
as and when bills are received or expense, loss,
damage or liability is incurred.
(f) Contribution. If the indemnification
provided for in the preceding subdivisions of this
section 13.6 is unavailable to an indemnified party
in respect of any expense, loss, claim, damage or
liability referred to therein, then each
indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a
result of such expense, loss, claim, damage or
liability (i) in such proportion as is appropriate
to reflect the relative benefits received by the
Company on the one hand and the holder or
underwriter, as the case may be, on the other from
the distribution of the Registrable Securities or
(ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above
but also the relative fault of the Company on the
one hand and of the holder or underwriter, as the
case may be, on the other in connection with the
statements or omissions which resulted in such
expense, loss, damage or liability, as well as any
other relevant equitable considerations. The
relative benefits received by the Company on the one
hand and the holder or underwriter, as the case may
be, on the other in connection with the distribution
of the Registrable Securities shall be deemed to be
in the same proportion as the total net proceeds
received by the Company from the initial sale of the
Registrable Securities by the Company to bear to the
gain, if any, realized by the selling holder or the
underwriting discounts and commissions received by
the underwriter, as the case may be. The relative
fault of the Company on the one hand and of the
holder or underwriter, as the case may be, on the
other shall be determined by reference to, among
other things, whether the untrue or alleged untrue
statement of a material fact or omission to state a
material fact relates to information supplied by the
Company, by the holder or by the underwriter and the
parties' relative intent, knowledge, access to
information and opportunity to correct or prevent
such statement or omission, provided that the
foregoing contribution agreement shall not inure to
the benefit of any indemnified party if
indemnification would be unavailable to such
indemnified party by reason of the provisions
contained in the first sentence of subdivision (a)
of this section 13.6, and in no event shall the
obligation of any indemnifying party to contribute
under this subdivision (f) exceed the amount that
such indemnifying party would have been obligated to
pay by way of indemnification if the indemnification
provided for under subdivisions (a) or (b) of this
section 13.6 had been available under the circumstances.
The Company and the holders of Registrable
Securities agree that it would not be just and
equitable if contribution pursuant to this
subdivision (f) were determined by pro rata
allocation (even if the holders and any underwriters
were treated as one entity for such purpose) or by
any other method of allocation that does not take
account of the equitable considerations referred to
in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result
of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph
shall be deemed to include, subject to the
limitations set forth in the preceding sentence and
subdivision (c) of this section 13.7, any legal or
other expenses reasonably incurred by such
indemnified party in connection with investigating
or defending any such action or claim.
Notwithstanding the provisions of this
subdivision (f), no holder of Registrable Securities
or underwriter shall be required to contribute any
amount in excess of the amount by which (i) in the
case of any such holder, the net proceeds received
by such holder from the sale of Registrable
Securities or (ii) in the case of an underwriter,
the total price at which the Registrable Securities
purchased by it and distributed to the public were
offered to the public exceeds, in any such case, the
amount of any damages that such holder or
underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or
omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of
such fraudulent misrepresentation.
(g) The provisions of this Section 13.6
shall be subject to applicable law.
14. Definitions. As used herein, unless the
context otherwise requires, the following terms have the
following respective meanings:
Additional Shares of Common Stock: All shares
(including treasury shares) of Common Stock issued or
sold (or, pursuant to section 2.3 or 2.4, deemed to be
issued) by the Company after the date hereof, whether or
not subsequently reacquired or retired by the Company,
other than
(a) shares issued upon the exercise of the
Warrants,
(b) shares (as constituted on such date)
issued upon the exercise of options granted under
the Company's stock option plans as in effect on the
date hereof or under any other employee stock option
or purchase plan,
(c) such additional number of shares as may
become issuable upon the exercise of any of the
securities referred to in the foregoing clauses (a)
and (b) by reason of adjustments required pursuant
to anti-dilution provisions applicable to such
securities as in effect on the date hereof, but only
if and to the extent that such adjustments are
required as the result of the original issuance of
the Warrants, and
(d) such additional number of shares as may
become issuable upon the exercise of any of the
securities referred to in the foregoing clauses (a)
and (b) by reason of adjustments required pursuant
to anti-dilution provisions applicable to such
securities as in effect on the date hereof, in order
to reflect any subdivision or combination of Common
Stock, by reclassification or otherwise, or any
dividend on Common Stock payable in Common Stock.
Affiliate: of any specified Person means any
other Person directly or indirectly controlling or
controlled by or under common control with such specified
Person. For the purpose of this definition, "control"
(including with correlative meanings, the terms
"controlling", "controlled by" and "under common control
with") as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to
direct or cause the direction of management or policies
of such Person, whether through ownership of voting
securities, agreement or otherwise.
Amalgamation: As defined in the Amalgamation
Agreement.
Amalgamation Agreement: As defined in the
introduction to this Warrant.
Business Day: Any day other than a Saturday or
a Sunday or a day on which commercial banking
institutions in the City of New York are authorized by
law to be closed. Any reference to "days" (unless
Business Days are specified) shall mean calendar days.
Closing: As defined in the Amalgamation
Agreement.
Commission: The Securities and Exchange
Commission or any other federal agency at the time
administering the Securities Act.
Common Stock: As defined in the introduction
to this Warrant, such term to include any shares into
which such Common Stock shall have been changed or any
shares resulting from any reclassification of such Common
Stock, and all other shares of any class or classes
(however designated) of the Company the holders of which
have the right, without limitation as to amount, either
to all or to a share of the balance of current dividends
and liquidating dividends after the payment of dividends
and distributions on any shares entitled to preference.
Company: As defined in the introduction to
this Warrant, such term to include any corporation which
shall succeed to or assume the obligations of the Company
hereunder in compliance with section 3.
Convertible Securities: Any evidences of
indebtedness, shares of stock (other than Common Stock)
or other securities directly or indirectly convertible
into or exchangeable for Additional Shares of Common
Stock.
Current Market Price: On any date specified
herein, the average daily Market Price during the period
of the most recent 20 days, ending on such date, on which
the national securities exchanges were open for trading,
except that if no Common Stock is then listed or admitted
to trading on any national securities exchange or quoted
in the over-the-counter market, the Current Market Price
shall be the Market Price on such date.
Exercise Period: The period set forth in
Section 19 hereof during which this Warrant shall be
exercisable.
Exchange Act: The Securities Exchange Act of
1934, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same
shall be in effect at the time.
Initiating Holders: Any holder or holders of
Registrable Securities holding at least at any time
thereafter, 20% of the Registrable Securities (by number
of shares at the time issued and outstanding), and
initiating a request pursuant to section 13.1 for the
registration of all or part of such holder's or holders'
Registrable Securities.
Institutional Holder: Any original purchaser
of any Warrant, any insurance company, pension fund,
mutual fund, investment company, bank, savings bank,
savings and loan association, broker-dealer, investment
adviser, investment banking company, trust company or any
finance or credit company, any portfolio or any
investment fund managed by any of the foregoing, any
other institutional investor and any nominee of any of
the foregoing.
Market Price: On any date specified herein,
the amount per share of the Common Stock, equal to (a)
the last sale price of such Common Stock, regular way, on
such date or, if no such sale takes place on such date,
the average of the closing bid and asked prices thereof
on such date, in each case as officially reported on the
principal national securities exchange on which such
Common Stock is then listed or admitted to trading, or
(b) if such Common Stock is not then listed or admitted
to trading on any national securities exchange but is
designated as a national market system security by the
NASD, the last trading price of the Common Stock on such
date, or (c) if there shall have been no trading on such
date or if the Common Stock is not so designated, the
average of the closing bid and asked prices of the Common
Stock on such date as shown by the NASD automated
quotation system, or (d) if such Common Stock is not then
listed or admitted to trading on any national exchange or
quoted in the over-the-counter market, the higher of (x)
the book value thereof as determined by any firm of
independent public accountants of recognized standing
selected by the Board of Directors of the Company as of
the last day of any month ending within 60 days preceding
the date as of which the determination is to be made or
(y) the fair value thereof determined in good faith by
the Board of Directors of the Company as of a date which
is within 18 days of the date as of which the
determination is to be made.
NASD: The National Association of Securities
Dealers, Inc.
Options: Rights, options or warrants to
subscribe for, purchase or otherwise acquire either
Additional Shares of Common Stock or Convertible
Securities.
Other Securities: Any stock (other than Common
Stock) and other securities of the Company or any other
Person (corporate or otherwise) which the holders of the
Warrants at any time shall be entitled to receive, or
shall have received, upon the exercise of the Warrants,
in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other
Securities pursuant to section 3 or otherwise.
Parent: As to any Acquiring Person any
corporation which (a) controls the Acquiring Person
directly or indirectly through one or more
intermediaries, (b) is required to include the Acquiring
Person in the consolidated financial statements contained
in such Parent's Annual Report on Form 10-K and (c) is
not itself included in the consolidated financial
statements of any other person (other than its
consolidated subsidiaries).
Person: A corporation, an association, a
partnership, an organization, a business, an individual,
a government or political subdivision thereof or a
governmental agency.
Registrable Securities: (a) Any shares of
Common Stock or Other Securities issued or issuable upon
exercise of this Warrant and (b) any securities issued or
issuable with respect to any securities referred to in
the foregoing subdivision by way of stock dividend or
stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (a) a
registration statement with respect to the sale of such
securities shall have become effective under the
Securities Act and such securities shall have been
disposed of in accordance with such registration
statement, (b) they shall have been distributed to the
public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (c) they shall have been
otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have
been delivered by the Company and subsequent disposition
of them shall not require registration or qualification
of them under the Securities Act or any similar state law
then in force, or (d) they shall have ceased to be
outstanding.
Registration Expenses: All expenses incident
to the Company's performance of or compliance with
section 13, including, without limitation, all
registration, filing and NASD fees, all fees and expenses
of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger
and delivery expenses, the fees and disbursements of
counsel for the Company and of its independent public
accountants, including the expenses of any special audits
or "cold comfort" letters required by or incident to such
performance and compliance, the fees and disbursements of
any a single counsel and accountants retained by the
holder or holders of more than 20% of the Registrable
Securities being registered, premiums and other costs of
policies of insurance against liabilities arising out of
the public offering of the Registrable Securities being
registered and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but
excluding underwriting discounts and commissions and
transfer taxes, if any, provided that, in any case where
Registration Expenses are not to be borne by the Company,
such expenses shall not include salaries of Company
personnel or general overhead expenses of the Company,
auditing fees, premiums or other expenses relating to
liability insurance required by underwriters of the
Company or other expenses for the preparation of
financial statements or other data normally prepared by
the Company in the ordinary course of its business or
which the Company would have incurred in any event.
Restricted Securities: (a) any Warrants
bearing the applicable legend set forth in section 9.2,
(b) any shares of Common Stock (or Other Securities)
issued upon the exercise of Warrants which are evidenced
by a certificate or certificates bearing the applicable
legend set forth in such section, (c) any shares of
Common Stock (or Other Securities) issued subsequent to
the exercise of any of the Warrants as a dividend or
other distribution with respect to, or resulting from a
subdivision of the outstanding shares of Common Stock (or
Other Securities) into a greater number of shares by
reclassification, stock splits or otherwise, or in
exchange for or in replacement of the Common Stock (or
Other Securities) issued upon such exercise, which are
evidenced by a certificate or certificates bearing the
applicable legend set forth in such section, and (d)
unless the context otherwise requires, any shares of
Common Stock (or Other Securities) issuable upon the
exercise of Warrants, which, when so issued, will be
evidenced by a certificate or certificates bearing the
applicable legend set forth in such section.
Securities Act: The Securities Act of 1933, or
any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same
shall be in effect at the time.
Transfer: Any sale, assignment, pledge or
other disposition of any security, or of any interest
therein, which could constitute a "sale" as that term is
defined in section 2(3) of the Securities Act.
Voting Securities: Stock of any class or
classes (or equivalent interests), if the holders of the
stock of such class or classes (or equivalent interests)
are ordinarily, in the absence of contingencies, entitled
to vote for the election of the directors (or persons
performing similar functions) of such business entity,
even though the right so to vote has been suspended by
the happening of such a contingency.
Warrant Price: As defined in section 2.1.
Warrants: As defined in the introduction to
this Warrant.
Weighted Average Warrant Price: As to any
holder of Restricted Securities, the price determined by
dividing (a) the sum of the aggregate consideration
previously paid by such holder upon the exercise of
Warrants plus the consideration payable upon the exercise
of all Warrants held by such holder by (b) the sum of (i)
the aggregate number of shares previously received by
such holder upon the exercise of Warrants plus (ii) the
number of shares which would be received by such holder
upon the exercise of all Warrants held by such holder,
based upon the Warrant Price in effect on the effective
date of the registration statement in respect of which
the Weighted Average Warrant Price is being determined.
15. Remedies. The Company stipulates that the
remedies at law of the holder of this Warrant in the
event of any default or threatened default by the Company
in the performance of or compliance with any of the terms
of this Warrant are not and will not be adequate and
that, to the fullest extent permitted by law, such terms
may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof
or otherwise.
16. No Rights or Liabilities as Stockholder.
Nothing contained in this Warrant shall be construed as
conferring upon the holder hereof any rights as a
stockholder of the Company or as imposing any obligation
on such holder to purchase any securities or as imposing
any liabilities on such holder as a stockholder of the
Company, whether such obligation or liabilities are
asserted by the Company or by creditors of the Company.
17. Notices. All notices and other
communications under this Warrant shall be in writing and
shall be delivered, or mailed by registered or certified
mail, return receipt requested, by a nationally
recognized overnight courier, postage prepaid, addressed
(a) if to any holder of any Warrant, at the registered
address of such holder as set forth in the register kept
at the principal office of the Company, or (b) if to the
Company, to the attention of its President at its
principal office, provided that the exercise of any
Warrant shall be effective in the manner provided in
section 1.
18. Amendments. This Warrant and any term
hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party
against which enforcement of such change, waiver,
discharge or termination is sought.
19. Exercise Period; Expiration. (a) This
Warrant shall be exercisable by the holder from and after
the date determined in accordance with section 1.5 and
shall cease to be exercisable at 5:00 p.m., New York City
time, on the 180th day after the date the Warrant
initially became exercisable, or if such 180th day shall
not be a Business Day, at such time on the next Business
Day thereafter.
(b) This Warrant shall expire upon the Effective
Time (as defined in the Amalgamation Agreement).
20. Descriptive Headings. The headings in
this Warrant are for purposes of reference only and shall
not limit or otherwise affect the meaning hereof.
21. GOVERNING LAW. THIS WARRANT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS
OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF BERMUDA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
22. Representations and Warranties. The
Company hereby represents and warranties that: (i) it is
a Bermuda company limited by shares and has all necessary
right, power and authority to execute and deliver this
Warrant and to perform its obligation hereunder, (ii)
this Warrant has been properly authorized and (iii) this
Warrant is a valid and binding obligation of the Company
enforceable against the Company in accordance with its
terms.
23. Judicial Proceedings. Any judicial
proceeding brought against the Company with respect to
this Warrant may be brought in any court of competent
jurisdiction in Bermuda.
ADT LIMITED
By: /s/ S.J. Ruzika
Name: S.J. Ruzika
Title: Director
[SEAL]
/s/ M. Ashcroft
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To ADT Limited
The undersigned registered holder of the within Warrant
hereby irrevocably exercises such Warrant for, and
purchases thereunder, 15 million* shares of Common Stock
of ADT Limited and herewith makes payment of $
therefor, and requests that the certificates for such
shares be issued in the name of, and delivered to
, whose address is .
Dated:
(Signature must conform in all
respects to name of holder as
specified on the face of
Warrant)
(Street Address)
(City)(State)(Zip Code)
* Represents the number of shares called for on the
face of this Warrant without making any adjustment
for Additional Shares of Common Stock or any other
stock or other securities or property or cash which,
pursuant to the adjustment provisions of this
Warrant, may be delivered upon exercise.
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of
the within Warrant hereby sells, assigns and transfers
unto the Warrants and appoints attorney to make such
transfer on the books of ADT Limited maintained for such
purpose, with full power of substitution in the premises.
Dated:
(Signature must conform in all
respects to name of holder as
specified on the face of
Warrant)
(Street Address)
(City)(State)(Zip Code)
Signed in the presence of:
[CONFORMED COPY]
________________________________________________________
ADT Limited
Common Share Purchase Warrant
Dated as of July 1, 1996
_________________________________________________________
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED
OF EXCEPT WHILE A REGISTRATION STATEMENT UNDER SUCH
ACT IS IN EFFECT OR PURSUANT TO AN EXEMPTION
THEREFROM UNDER SUCH ACT. THIS WARRANT AND SUCH
SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH
THE CONDITIONS SPECIFIED IN THIS WARRANT.
TABLE OF CONTENTS
1. Exercise of Warrant . . . . . . . . . . . . . . . . 1
1.1. Manner of Exercise . . . . . . . . . . . . . 1
1.2. When Exercise Effective . . . . . . . . . . 1
1.3. Delivery of Stock Certificates, etc. . . . . 1
1.4. Company to Reaffirm Obligations . . . . . . 2
1.5. Conditions to Exercise of Warrant . . . . . 2
1.6. Grant of Proxy . . . . . . . . . . . . . . . 2
2. Adjustment of Common Stock Issuable Upon Exercise . 4
2.1. General; Warrant Price . . . . . . . . . . . 4
2.2. Adjustment of Warrant Price . . . . . . . . 4
2.2.1 Issuance of Additional Shares of Common
Stock . . . . . . . . . . . . . . . . 4
2.2.2 Extraordinary Dividends and
Distributions . . . . . . . . . . . . 5
2.3. Treatment of Options and Convertible Securities 7
2.4. Treatment of Stock Dividends, Stock Splits,
etc. . . . . . . . . . . . . . . . . . . . 10
2.5. Computation of Consideration . . . . . . . 11
2.6. Adjustments for Combinations, etc. . . . . 13
2.7. Dilution in Case of Other Securities . . . 13
2.8. Minimum Adjustment of Warrant Price . . . . 13
2.9. No Adjustments . . . . . . . . . . . . . . 14
3. Consolidation, Merger, etc . . . . . . . . . . . 14
3.1. Adjustments for Consolidation, Merger, Sale of
Assets, Reorganization, etc. . . . . . . . 14
3.2. Assumption of Obligations . . . . . . . . . 15
4. Other Dilutive Events . . . . . . . . . . . . . . 16
5. No Dilution or Impairment . . . . . . . . . . . . 16
6. Accountants' Report as to Adjustments . . . . . . 17
7. Notices of Corporate Action . . . . . . . . . . . 18
8. Registration of Common Stock . . . . . . . . . . 19
9. Restrictions on Transfer . . . . . . . . . . . . 20
9.1. Restrictive Legends . . . . . . . . . . . . 20
9.2. Notice of Proposed Transfer; Opinions of
Counsel . . . . . . . . . . . . . . . . . . 21
9.3. Termination of Restrictions . . . . . . . . 23
9.4. Additional Restrictions . . . . . . . . . . 24
10. Availability of Information . . . . . . . . . . 24
11. Reservation of Stock, etc. . . . . . . . . . . . 26
12. Registration and Transfer of Warrants, etc. . . 26
12.1. Warrant Register; Ownership of Warrants . 26
12.2. Transfer and Exchange of Warrants . . . . 26
12.3. Replacement of Warrants . . . . . . . . . 27
13. Registration under Securities Act, etc. . . . . 27
13.1. Registration on Request. . . . . . . . . 27
13.2. Incidental Registration. . . . . . . . . 31
13.3. Registration Procedures . . . . . . . . . 33
13.4. Underwritten Offerings . . . . . . . . . 41
13.5. Preparation; Reasonable Investigation . . 44
13.6. Indemnification . . . . . . . . . . . . . 45
14. Definitions . . . . . . . . . . . . . . . . . . 51
15. Remedies . . . . . . . . . . . . . . . . . . . . 59
16. No Rights or Liabilities as Stockholder. . . . 59
17. Notices . . . . . . . . . . . . . . . . . . . . 59
18. Amendments . . . . . . . . . . . . . . . . . . . 59
19. Exercise Period; Expiration . . . . . . . . . . 60
20. Descriptive Headings . . . . . . . . . . . . . . 60
21. GOVERNING LAW . . . . . . . . . . . . . . . . . 60
22. Representations and Warranties . . . . . . . . . 60
23. Judicial Proceedings . . . . . . . . . . . . . . 61
FORM OF SUBSCRIPTION . . . . . . . . . . . . . . . . 62
FORM OF ASSIGNMENT . . . . . . . . . . . . . . . . . 63
