<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 1, 1996
------------
REPUBLIC INDUSTRIES, INC.
-------------------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of incorporation)
0-9787 73-1105145
------ ----------
(Commission (IRS Employer
File Number) Identification No.)
200 East Las Olas Boulevard
Suite 1400
Ft. Lauderdale, FL 33301
--------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (954) 627-6000
--------------
N.A.
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events.
On July 1, 1996 Republic Industries, Inc. (the "Registrant") announced that it
had entered a definitive agreement (the "Agreement") to combine with ADT
Limited ("ADT") in a transaction valued at approximately $5 billion. Under the
terms of the Agreement, ADT shareholders will receive .92857 of a share of the
Registrant's common stock, $0.01 par value per share ("Common Stock") for each
outstanding share of ADT common stock, and ADT will become a wholly-owned
subsidiary of the Registrant. The exchange ratio was based on a price of $26
for each share of ADT common stock.
As part of the transaction, ADT issued the Registrant a warrant (the "Warrant")
to acquire 15 million shares of ADT common stock at an exercise price of $20
per share. The Warrant is exercisable if the Agreement is terminated for any
reason.
The Registrant anticipates issuing approximately 130 million shares of Common
Stock at the closing of the transaction and reserving an additional 38 million
shares of Common Stock issuable in the future upon the exercise of outstanding
options and warrants of ADT, and the conversion of ADT's Liquid Yield Option
Notes. In addition, the Registrant has obtained a Commitment from NationsBank
of Florida, N.A. that would increase its borrowing capacity from $250 million
to $750 million. The Registrant currently has no borrowings under its existing
credit facility.
The transaction is intended to be tax-free to ADT's shareholders and will be
accounted for as a pooling of interests business combination. Consummation of
the transactions contemplated by the Agreement is subject to, among other
things, approval by the stockholders of the Registrant and ADT, receipt by ADT
of a fairness opinion from its financial advisor by no later than July 15,
1996, and other customary conditions, including receipt of regulatory approvals.
The descriptions contained herein of the Agreement and the transactions
contemplated thereunder are qualified in their entirety by reference to the
Agreement, the Warrant and the Press Release, dated July 1, 1996, attached
hereto as Exhibits 99.1, 99.2 and 99.3, respectively, which are incorporated
herein by reference.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The Exhibits to this Report are listed in the Exhibit Index set
forth elsewhere herein.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REPUBLIC INDUSTRIES, INC.
By: /s/ Richard L. Handley
----------------------
Richard L. Handley
Senior Vice President
Date: July 9, 1996
<PAGE> 4
REPUBLIC INDUSTRIES, INC.
EXHIBIT INDEX
Number and
Description of Exhibit
- ----------------------
1. None
2. None
4. None
16. None
17. None
21. None
23. None
24. None
27. None
99.1 Agreement and Plan of Amalgamation, dated as of July 1, 1996, by and
among the Registrant, R.I. Triangle, Ltd. and ADT Limited.
99.2 Common Share Purchase Warrant, dated as of July 1, 1996.
99.3 Press Release, dated July 1, 1996.
<PAGE> 1
Exhibit 99.1
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
<PAGE> 2
AGREEMENT AND PLAN OF AMALGAMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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................................................18
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.......32
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VII
TERMINATION AND AMENDMENT......................................................34
7.1 Termination..........................................................34
7.2 Effect of Termination................................................35
7.3 Amendment............................................................35
7.4 Extension; Waiver....................................................35
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.....................................................37
8.6 No Third Party Beneficiaries.........................................37
8.7 Governing Law........................................................37
8.8 Specific Performance.................................................37
8.10 Expenses............................................................38
8.11 Severability........................................................38
8.12 Jurisdiction........................................................38
8.13 Joinder by Acquisition..............................................38
</TABLE>
SCHEDULES
Schedule A: Initial Directors of the Surviving Company
iii
<PAGE> 5
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
<PAGE> 6
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.
2
<PAGE> 7
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
3
<PAGE> 8
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
4
<PAGE> 9
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
5
<PAGE> 10
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.
6
<PAGE> 11
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 con ducted. 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
7
<PAGE> 12
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:
8
<PAGE> 13
(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
9
<PAGE> 14
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
10
<PAGE> 15
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
11
<PAGE> 16
(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
12
<PAGE> 17
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,
13
<PAGE> 18
"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.
14
<PAGE> 19
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, Bye-laws 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.
15
<PAGE> 20
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.
16
<PAGE> 21
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
17
<PAGE> 22
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
as sets, 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
18
<PAGE> 23
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
19
<PAGE> 24
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
20
<PAGE> 25
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.
21
<PAGE> 26
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
22
<PAGE> 27
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
23
<PAGE> 28
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
24
<PAGE> 29
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
25
<PAGE> 30
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
26
<PAGE> 31
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
27
<PAGE> 32
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)
28
<PAGE> 33
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
29
<PAGE> 34
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
30
<PAGE> 35
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.
31
<PAGE> 36
(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.
32
<PAGE> 37
(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.
33
<PAGE> 38
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;
34
<PAGE> 39
(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.
Not withstanding 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,
35
<PAGE> 40
(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
36
<PAGE> 41
(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
37
<PAGE> 42
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.
38
<PAGE> 43
IN WITNESS WHEREOF, the undersigned parties hereto have
executed this Agreement as of the date first written above.
REPUBLIC INDUSTRIES, INC.
By:
------------------------
Name:
Title: [SEAL]
R.I./TRIANGLE, LTD.
By:
------------------------
Name:
Title: [SEAL]
ADT LIMITED
By:
------------------------
Name:
Title: [SEAL]
39
<PAGE> 44
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
40
<PAGE> 1
Exhibit 99.2
_________________________________________________________
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.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Exercise of Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. Manner of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. When Exercise Effective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Delivery of Stock Certificates, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Company to Reaffirm Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5. Conditions to Exercise of Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6. Grant of Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4. Treatment of Stock Dividends, Stock Splits, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5. Computation of Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6. Adjustments for Combinations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7. Dilution in Case of Other Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.8. Minimum Adjustment of Warrant Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
9.4. Additional Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10. Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11. Reservation of Stock, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12. Registration and Transfer of Warrants, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.1. Warrant Register; Ownership of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.2. Transfer and Exchange of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
12.3. Replacement of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13. Registration under Securities Act, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.1. Registration on Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.2. Incidental Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.3. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.4. Underwritten Offerings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.5. Preparation; Reasonable Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
15. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
16. No Rights or Liabilities as Stockholder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
18. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
19. Exercise Period; Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
20. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
21. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
23. Judicial Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
FORM OF SUBSCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
FORM OF ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
ii
<PAGE> 4
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 applicable, 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; references to an "Exhibit" are, unless otherwise
specified, to one of the Exhibits attached to this Warrant and references 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
<PAGE> 5
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 immediately 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 certificate 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 applicable transfer taxes) may direct, a certificate or certificates 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 Warrant, 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
2
<PAGE> 6
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.
Notwithstanding 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
Affiliates 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 provisions 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
3
<PAGE> 7
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
4
<PAGE> 8
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
5
<PAGE> 9
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
6
<PAGE> 10
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
7
<PAGE> 11
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
8
<PAGE> 12
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, irrespec-
9
<PAGE> 13
tive 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,
10
<PAGE> 14
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
11
<PAGE> 15
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
12
<PAGE> 16
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
13
<PAGE> 17
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 outstand-
14
<PAGE> 18
ing, (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
15
<PAGE> 19
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.
16
<PAGE> 20
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:
17
<PAGE> 21
"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
18
<PAGE> 22
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
19
<PAGE> 23
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
20
<PAGE> 24
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
21
<PAGE> 25
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.
22
<PAGE> 26
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
23
<PAGE> 27
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 condi-
24
<PAGE> 28
tions 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.
25
<PAGE> 29
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
securi-
26
<PAGE> 30
ties. 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.
27
<PAGE> 31
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
28
<PAGE> 32
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
29
<PAGE> 33
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
30
<PAGE> 34
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
31
<PAGE> 35
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
32
<PAGE> 36
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
33
<PAGE> 37
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
34
<PAGE> 38
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.
35
<PAGE> 39
(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
36
<PAGE> 40
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
37
<PAGE> 41
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
38
<PAGE> 42
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
39
<PAGE> 43
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
40
<PAGE> 44
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.
41
<PAGE> 45
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
42
<PAGE> 46
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
43
<PAGE> 47
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,
44
<PAGE> 48
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
45
<PAGE> 49
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
46
<PAGE> 50
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.
47
<PAGE> 51
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
48
<PAGE> 52
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,
49
<PAGE> 53
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.
50
<PAGE> 54
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:
---------------------------------
Name:
Title:
[SEAL]
51
<PAGE> 55
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]
52
<PAGE> 56
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:
- ------------------------------------
53
<PAGE> 1
EXHIBIT 99.3
[REPUBLIC LETTERHEAD]
CONTACT: Republic Industries 954-627-6000
J. Ronald Castell 954-627-6061
David Potts 954-627-6039
ADT Limited 407-997-8406
ADT AND REPUBLIC INDUSTRIES TO COMBINE
--Will Create Largest Electronic Security Service Provider
and Accelerate Plans for AutoNation USA
Fort Lauderdale, FL July 1, 1996 - Republic Industries, Inc. (Nasdaq: RWIN)
and ADT Limited (NYSE: ADT) jointly announced today that they have signed a
definitive agreement providing for the combination of ADT and Republic. Under
the terms of the agreement, which was approved by the Board of Directors of each
company, ADT shareholders will receive .92857 shares of Republic common Stock
for each share of ADT common stock, and ADT will become a wholly-owned
subsidiary of Republic. The transaction is valued at approximately $5 billion.
The exchange ratio was based on a price of $26 for each share of ADT common
stock.
As part of the transaction, ADT issued Republic a warrant to acquire 15
million shares of ADT common stock at an exercise price of $20 per share. The
warrant is exercisable if the agreement is terminated for any reason.
H. Wayne Huizenga, Chairman and Chief Executive Officer of Republic,
stated "The combination of ADT and Republic will create the world's largest
provider of electronic security services and strengthen our businesses at
AutoNation USA."
"On a combined basis, our security businesses will serve approximately 1.6
million customers in the United States, Canada, the United Kingdom and
continental Europe."
--more--
<PAGE> 2
"ADT Automotive consists of vehicle auction centers, reconditioning
services, vehicle remarketing, title assistance, data management, truck and
equipment services, and inventory management of leased and fleet vehicles.
These operations and their management expertise in the automotive industry will
enable us to accelerate AutoNation USA's business plans. At the same time, we
will be able to capitalize on ADT's strong relationships with manufacturers and
other suppliers of vehicles."
"This exciting combination is consistent with our strategy of enhancing
shareholder value by building businesses in high growth industries and
capitalizing on opportunities to make these businesses well-recognized, branded
leaders in their markets. This transaction represents a tremendous opportunity
for the shareholders of both Republic and ADT." Mr. Huizenga said.
Michael A. Ashcroft, Chairman and Chief Executive Officer of ADT, added "We
are excited about the opportunities which this combination offers for the
shareholders of both companies. Combining Republic's existing electronic
security services business with ADT's will create a unique platform for future
growth."
"In addition, we are optimistic that the relationship between ADT
Automotive and AutoNation USA will be beneficial to both businesses."
Following the combination, Mr. Ashcroft will become a member of Republic's
Board of Directors. He will also continue with his responsibilities as
Chairman and Chief Executive Officer of ADT. Stephen J. Ruzika will continue
as President of ADT's electronic security services division. Mr. Ruzika is
currently Executive Vice President and Chief Financial Officer of ADT. Michael
J. Richardson will continue as President and Chief Executive Officer of ADT
Automotive, which will become part of AutoNation USA.
The transaction is intended to be tax-free to ADT's shareholders and will
be accounted for as a pooling of interests. Completion of the transaction is
subject to customary conditions, including the receipt of all required
regulatory approvals and approval by both companies' shareholders. The
transaction is also subject to ADT's receipt of a fairness opinion by no later
than July 15, 1996.
Republic anticipates issuing approximately 130 million shares of its
common stock at the closing of the transaction and reserving an additional 38
million shares for the exercise of ADT options and warrants and the conversion
of ADT Liquid Yield Option Notes in the future.
Republic has also obtained a commitment from NationsBank that would
increase its borrowing capacity from $250 million to $750 million. The Company
currently has no borrowings under its existing facility.
Republic is a diversified company operating in the electronic security
service, solid waste, and out-of-home media industries. The Company is
expanding into the automotive industry.
--more--
<PAGE> 3
ADT is the largest single provider of electronic security services in
North America and the largest provider in the United Kingdom, providing
continuous monitoring of commercial and residential security systems to over
1.4 million customers in North America and Europe.
ADT is also the second largest provider of vehicle auction services in the
United States, operating a network of 29 vehicle auction centers providing a
comprehensive range of vehicle remarketing services to vehicle dealers and
owners of and operators of vehicle fleets.
