SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 22, 1998
(Date of earliest event reported)
AMP Incorporated
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(Exact Name of Registrant as Specified in its charter)
Pennsylvania 1-4235 23-0332575
(State or Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
P.O. Box 3608, Harrisburg, Pennsylvania 17105-3608
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(Address of principal executive offices, including zip code)
(717) 564-0100
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On November 22, 1998, AMP Incorporated, a Pennsylvania
corporation, (the "Company" or "AMP") entered into an Agreement and Plan of
Merger, by and among the Company, Beta Zeno Corp. ("Beta"), a Pennsylvania
corporation and wholly owned subsidiary of Tyco International Ltd.
("Tyco"), and Alpha Zeno Corp. ("Merger Sub"), a Pennsylvania corporation
and wholly owned subsidiary of Beta, pursuant to which Merger Sub will be
merged with and into the Company (the "Merger"). Upon consummation of the
Merger, each outstanding share of the Company's common stock ("AMP Common
Stock") will be converted, on a tax-free basis, into a fraction of a Tyco
common share ("Tyco Common Share"), as described below, and the Company
will become an indirect, wholly owned subsidiary of Tyco.
Under the terms of the Merger Agreement, if the weighted
average share price of a Tyco Common Share for the fifteen consecutive day
trading period ending four trading days prior to AMP's shareholder meeting
to vote on the Merger (the "Average Share Price") is equal to or greater
than $60.00 but less than $67.00 per share, AMP shareholders will receive,
for each share of AMP Common Stock, Tyco Common Shares valued at $51.00 per
share. If the Average Share Price of a Tyco Common Share is equal to or
greater than $67.00 but less than or equal to $73.50, AMP shareholders will
receive 0.7612 of a Tyco Common Share for each share of AMP Common Stock,
resulting in value between $51.00 and $55.95 per share, with $55.95 per
share being the maximum value that shareholders of the Company could
receive in the Merger. If the Average Share Price of a Tyco Common Share is
less than $60.00, Tyco can terminate the Merger Agreement unless AMP
exercises its right to close the Merger at an exchange ratio of 0.85. If
Tyco does not elect to terminate the Merger Agreement, the exchange ratio
will increase so that AMP shareholders receive Tyco Common Shares with a
value of $51.00 per share of AMP Common Stock.
The Merger is expected to be accounted for as a pooling of
interests. The consummation of the Merger and the other transactions
contemplated by the Merger Agreement is subject to the satisfaction or
waiver of certain conditions set forth in the Merger Agreement, including
obtaining the approval of the shareholders of the Company and Tyco and
customary regulatory approvals. It is anticipated that the Merger will be
completed in the first calendar quarter of 1999. In connection with its
entering into the Merger Agreement, the Company terminated its previously
announced self-tender offer for 30,000,000 shares of AMP Common Stock.
The Merger Agreement provides that AMP will pay Tyco $300
million as a termination fee plus Tyco's reasonable out of pocket expenses
upon termination of the Merger Agreement under the circumstances, and
subject to the conditions, specified therein. Prior to November 6, 1999,
AMP is prohibited from entering into or approving another transaction unless
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the Merger Agreement is terminated under certain limited circumstances as
specified in the Merger Agreement.
The Company has also entered into a Stock Option Agreement,
dated as of November 22, 1998 (the "Stock Option Agreement"), between the
Company and Beta, pursuant to which Beta was granted an option to acquire
up to 19.9% of the outstanding shares of AMP Common Stock at a price per
share of $51, subject to terms and conditions of the Stock Option
Agreement. All obligations of Merger Sub and Beta under the Merger
Agreement and the Stock Option Agreement are guaranteed by Tyco.
In connection with the execution of the Merger Agreement, the
Company has also entered into Amendment No. 5 to the Rights Agreement,
dated as of November 22, 1998 (" Amendment No.5"), by and between the
Company and ChaseMellon Shareholder Services L.L.C., as rights agent (the
"Rights Agent"). Pursuant to Amendment No. 5, the Rights Agreement, dated
October 25, 1989 and as amended prior hereto ( the "Rights Agreement"), by
and between the Company and the Rights Agent, was further amended to
provide that the execution and delivery of the Merger Agreement and the
Stock Option Agreement, and the consummation of the transactions
contemplated thereby, will not result in Tyco or any of its affiliates
becoming an Acquiring Person (as defined in the Rights Agreement) or any
triggering event occurring thereunder.
The foregoing description of the Merger, the Merger Agreement, the
Stock Option Agreement and Amendment No. 5 does not purport to be complete
and is qualified in its entirety by the copies of the Merger Agreement, the
Stock Option Agreement and Amendment No. 5 which are filed as exhibits to
this Current Report on Form 8-K and are incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
Exhibit No. Description
2.1 Agreement and Plan of Merger, dated as of November 22,
1998, by and among the Company, Beta and Merger Sub.
2.2 Stock Option Agreement, dated as of November 22, 1998, by
and between the Company and Beta.
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4.1 Amendment No. 5, dated as of November 22, 1998, to the
Rights Agreement, by and between the Company and ChaseMellon
Shareholder Services L.L.C.
99.1 Press release issued by the Company on November 23,
1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
AMP Incorporated
By:/s/ David F. Henschel
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Name: David F. Henschel
Title: General Counsel and
Corporate Secretary
Dated: November 25, 1998
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EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement and Plan of Merger, dated as of November 22,
1998, by and among the Company, Beta and Merger Sub.
2.2 Stock Option Agreement, dated as of November 22, 1998, by
and between the Company and Beta.
4.1 Amendment No. 5, dated as of November 22, 1998, to the
Rights Agreement, by and between the Company and ChaseMellon
Shareholder Services L.L.C.
99.1 Press release issued by the Company on November 23,
1998.
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BETA ZENO CORP.,
ALPHA ZENO CORP.
and
AMP INCORPORATED
including
GUARANTEE
of
TYCO INTERNATIONAL LTD.
Dated as of November 22, 1998
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TABLE OF CONTENTS
ARTICLE I
THE MERGER............................... 2
SECTION 1.01. The Merger............................................ 2
SECTION 1.02. Effective Time........................................ 2
SECTION 1.03. Effect of the Merger.................................. 2
SECTION 1.04. Articles of Incorporation; Bylaws..................... 2
SECTION 1.05. Directors and Officers................................ 3
SECTION 1.06. Effect on Securities, Etc............................. 3
SECTION 1.07. Exchange of Certificates.............................. 6
SECTION 1.08. Stock Transfer Books.................................. 8
SECTION 1.09. No Further Ownership Rights in Company Common Stock... 8
SECTION 1.10. Lost, Stolen or Destroyed Certificates................ 9
SECTION 1.11. Tax and Accounting Consequences....................... 9
SECTION 1.12. Taking of Necessary Action; Further Action............ 9
SECTION 1.13. Material Adverse Effect............................... 9
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 10
SECTION 2.01. Organization and Qualification; Subsidiaries.......... 10
SECTION 2.02. Articles of Incorporation and Bylaws.................. 10
SECTION 2.03. Capitalization........................................ 11
SECTION 2.04. Authority Relative to this Agreement and Stock Option
Agreement........................................... 12
SECTION 2.05. No Conflict; Required Filings and Consents............ 12
SECTION 2.06. Compliance; Permits................................... 14
SECTION 2.07. SEC Filings; Financial Statements..................... 14
SECTION 2.08. Absence of Certain Changes or Events.................. 15
SECTION 2.09. No Undisclosed Liabilities............................ 15
SECTION 2.10. Absence of Litigation................................. 15
SECTION 2.11. Employee Benefit Plans; Employment Agreements......... 15
SECTION 2.12. Labor Matters......................................... 19
SECTION 2.13. Registration Statement; Joint Proxy
Statement/Prospectus................................ 19
SECTION 2.14. Restrictions on Business Activities................... 20
SECTION 2.15. Title to Property..................................... 20
SECTION 2.16. Taxes................................................. 20
SECTION 2.17. Environmental Matters................................. 21
SECTION 2.18. Brokers............................................... 23
SECTION 2.19. Intellectual Property................................. 23
SECTION 2.20. Interested Party Transactions......................... 25
SECTION 2.21. Insurance............................................. 25
SECTION 2.22. Product Liability and Recalls......................... 25
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SECTION 2.23. Opinion of Financial Advisor.......................... 25
SECTION 2.24. Pooling Matters....................................... 25
SECTION 2.25. Tax Matters........................................... 26
SECTION 2.26. Rights Agreement...................................... 26
SECTION 2.27. Supplemental Company Disclosure Schedule.............. 26
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BETA AND MERGER SUB......... 26
SECTION 3.01. Organization and Qualification; Subsidiaries.......... 26
SECTION 3.02. Memorandum of Association and Bye-Laws................ 27
SECTION 3.03. Capitalization........................................ 27
SECTION 3.04. Authority Relative to this Agreement and the Stock
Option Agreement.................................... 28
SECTION 3.05. No Conflict; Required Filings and Consents............ 28
SECTION 3.06. Compliance; Permits................................... 29
SECTION 3.07. SEC Filings; Financial Statements..................... 30
SECTION 3.08. Absence of Certain Changes or Events.................. 30
SECTION 3.09. No Undisclosed Liabilities............................ 31
SECTION 3.10. Absence of Litigation................................. 31
SECTION 3.11. Employee Benefit Plans; Employment Agreements......... 34
SECTION 3.12. Labor Matters......................................... 33
SECTION 3.13. Registration Statement; Joint Proxy
Statement/Prospectus................................ 34
SECTION 3.14. Restrictions on Business Activities................... 35
SECTION 3.15. Title to Property..................................... 35
SECTION 3.16. Taxes................................................. 35
SECTION 3.17. Environmental Matters................................. 36
SECTION 3.18. Brokers............................................... 36
SECTION 3.19. Intellectual Property................................. 37
SECTION 3.20. Interested Party Transactions......................... 37
SECTION 3.21. Insurance............................................. 37
SECTION 3.22. Product Liability and Recalls......................... 38
SECTION 3.23. Ownership of Beta and Merger Sub; No Prior Activities. 38
SECTION 3.24. Pooling Matters....................................... 38
SECTION 3.25. Tax Matters........................................... 38
SECTION 3.26. PBCL Section 2538..................................... 39
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER................. 39
SECTION 4.01. Conduct of Business by the Company Pending the Merger. 39
SECTION 4.02. No Solicitation....................................... 41
SECTION 4.03. Conduct of Business by Tyco Pending the Merger........ 43
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ARTICLE V
ADDITIONAL AGREEMENTS......................... 44
SECTION 5.01. Joint Proxy Statement/Prospectus; Registration
Statemen............................................ 44
SECTION 5.02. Company Shareholders Meeting.......................... 44
SECTION 5.03. Tyco Shareholders Meeting............................. 45
SECTION 5.04. Access to Information; Confidentiality................ 45
SECTION 5.05. Consents; Approvals................................... 45
SECTION 5.06. Agreements with Respect to Affiliates................. 46
SECTION 5.07. Indemnification and Insurance......................... 46
SECTION 5.08. Notification of Certain Matters....................... 48
SECTION 5.09. Further Action/Tax Treatment.......................... 48
SECTION 5.10. Public Announcements.................................. 48
SECTION 5.11. Tyco Common Shares.................................... 49
SECTION 5.12. Conveyance Taxes...................................... 48
SECTION 5.13. Option Plans and Benefits, etc........................ 49
SECTION 5.14. Rights Agreement...................................... 50
SECTION 5.15. Accountant's Letters.................................. 50
SECTION 5.16. Pooling Accounting Treatment.......................... 50
SECTION 5.17. Compliance with State Property Transfer Statutes...... 51
SECTION 5.18. Director Appointment.................................. 51
SECTION 5.19. Termination of Flexitrust............................. 51
SECTION 5.20. Charities............................................. 51
ARTICLE VI
CONDITIONS TO THE MERGER........................ 52
SECTION 6.01. Conditions to Obligation of Each Party to Effect the
Merger.............................................. 52
SECTION 6.02. Additional Conditions to Obligations of Beta and
Merger Sub.......................................... 53
SECTION 6.03. Additional Conditions to Obligation of the Company.... 54
ARTICLE VII
TERMINATION.............................. 55
SECTION 7.01. Termination........................................... 55
SECTION 7.02. Effect of Termination................................. 57
SECTION 7.03. Fees and Expenses..................................... 57
ARTICLE VIII
GENERAL PROVISIONS........................... 59
SECTION 8.01. Effectiveness of Representations, Warranties and
Agreements.......................................... 59
SECTION 8.02. Notices............................................... 60
SECTION 8.03. Certain Definitions................................... 61
SECTION 8.04. Amendment............................................. 62
SECTION 8.05. Waiver................................................ 62
SECTION 8.06. Headings.............................................. 62
SECTION 8.07. Severability.......................................... 62
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SECTION 8.08. Entire Agreement...................................... 63
SECTION 8.09. Assignment............................................ 63
SECTION 8.10. Parties in Interest................................... 63
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative. 63
SECTION 8.12. Governing Law; Jurisdiction........................... 63
SECTION 8.13. Counterparts.......................................... 63
SECTION 8.14. WAIVER OF JURY TRIAL.................................. 64
GUARANTEE...............................................65
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 22, 1998
(this "Agreement"), among Beta Zeno Corp. ("Beta"), a Pennsylvania
corporation and a direct, wholly-owned subsidiary of Tyco International
Ltd. ("Tyco"), Alpha Zeno Corp., a Pennsylvania corporation and a direct,
wholly-owned subsidiary of Beta ("Merger Sub"), and AMP Incorporated, a
Pennsylvania corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Beta, Merger Sub and the
Company have each determined that it is advisable and in the best interests
of their respective shareholders, and consistent with and in furtherance of
their respective business strategies and goals, for Beta to acquire all of
the outstanding shares of the Company through the merger of Merger Sub with
and into the Company upon the terms and subject to the conditions set forth
herein;
WHEREAS, in furtherance of such combination, the Boards of
Directors of Beta , Merger Sub and the Company have each approved the
merger (the "Merger") of Merger Sub with and into the Company in accordance
with the applicable provisions of the Business Corporation Law of 1988 of
the Commonwealth of Pennsylvania (the "PBCL"), and upon the terms and
subject to the conditions set forth herein;
WHEREAS, Beta, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan
of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder and that the transactions contemplated by this Agreement be
undertaken pursuant to such plan;
WHEREAS, Beta, Merger Sub and the Company intend that the
Merger be accounted for as a pooling of interests for financial reporting
purposes;
WHEREAS, pursuant to the Merger, each outstanding share
(together with the common stock purchase right associated therewith, a
"Share") of the Company's Common Stock, without par value (the "Company
Common Stock"), shall be converted into the right to receive the Merger
Consideration (as defined in Section 1.07(b)), upon the terms and subject
to the conditions set forth herein;
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition to the Company's willingness to enter into
this Agreement, Tyco has agreed fully and unconditionally to guarantee the
representations, warranties, covenants, agreements and other obligations of
Beta and Merger Sub in this Agreement; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition to Beta's and Merger Sub's entry into this
Agreement, the Company and Beta have entered into a Stock Option Agreement
(the "Stock Option Agreement") of even date herewith and attached hereto as
Exhibit A;
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NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be
legally bound hereby, Beta, Merger Sub and the Company hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. (a) At the Effective Time (as defined
in Section 1.02), and subject to and upon the terms and conditions of this
Agreement and the PBCL, Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease, and
the Company shall continue as the surviving corporation (hereinafter
sometimes referred to as the "Surviving Corporation").
SECTION 1.02. Effective Time. Unless this Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 7.01, as promptly as practicable (and in any
event within two business days) after the satisfaction or waiver of the
conditions set forth in Article VI, the parties hereto shall cause the
Merger to be consummated by filing articles of merger as contemplated by
the PBCL (the "Articles of Merger"), together with any required related
certificates, with the Corporation Bureau, Department of State of the
Commonwealth of Pennsylvania, in such form as required by, and executed in
accordance with the relevant provisions of, the PBCL. The Merger shall
become effective at the time of such filing or at such later time, which
will be as soon as reasonably practicable, specified in the Articles of
Merger (the "Effective Time"). Prior to such filing, a closing shall be
held at the offices of Kramer Levin Naftalis & Frankel LLP, 919 Third
Avenue, New York, NY, unless another time or place is agreed to in writing
by the parties hereto, for the purpose of confirming the satisfaction or
waiver, as the case may be, of the conditions set forth in Article VI.
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Articles
of Merger and the applicable provisions of the PBCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 1.04. Articles of Incorporation; Bylaws. (a) Articles
of Incorporation. Unless otherwise determined by Beta prior to the
Effective Time, at the Effective Time, the Restated Articles of
Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided by the PBCL and such
Articles of Incorporation; provided, however, that Article FOURTH of the
Surviving Corporation's Articles of Incorporation shall be amended and
restated in the Merger to read in its entirety as follows: "FOURTH.
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The aggregate number of shares authorized is 1,000 shares of common stock,
par value $0.01 per share."
(b) Bylaws. The Bylaws of the Company, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by the PBCL, the Articles
of Incorporation of the Surviving Corporation and such Bylaws.
SECTION 1.05. Directors and Officers. The directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation, each to hold office in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
SECTION 1.06. Effect on Securities, Etc. At the Effective Time,
by virtue of the Merger and without any action on the part of Beta, Merger
Sub, the Company or the holders of any securities of the Company:
(a) Conversion of Securities. Each Share issued and outstanding
immediately prior to the Effective Time (excluding any Shares to be
canceled pursuant to Section 1.06(b)) shall be converted, subject to
Section 1.06(e) and Section 1.06(f), into the right to receive a fraction
of a validly issued, fully paid and nonassessable common share, par value
$0.20 per share, of Tyco (a "Tyco Common Share") such fraction to be in the
ratio provided below (the "Exchange Ratio"). If the Average Stock Price (as
hereinafter defined) is:
(i) greater than $73.50, the Exchange Ratio shall be equal to
$55.95 divided by the Average Stock Price;
(ii) equal to or greater than $67.00 but less than or equal to
$73.50, the Exchange Ratio shall be fixed at 0.7612;
(iii) equal to or greater than $60.00 but less than $67.00, the
Exchange Ratio shall be equal to $51.00 divided by the
Average Stock Price; or
(iv) less than $60.00, the Exchange Ratio shall be equal to
$51.00 divided by the Average Stock Price (provided that
Beta will have the right to terminate this Agreement by
reason of such Average Stock Price pursuant to Section
7.01(i)), except that if the Company has given notice
in accordance with Section 7.01(i), the Exchange Ratio
shall be fixed at 0.8500.
"Average Stock Price" means the average of the Daily Per Share Prices (as
hereinafter defined) for the fifteen consecutive trading days ending on the
fourth trading day prior to the Company Shareholders Meeting (as defined in
Section 2.13). The "Daily Per Share Price" for any trading day means the
weighted average of the per share selling prices on the New York
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Stock Exchange, Inc. (the "NYSE") of Tyco Common Shares (as reported in the
NYSE Composite Transaction Tape) for that day.
(b) Cancellation. Each Share held in the treasury of the
Company and each Share owned by Beta, Merger Sub or any direct or indirect,
wholly-owned subsidiary of the Company or Tyco immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, be canceled and
retired without payment of any consideration therefor and cease to exist.
(c) Company/Equity Awards. (i) Stock Options. Each option
outstanding at the Effective Time to purchase shares of Company Common
Stock (a "Stock Option") granted under (A) the Company's Stock Option Plan
for Outside Directors, as amended, (B) the Company's 1993 Long-Term Equity
Incentive Plan, as amended (the "1993 Plan") or (C) any other stock option
plan or agreement of the Company (collectively, the "Company Stock Option
Plans") shall constitute an option (an "Adjusted Option") to acquire, on
the same terms and conditions mutatis mutandis as were applicable under
such Stock Option prior to the Effective Time (but taking account of the
Merger), the number of Tyco Common Shares (rounded to the nearest whole
Tyco Common Share) as the holder of such Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such
Stock Option in full immediately prior to the Effective Time, at a price
per share (rounded to the nearest whole cent) equal to (x) the aggregate
exercise price for Company Common Stock otherwise purchasable pursuant to
such Stock Option divided by (y) the number of Tyco Common Shares deemed
purchasable pursuant to such Adjusted Option. The other terms of each such
Stock Option, and the plans under which they were issued, shall continue to
apply in accordance with their terms, including, to the extent provided
therein, the acceleration of vesting of such Stock Options in connection
with the transactions contemplated hereby. As soon as practicable after the
Effective Time, Beta shall cause to be delivered to each holder of an
outstanding Stock Option an appropriate notice setting forth such holder's
rights pursuant thereto, and that such Stock Option shall continue in
effect on the same terms and conditions (subject to the adjustments as a
result of the Merger described in this Section 1.06(c)).
(ii) Restricted Stock. Except as set forth on Section
1.06(c)(ii) of the Company Disclosure Schedule (as defined in Section 2.01)
and subject to the immediately following sentence, all restricted Shares
subject to awards granted pursuant to the 1993 Plan or pursuant to any
other plan or agreement of the Company, including but not limited to
"Performance Restricted Shares," in accordance with the terms of such plans
and agreements as in effect on the date hereof, shall become immediately
vested and free of restrictions as of the Effective Time and each such
award shall be converted into the number of Tyco Common Shares calculated
by multiplying (A) the sum of (1) the number of restricted Shares subject
to such award plus (2) the number of phantom Shares credited to the
awardee's "Dividend Reinvestment Account" by (B) the Exchange Ratio.
Notwithstanding the immediately preceding sentence, awards of Performance
Restricted Shares granted to an employee who is party to an "Executive
Severance Agreement" with the Company, in accordance with the terms of such
Executive Severance Agreement as in effect on the date hereof, shall, as of
the Effective Time, become immediately vested and free of restrictions as
of consummation of the Merger, and such award shall be converted into a
number of Tyco Common Shares equal to two times the product of (A) the sum
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of (1) the number of restricted Shares subject to such award plus (2) the
number of phantom Shares credited to the awardee's Dividend Reinvestment
Account and (B) the Exchange Ratio.
(iii) Bonus Units. Bonus Units subject to awards granted under
the Company's Bonus Plan (Stock plus Cash) (the "Stock Plus Cash Plan"), in
accordance with the terms of such Plan as in effect on the date hereof (but
subject to the terms of any Executive Severance Agreement with the holder
of such a Bonus Unit as in effect on the date hereof), shall, as of the
Effective Time, be converted into Bonus Units relating to Tyco Common
Shares. The number of Tyco Common Shares to be issued in respect of each
such award of Bonus Units shall be the result obtained by (A) calculating
the excess, if any, of (1) the "Market Value" (as defined in the Stock Plus
Cash Plan) or the "Fair Market Value" (as defined in Section 2(a) of the
Executive Severance Agreement with the Company), as applicable to the
particular holder (the applicable value being referred to as the "Market
Price") over (2) the per Bonus Unit Designated Value (as defined in the
Stock Plus Cash Plan) of such award; (B) multiplying the result obtained
pursuant to clause (A) by the number of Bonus Units subject to such award;
(C) dividing the product obtained pursuant to clause (B) by the Market
Price; and (D) multiplying the quotient obtained pursuant to clause (C) by
the Exchange Ratio. The Tyco Common Shares so determined shall be issued on
the date or dates set forth under the terms of the agreement evidencing the
award of Bonus Units, subject to the terms of the applicable Executive
Severance Agreement as in effect on the date hereof. In addition, the Cash
Bonus (as defined in the Stock Plus Cash Plan) in respect thereof shall be
paid in accordance with the terms of such Plan as in effect of the date
hereof, subject to the terms of the applicable Executive Severance
Agreement as in effect on the date hereof.
Bonus Units subject to awards granted under the 1993 Plan shall
be payable as of the Effective Time in accordance with the terms of such
Plan as in effect on the date hereof, in a number of Tyco Common Shares
calculated as follows: the number of Tyco Common Shares to be issued as of
such date shall be the result obtained by (A) calculating the excess, if
any, of (1) the "Fair Market Value" (as defined in the 1993 Plan) or the
"Fair Market Value" (as defined in Section 2(a)) of the Executive Severance
Agreement with the Company), as applicable to the particular holder (the
applicable value being referred to as the "Market Price") over (2) the per
Bonus Unit Designated Value (as defined in the 1993 Plan) of such award;
(B) multiplying the result obtained pursuant to clause (A) by the number of
Bonus Units subject to such award; (C) dividing the product obtained
pursuant to clause (B) by the Market Price; and (D) multiplying the
quotient obtained pursuant to clause (C) by the Exchange Ratio. In
addition, the Cash Bonus (as defined in such Plan) in respect of such
distribution shall be paid to each holder of such Bonus Units in accordance
with the terms of such Plan as in effect of the date hereof, subject to the
terms of the applicable Executive Severance Agreement as in effect on the
date hereof.
(iv) Phantom Shares. The number of phantom Shares credited to a
participant's account under the Company's Deferred Compensation Plan,
Deferred Compensation Plan for Non-Employee Directors and Deferred Stock
Accumulation Plan for Outside Directors, in accordance with the terms of
such Plan as in effect of the date hereof, shall be adjusted by
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multiplying such number of phantom Shares by the Exchange Ratio. Such
accounts shall otherwise be subject to the terms of such Plans.
Beta shall take all action necessary such that Tyco will
reserve for issuance a sufficient number of Tyco Common Shares for delivery
upon exercise of Adjusted Options and distributions in respect to Bonus
Units and restricted stock awards in accordance with this Section 1.06(c).
As soon as practicable following the Effective Time, Beta shall take all
action necessary such that Tyco will register the Tyco Common Shares
subject to the Adjusted Options under the Securities Act of 1933, as
amended, and the rules and regulations of the Securities and Exchange
Commission ("SEC") thereunder (the "Securities Act") pursuant to a
registration statement on Form S-8 (or any successor or other appropriate
form) to the extent such registration is required under the Securities Act,
and to use at least such efforts as are applied to Tyco's other stock
options generally to cause the effectiveness of such registration statement
or registration statements (and the current status of the prospectus or
prospectuses contained therein) to be maintained for so long as the
Adjusted Options remain outstanding (subject to interruptions of such
effectiveness or current status as may be reasonably required from time to
time, and are applicable to registration statements of Tyco with respect to
its option plans generally, because of developments affecting Tyco or
otherwise).
(d) Capital Stock of Merger Sub. Each share of common stock,
$0.01 par value per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of common stock, $0.01
par value, of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
appropriately adjusted to reflect fully the effect of any stock split,
reverse split, stock dividend (including any dividend or distribution of
securities convertible into Tyco Common Shares or Company Common Stock),
distribution, exercise or exchange of Rights (as defined in Section
4.02(d)) or such Rights becoming exercisable, reorganization,
recapitalization, split up, combination or exchange of shares or other like
event with respect to Tyco Common Shares or Company Common Stock occurring
after the date hereof and prior to the Effective Time.
(f) Fractional Shares. No certificates or scrip representing
less than one Tyco Common Share shall be issued upon the surrender for
exchange of a certificate or certificates or other evidence for shares
issued pursuant to the Company's direct registration system which
immediately prior to the Effective Time represented outstanding Shares (the
"Certificates"). In lieu of any such fractional share, each holder of
Shares who would otherwise have been entitled to a fraction of a Tyco
Common Share upon surrender of Certificates for exchange shall be paid upon
such surrender cash (without interest) in an amount equal to such fraction
multiplied by the last reported sale price per Tyco Common Share on the
NYSE Composite Transaction Tape on the last trading day prior to the date
of the Effective Time.
SECTION 1.07. Exchange of Certificates. (a) Exchange Agent. At
or prior to the Effective Time, Beta shall cause to be supplied to or for
such bank or trust company as shall be designated by Beta and shall be
reasonably acceptable to the Company (the "Exchange Agent"), in trust
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for the benefit of the holders of Company Common Stock, for exchange
in accordance with this Section 1.07 through the Exchange Agent,
certificates evidencing the Tyco Common Shares issuable pursuant to Section
1.06(a) and the cash to be paid in lieu of fractional shares in exchange
for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Beta will cause the Exchange Agent to mail to
each holder of record of Certificates (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 proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Beta may reasonably specify), and (ii) instructions to
effect the surrender of the Certificates in exchange for the certificates
evidencing Tyco Common Shares. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor solely (A) certificates
evidencing that number of whole Tyco Common Shares which such holder has
the right to receive in accordance with the Exchange Ratio in respect of
the Shares formerly evidenced by such Certificate and (B) cash in respect
of fractional shares as provided in Section 1.06(f) (the Tyco Common Shares
and cash in respect of fractional shares being, collectively, the "Merger
Consideration"). The holder of such Certificate, upon its exchange for Tyco
Common Shares, shall also receive any dividends or other distributions to
which such holder is entitled pursuant to Section 1.07(c). Certificates
surrendered pursuant to this Section 1.07(b) shall forthwith be canceled.
In the event of a transfer of ownership of Shares which is not registered
in the transfer records of the Company as of the Effective Time, Merger
Consideration, dividends or distributions may be issued and paid in
accordance with this Article I to a transferee if the Certificate
evidencing such Shares is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer pursuant to
this Section 1.07(b) and by evidence that any applicable stock transfer
taxes have been paid. Until so surrendered, each outstanding Certificate
that, prior to the Effective Time, represented Shares of Company Common
Stock will be deemed from and after the Effective Time, for all corporate
purposes, other than the payment of dividends or other distributions, to
evidence the ownership of the number of full Tyco Common Shares, and cash
in respect of fractional shares, into which such shares of the Company
Common Stock shall have been so converted. The provisions of this Section
1.07 shall be appropriately adjusted to the extent necessary to preserve
and implement the intent of this section with respect to Certificates
issued pursuant to the direct registration system.
(c) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time
with respect to Tyco Common Shares with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with
respect to the Tyco Common Shares he is entitled to receive until the
holder of such Certificate shall surrender such Certificate in accordance
with the provisions of Section 1.07(b). Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the
record holder of the certificates representing whole Tyco Common Shares
issued in exchange therefor, without interest, at the time of such surrender,
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the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole Tyco Common
Shares.
(d) Transfers of Ownership. If any certificate for Tyco Common
Shares is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of
the issuance thereof that the Certificate so surrendered will be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Beta or any agent designated by
it any transfer or other taxes required by reason of the issuance of a
certificate for Tyco Common Shares in any name other than that of the
registered holder of the certificate surrendered, or establish to the
satisfaction of Beta or any agent designated by it that such tax has been
paid or is not payable.
(e) Escheat. Neither Beta, Merger Sub nor the Company nor any
of their respective affiliates shall be liable to any holder of Company
Common Stock for any Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) Withholding Rights. The Exchange Agent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any holder of Company Common Stock and from
any cash dividends or other distributions that the holder is entitled to
receive under Section 1.07(c), such amounts as the Exchange Agent is
required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or non-United States tax
law. To the extent that amounts are so withheld by the Exchange Agent, such
portion of the Merger Consideration and other such amounts payable under
Section 1.07(c) that are withheld shall be treated for all purposes of this
Agreement as having been received by the holder of the Shares in respect of
which such deduction and withholding was made by the Exchange Agent.
(g) Undistributed Certificates. Any portion of the certificates
evidencing the Tyco Common Shares and the cash to be paid in lieu of
fractional shares supplied to the Exchange Agent which remains
undistributed to the holders of the Certificates for one year after the
Effective Time shall be delivered to Beta, upon demand, and any holders of
the Certificates who have not theretofore complied with this Section 1.07
shall thereafter look only to Beta for payment of their claim for Merger
Consideration and any dividends or distributions with respect to Tyco
Common Shares.
SECTION 1.08. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers of the Company Common Stock thereafter on
the records of the Company.
SECTION 1.09. No Further Ownership Rights in Company Common
Stock. The Merger Consideration delivered upon the surrender for exchange
of Shares in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Shares, and
there shall be no further registration of transfers on the records of the
Surviving Corporation of Shares which were outstanding immediately prior to
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the Effective Time. If, after the Effective Time, Certificates are presented
to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article I.
SECTION 1.10. Lost, Stolen or Destroyed Certificates. In the
event any Certificates shall have been lost, stolen or destroyed, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder
thereof, such Tyco Common Shares as may be required pursuant to Section
1.06(a); provided, however, that Beta may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond in such sum as it
may reasonably direct as indemnity against any claim that may be made
against Tyco, Beta or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
SECTION 1.11. Tax and Accounting Consequences. It is intended
by the parties hereto that the Merger shall (i) constitute a reorganization
within the meaning of Section 368 of the Code and the regulations
promulgated thereunder and (ii) subject to applicable accounting standards,
qualify for accounting treatment as a pooling of interests. The parties
hereto hereby adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.
SECTION 1.12. Taking of Necessary Action; Further Action. Each
of Beta, Merger Sub and the Company will take all such reasonable and
lawful actions as may be necessary or appropriate in order to effectuate
the Merger and the other transactions contemplated by this Agreement in
accordance with this Agreement as promptly as possible. If, at any time
after the Effective Time, any such further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Company and Merger Sub,
the officers and directors of the Company and Merger Sub immediately prior
to the Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and
necessary action.
SECTION 1.13. Material Adverse Effect. When used in connection
with the Company or any of its subsidiaries or Tyco or any of its
subsidiaries, as the case may be, the term "Material Adverse Effect" means
any change, effect or circumstance that is or would reasonably be expected
to be materially adverse to the business, assets (including intangible
assets), financial condition or results of operations of the Company and
its subsidiaries or Tyco and its subsidiaries, as the case may be, in each
case taken as a whole; provided, however, that effects of changes that are
applicable to (A) the United States economy generally or (B) the United
States securities markets generally shall be excluded from the definition
of "Material Adverse Effect" and from any determination as to whether a
Material Adverse Effect has occurred or may occur.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Beta and Merger Sub
as follows:
SECTION 2.01. Organization and Qualification; Subsidiaries.
Each of the Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation and has the requisite corporate power and authority
necessary to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing
or to have such power or authority would not reasonably be expected to have
a Material Adverse Effect. Each of the Company and its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing that would not reasonably
be expected to have a Material Adverse Effect. A true and complete list of
all of the Company's "significant" subsidiaries, as defined in Regulation
S-X, is included as an exhibit to the Company's 1997 Annual Report on Form
10-K (the "Company Significant Subsidiaries"). The Company has furnished or
will furnish to Beta a list of all subsidiaries of the Company together
with the jurisdiction of incorporation of each such subsidiary and the
percentage of each such subsidiary's outstanding capital stock owned by the
Company or another subsidiary of the Company in Section 2.01of the written
disclosure schedule previously delivered by the Company to Beta (the
"Company Disclosure Schedule") or in Section 2.01 of the supplement to the
Company Disclosure Schedule to be delivered to Beta not later than 14 days
from the date of this Agreement (the "Supplemental Company Disclosure
Schedule"). Except as set forth in Section 2.01 of the Company Disclosure
Schedule or the Company SEC Reports (as defined in Section 2.07 below), the
Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for,
any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity (other than its
wholly-owned subsidiaries), with respect to which interest the Company has
invested (and currently owns) or is required to invest $10,000,000 or more,
excluding securities in any publicly-traded company held for investment by
the Company and comprising less than five percent of the outstanding stock
of such company.
SECTION 2.02. Articles of Incorporation and Bylaws. The Company
has heretofore made available to Beta a complete and correct copy of its
Restated Articles of Incorporation and Bylaws as amended to date (the
"Company Charter Documents"), and will make available to Beta , as promptly
as practicable, the Articles of Incorporation and Bylaws (or equivalent
organizational documents) of each of its subsidiaries reasonably requested
by Beta (the "Subsidiary Documents"). Such Company Charter Documents and
Subsidiary Documents are in full force and effect. Neither the Company nor
any of the Company Significant Subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or Bylaws or equivalent
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organizational documents, except for violations of the documents
which do not and are not reasonably likely to materially interfere
with the operations of such entity. Neither the Company nor any
of its subsidiaries is in violation of any of the provisions of its
Articles of Incorporation or Bylaws or equivalent organizational documents,
except for violations of such documents which, individually or in the
aggregate, do not and would not reasonably be expected to have a Material
Adverse Effect.
SECTION 2.03. Capitalization. (a) The authorized capital stock
of the Company consists of 700,000,000 shares of Company Common Stock. As
of November 18, 1998, 218,789,869 shares of Company Common Stock were
issued and outstanding, all of which are validly issued, fully paid and
nonassessable (excluding shares which are issued but not outstanding all of
which are not entitled to vote), (iii) no shares of Company Common Stock
were held by subsidiaries of the Company, (iv) 9,260,282 shares of Company
Common Stock were reserved for existing grants and 739,758 shares were
reserved for future grants pursuant to the Company Stock Option Plans, (v)
3,000,000 shares of Company Common Stock were reserved and available for
future issuance pursuant to the Company's 1998 Employee Stock Purchase Plan
(the "Stock Purchase Plan"), and (vi) 25,000,000 shares of Company Common
Stock were reserved and available for issuance pursuant to the Company's
proposed "Flexitrust Agreement" (the "Flexitrust") described in Amendment
No. 20 to the Company's 14D-9, filed with the SEC on September 28, 1998.
Except as set forth in Section 2.03 of the Company Disclosure Schedule, no
change in such capitalization has occurred since November 18, 1998, except
for changes resulting from the exercise of Stock Options. Except as set
forth in Section 2.01, this Section 2.03 or Section 2.11 or in Section 2.03
or Section 2.11 of the Company Disclosure Schedule or the Company SEC
Reports or as contemplated by the Stock Option Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments
of any character binding on the Company or any of its subsidiaries relating
to the issued or unissued capital stock of the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue
or sell any shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries. All shares of Company Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, shall be
duly authorized, validly issued, fully-paid and nonassessable. Except as
disclosed in Section 2.03 of the Company Disclosure Schedule or the Company
SEC Reports, there are no obligations, contingent or otherwise, of the
Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any shares of Company Common Stock or the capital stock of any
subsidiary. Except as disclosed in Section 2.03 of the Company Disclosure
Schedule or the Company SEC Reports, there are no obligations, contingent
or otherwise, of the Company or any of its subsidiaries to provide funds to
or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity other than guarantees
of bank obligations of subsidiaries entered into in the ordinary course of
business and other than obligations in amounts less than $3,000,000
individually and $25,000,000 in the aggregate. Except as set forth in
Sections 2.01 and 2.03 of the Company Disclosure Schedule, all of the
outstanding shares of capital stock (other than directors' qualifying
shares) of each of the Company's subsidiaries are duly authorized, validly
issued, fully-paid and nonassessable, and all such shares (other than
directors' qualifying shares and a de minimis number of shares owned by
employees of such subsidiaries) are owned by the Company or
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another subsidiary free and clear of all security interests, liens, claims,
pledges, agreements, limitations in the Company's voting rights, charges or
other encumbrances of any nature whatsoever.
(b) The Company's Board of Directors has rescinded all
authority of the Company to repurchase any of its securities and has
resolved to terminate the Company's tender for shares of Company Common
Stock pursuant to its Offer to Purchase, dated October 9, 1998 (the
"Company's Tender Offer"), immediately upon the execution of this Agreement
and without having purchased or accepted for purchase any shares of Company
Common Stock, and the Company has no obligation to purchase or accept for
purchase any such shares pursuant thereto or any other securities of the
Company. The Company will publicly announce such termination by 9:00 a.m.
E.S.T. on November 23, 1998.
SECTION 2.04. Authority Relative to this Agreement and Stock
Option Agreement. The Company has all necessary corporate power and
authority to execute and deliver this Agreement and the Stock Option
Agreement and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Stock Option Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized by
all necessary corporate action, and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or the Stock
Option Agreement or to consummate the transactions so contemplated (other
than the approval of the Merger and this Agreement by the Company's
shareholders in accordance with the PBCL and the Company's Charter
Documents). As of the date hereof, the Board of Directors of the Company
has determined that it is advisable and in the best interest of the
Company's shareholders for the Company to enter into this Agreement and the
Stock Option Agreement and to consummate the Merger upon the terms and
subject to the conditions of this Agreement and have adopted resolutions so
that Subchapters 25F and Section 2538 of the PBCL are not applicable to
Tyco or any of its affiliates or to the Merger or the other transactions
contemplated by this Agreement. This Agreement and the Stock Option
Agreement have been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by Tyco, Beta
and Merger Sub of each such agreement and/or the guarantee thereof, as
applicable, each constitutes a legal, valid and binding obligation of the
Company.
SECTION 2.05. No Conflict; Required Filings and Consents. (a)
Section 2.05(a) of the Company Disclosure Schedule includes, as of the date
hereof, a list of (i) other than intercompany, all loan agreements,
indentures, mortgages, pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, guaranties, standby
letters of credit, equipment leases or lease purchase agreements, each in
an amount equal to or exceeding $15,000,000 to which the Company or any of
its subsidiaries is a party or by which any of them is bound; (ii) all
contracts, agreements, commitments or other understandings or arrangements
to which the Company or any of its subsidiaries is a party or by which any
of them or any of their respective properties or assets are bound or
affected, but excluding contracts, agreements, commitments or other
understandings or arrangements entered into in the ordinary course of
business and involving, in the case of any such contact, agreement,
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commitment, or other understanding or arrangement, individual payments or
receipts by the Company or any of its subsidiaries of less than $15,000,000
over the term of such contract, commitment, agreement, or other
understanding or arrangement; and (iii) all agreements which are required
to be filed as "material contracts" with the SEC pursuant to the
requirements of the Securities Exchange Act of 1934, as amended, and the
SEC's rules and regulations thereunder (the "Exchange Act") but have not
been so filed with the SEC.
(b) Except as set forth in Section 2.05(b) of the Company
Disclosure Schedule, the execution and delivery of this Agreement and the
Stock Option Agreement by the Company does not, and the performance of this
Agreement and the Stock Option Agreement by the Company will not, (i)
conflict with or violate the Restated Articles of Incorporation or Bylaws
of the Company, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its
subsidiaries or by which its or any of their respective properties is bound
or affected, or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a default),
or impair the Company's or any of its subsidiaries' rights or alter the
rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on (including a right to
purchase) any of the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except, in the case of clauses
(ii) or (iii), for any such conflicts, violations, breaches, defaults or
other occurrences that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, domestic or
foreign (each, a "Governmental Authority"), except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, state
securities laws ("Blue Sky Laws"), the pre-merger notification requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations thereunder (the "HSR Act"), filings under the
Exon-Florio Act, filings and consents under any applicable foreign laws
intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade ("Foreign Monopoly Laws"),
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Merger or the transactions contemplated
by this Agreement, and the filing and recordation of appropriate merger or
other documents as required by the PBCL, (ii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially delay
consummation of the Merger, or otherwise prevent or materially delay the
Company from performing its material obligations under this Agreement or
the Stock Option Agreement, or would not otherwise reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, or
(iii) as to which any necessary consents, approvals, authorizations,
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permits, filings or notifications have heretofore been obtained or filed,
as the case may be, by the Company.
SECTION 2.06. Compliance; Permits. (a) Except as disclosed in
Section 2.06(a) of the Company Disclosure Schedule or the Company SEC
Reports, neither the Company nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its subsidiaries or
by which its or any of their respective properties is bound or affected or
(ii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries or its or any of their respective properties is
bound or affected, except for any such conflicts, defaults or violations
which would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.06(b) of the Company
Disclosure Schedule or the Company SEC Reports, the Company and its
subsidiaries hold all permits, licenses, easements, variances, exemptions,
consents, certificates, orders and approvals from governmental authorities
which are material to the operation of the business of the Company and its
subsidiaries taken as a whole as it is now being conducted (collectively,
the "Company Permits"), except where the failure to hold such Company
Permits would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect. The Company and its subsidiaries are in
compliance with the terms of the Company Permits, except as described in
the Company SEC Reports or where the failure to so comply would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
SECTION 2.07. SEC Filings; Financial Statements. (a) The
Company has filed all forms, reports and documents required to be filed
with the SEC since December 31, 1995 (collectively, the "Company SEC
Reports"). Except as disclosed in Section 2.07 of the Company Disclosure
Schedule, the Company SEC Reports (i) were prepared in all material
respects in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) 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 the light
of the circumstances under which they were made, not misleading. None of
the Company's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC
Reports was prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or in the
Company SEC Reports), and each fairly presents in all material respects the
consolidated financial position of the Company and its subsidiaries as at
the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
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SECTION 2.08. Absence of Certain Changes or Events. Except as
set forth in Section 2.08 of the Company Disclosure Schedule or the Company
SEC Reports or actions (other than actions of the type prohibited by
Section 4.01) relating to the unsolicited efforts of AlliedSignal, Inc.
("AlliedSignal") to acquire the Company, since September 30, 1998, the
Company has conducted its business in the ordinary course and there has not
occurred: (i) any changes, effects or circumstances constituting,
individually or in the aggregate, a Material Adverse Effect; (ii) any
amendments or changes in the Restated Articles of Incorporation or Bylaws
of the Company; (iii) any damage to, destruction or loss of any asset of
the Company (whether or not covered by insurance) that would reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect; (iv) any material change by the Company in its accounting methods,
principles or practices; or (v) other than in the ordinary course of
business, any sale of a material amount of assets of the Company.
SECTION 2.09. No Undisclosed Liabilities. Except as set forth
in Section 2.09 of the Company Disclosure Schedule or the Company SEC
Reports, neither the Company nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise), except
liabilities (a) in the aggregate adequately provided for in the Company's
unaudited balance sheet (including any related notes thereto) as of
September 30, 1998 included in the Company's Quarterly Report of Form 10-Q
for the quarter ended September 30, 1998 (the "1998 Balance Sheet"), (b)
incurred in the ordinary course of business and not required under GAAP to
be reflected on the 1998 Balance Sheet, (c) incurred since September 30,
1998 in the ordinary course of business, (d) incurred in connection with
this Agreement or the Merger or the other transactions contemplated hereby,
(e) for fees and expenses relating to AlliedSignal's unsolicited efforts to
acquire the Company or with respect to the Company's Tender Offer, or (f)
which would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.
SECTION 2.10. Absence of Litigation. Except as set forth in
Section 2.10 and Section 2.19(c) of the Company Disclosure Schedule or the
Company SEC Reports or arising out of transactions contemplated by this
Agreement, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, overtly
threatened against the Company or any of its subsidiaries, or any
properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority
or body, domestic or foreign, that would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.11. Employee Benefit Plans; Employment Agreements.
(a) Section 2.11(a) of the Company Disclosure Schedule lists all employee
pension benefit plans (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), all employee
welfare benefit plans (as defined in Section 3(1) of ERISA), and all other
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar fringe or employee
benefit plans, programs or arrangements (including those which contain
change of control provisions or pending change of control provisions), and
any employment, executive compensation or severance agreements (including
those which contain change of control provisions or pending change of
control provisions), written or otherwise, as amended, modified or
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supplemented, for the benefit of, or relating to, any former or current
employee, officer, director or consultant (or any of their beneficiaries) of
the Company or any other entity (whether or not incorporated) which is a
member of a controlled group including the Company or which is under common
control with the Company within the meaning of Sections 414(b), (c), (m) or
(o) of the Code or Section 4001(a) (14) or (b) of ERISA (a "Company ERISA
Affiliate"), or any subsidiary of the Company, as well as each plan with
respect to which the Company or a Company ERISA Affiliate could incur
liability under Title IV of ERISA or Section 412 of the Code (together for
the purposes of this Section 2.11, the "Company Employee Plans"); provided,
however, that a list of (i) all Company International Plans (as defined in
Section 2.11(g) hereof) not currently set forth on Section 2.11(a) of the
Company Disclosure Schedule and (ii) all individual employment, incentive
or compensation arrangements with non-officers of the Company not currently
set forth on Section 2.11(a) of the Company Disclosure Schedule shall be
provided by the Company to Beta on Section 2.11(a) of the Supplemental
Company Disclosure Schedule. To the Company's knowledge, failure to satisfy
its obligations under the Company Employee Plans referred to in clauses (i)
and (ii) of the immediately preceding sentence would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect. The Company has made available to Beta, prior to the date of this
Agreement, or the Company will make available not later than 30 days after
the date of this Agreement, copies of (i) each such written Company
Employee Plan (or a written description of any Company Employee Plan which
is not written) and all related trust agreements, insurance and other
contracts (including policies), summary plan descriptions, summaries of
material modifications and communications distributed to plan participants,
(ii) the three most recent annual reports on Form 5500 series, with
accompanying schedules and attachments, filed with respect to each Company
Employee Plan required to make such a filing, (iii) the most recent
actuarial valuation for each Company Employee Plan subject to Title IV of
ERISA, (iv) the latest reports which have been filed with the Department of
Labor with respect to each Company Employee Plan required to make such
filing and (v) the most recent favorable determination letters issued for
each Company Employee Plan and related trust which is intended to be
qualified under Section 401(a) of the Code (and, if an application for such
determination is pending, a copy of the application for such
determination). For purposes of this Section 2.11, the term "material,"
when used with respect to (i) any Company Employee Plan, shall mean that
the Company or a Company ERISA Affiliate has incurred or may incur
obligations in an amount exceeding $1,250,000 with respect to such Company
Employee Plan, and (ii) any liability, obligation, breach or
non-compliance, shall mean that the Company or a Company ERISA Affiliate
has incurred or may incur obligations in an amount exceeding $750,000, with
respect to any one such or series of liabilities, obligations, breaches,
defaults, violations or instances of non-compliance.
(b) Except as set forth in Section 2.11(b) of the Company
Disclosure Schedule or the Company SEC Reports, (i) none of the Company
Employee Plans promises or provides retiree medical or other retiree
welfare benefits to any person, and none of the Company Employee Plans is a
"multiemployer plan" as such term is defined in Section 3(37) of ERISA;
(ii) no party in interest or disqualified person (as defined in Section
3(14) of ERISA and Section 4975 of the Code) has at any time engaged in a
transaction with respect to any Company Employee Plan which could subject
the Company or any Company ERISA Affiliate, directly or indirectly, to a
material tax, penalty or other material liability for prohibited
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transactions under ERISA or Section 4975 of the Code; (iii) no fiduciary of
any Company Employee Plan has breached any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA, which breach
would reasonably be expected to result in any material liability to the
Company or any Company ERISA Affiliate; (iv) all Company Employee Plans
have been established and maintained substantially in accordance with their
terms and have operated in compliance in all material respects with the
requirements of applicable law, and may by their terms be amended and/or
terminated at any time subject to applicable law and the terms of each
Company Employee Plan, and the Company and each of its subsidiaries have
performed all material obligations required to be performed by them under,
are not in any material respect in default under or violation of, and have
no knowledge of any default or violation by any other party to, any of the
Company Employee Plans; (v) each Company Employee Plan which is intended to
be qualified under Section 401(a) of the Code is the subject of a favorable
determination letter from the IRS, and, to the Company's knowledge, nothing
has occurred which may reasonably be expected to impair such determination;
(vi) all contributions required to be made with respect to any Company
Employee Plan pursuant to Section 412 of the Code, or the terms of the
Company Employee Plan or any collective bargaining agreement, have been
made on or before their due dates (including any extensions thereof); (vii)
with respect to each Company Employee Plan, no "reportable event" within
the meaning of Section 4043 of ERISA (excluding any such event for which
the 30 day notice requirement has been waived under the regulations to
Section 4043 of ERISA) has occurred for which there is any material
outstanding liability to the Company or any Company ERISA Affiliate nor
would the consummation of the transactions contemplated hereby (including
the execution of this Agreement) constitute a reportable event for which
the 30-day requirement has not been waived; and (viii) neither the Company
nor any Company ERISA Affiliate has incurred or reasonably expects to incur
any material liability under Title IV of ERISA including, without
limitation, with respect to an event described in Section 4062, 4063 or
4041 of ERISA (other than liability for premium payments to the Pension
Benefit Guaranty Corporation (the "PBGC") arising in the ordinary course).
(c) Section 2.11(c) of the Company Disclosure Schedule sets
forth a true and complete list of each current or former employee, officer
or director of the Company or any of its subsidiaries who holds (i) any
option to purchase Company Common Stock as of the date hereof, together
with the number of shares of Company Common Stock subject to such option,
the option price of such option (to the extent determined as of the date
hereof), whether such option is intended to qualify as an incentive stock
option within the meaning of Section 422(b) of the Code (an "ISO"), and the
expiration date of such option; (ii) any shares of Company Common Stock
that are restricted; and (iii) any other right, directly or indirectly, to
receive Company Common Stock, together with the number of shares of Company
Common Stock subject to such right.
(d) To the extent not already included and so labelled in
Section 2.11(a) of the Company Disclosure Schedule, Section 2.11(d) of the
Company Disclosure Schedule sets forth a true and complete list of (i) all
employment agreements with officers of the Company or any of its
subsidiaries; (ii) all agreements with consultants who are individuals
obligating the Company or any of its subsidiaries to make annual cash
payments in an amount exceeding $375,000; (iii) all agreements with respect
to the services of independent contractors or leased employees whether
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or not they participate in any of the Company Employee Plans obligating
the Company or any of its subsidiaries to make annual cash payments
in the aggregate exceeding $375,000; (iv) all officers of the
Company or any of its subsidiaries who have executed a non-competition
agreement with the Company or any of its subsidiaries; (v) all severance
agreements, programs and policies of the Company or any of its subsidiaries
with or relating to its employees, in each case with outstanding
commitments exceeding $375,000, excluding programs and policies required to
be maintained by law; and (vi) all plans, programs, agreements and other
arrangements of the Company which contain change of control provisions.
(e) Except as set forth in Section 2.11(e) of the Company
Disclosure Schedule: (i) the PBGC has not instituted proceedings to
terminate any Company Employee Plan that is subject to Title IV of ERISA
(each, a "Company Defined Benefit Plan"); (ii) the Company Defined Benefit
Plans have no accumulated or waived funding deficiencies within the meaning
of Section 412 of the Code nor have any extensions of any amortization
period within the meaning of Section 412 of the Code or 302 of ERISA been
applied for with respect thereto; (iii) as of January 1, 1998, the present
value of the benefit liabilities (within the meaning of Section 4041 of
ERISA) of the Company Defined Benefit Plans, determined on an ongoing basis
using the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such plan's actuary with respect to
such plan's most recently completed fiscal year, does not exceed by more
than $2,500,000 the value of the Company Defined Benefit Plans' assets and
to the knowledge of the Company, nothing has occurred since the end of the
most recently completed fiscal year that would adversely affect the funding
status of such plans; (iv) all applicable premiums required to be paid to
the PBGC with respect to the Company Defined Benefit Plans have been paid;
(v) no facts or circumstances exist with respect to any Company Defined
Benefit Plan which would give rise to a lien on the assets of the Company
under Section 4068 of ERISA or otherwise; and (vi) as of the date hereof,
substantially all of the assets of the Company Defined Benefit Plans are
readily marketable securities or insurance contracts.
(f) Except as set forth in Section 2.11(f) of the Company
Disclosure Schedule or in the Company SEC Reports, (i) the Company has
never maintained an employee stock ownership plan (within the meaning of
Section 4975(e)(7) of the Code) or any other Company Employee Plan that
invests in Company stock; (ii) since December 31, 1997, the Company has not
proposed nor agreed to any increase in benefits under any Company Employee
Plan (or the creation of new benefits) or change in employee coverage which
would materially increase the expense of maintaining any Company Employee
Plan; (iii) the consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or accelerate the vesting or timing of payment of any benefits or
compensation payable in respect of any employee; and (iv) no person will be
entitled to any severance benefits under the terms of any Company Employee
Plan solely by reason of the consummation of the transactions contemplated
by this Agreement.
(g) Each Company Employee Plan covering non-U.S. employees (a
"Company International Plan") has been maintained in substantial compliance
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with its terms and with the requirements prescribed by any and all
applicable laws (including any special provisions relating to
registered or qualified plans where such Company International Plan was
intended to so qualify) and has been maintained in good standing with
applicable regulatory authorities. Except as set forth on Section 2.11(g)
of the Company Disclosure Schedule, the fair market value of the assets of
each funded Company International Plan, if any, (or the liability of each
funded Company International Plan funded through insurance) is sufficient
to procure or provide for the benefits accrued thereunder through the
Effective Time according to the actuarial assumptions and valuations most
recently used to determine employer contributions to the Company
International Plan.
(h) The Company has fiduciary liability insurance of at least
$1,500,000 in effect covering the fiduciaries of the Company Employee Plans
(including the Company) with respect to whom the Company may have
liability.
SECTION 2.12. Labor Matters. Except as set forth in Section
2.12 of the Company Disclosure Schedule or the Company SEC Reports, (i)
there are no controversies pending or, to the knowledge of the Company,
threatened, between the Company or any of its subsidiaries and any of their
respective employees, which controversies have had, or would reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect; (ii) neither the Company nor any of its United States subsidiaries
is in breach of any material collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or its United
States subsidiaries which would reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect, nor does the Company or
any of its United States subsidiaries know of any activities or proceedings
of any labor union to organize any significant number of such employees;
and (iii) neither the Company nor any of its subsidiaries is in breach of
any material collective bargaining agreement or other labor union contract,
nor has any knowledge of any activities or proceedings of any labor unions
to organize employees, or of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the
Company or any of its subsidiaries which would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.13. Registration Statement; Joint Proxy
Statement/Prospectus. Subject to the accuracy of the representations of
Beta in Section 3.13, the information supplied by the Company in writing
specifically for inclusion in the Registration Statement (as defined in
Section 3.13) shall not at the time the Registration Statement is declared
effective by the SEC 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 the light of the circumstances
under which they were made, not misleading. The information supplied by the
Company for inclusion in the joint proxy statement/prospectus to be sent to
the shareholders of the Company in connection with the meeting of the
shareholders of the Company to consider the Merger (the "Company
Shareholders Meeting"), and to the shareholders of Tyco in connection with
the meeting of the shareholders of Tyco to consider the issuance of the
Tyco Common Shares in connection with the Merger (the "Tyco Shareholders
Meeting" and, together with the Company Shareholders Meeting, the
"Shareholders Meetings") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "Joint Proxy
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Statement/Prospectus") will not, on the date the Joint Proxy
Statement/Prospectus (or any amendment thereof or supplement thereto) is
first mailed to shareholders or at the time of the Shareholders Meetings
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to
make the statements made therein not false or misleading; or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Shareholders Meetings which has become false or misleading. If at any time
prior to the Effective Time any event relating to the Company or any of its
respective affiliates, officers or directors should be discovered by the
Company which should be set forth in an amendment to the Registration
Statement or a supplement to the Joint Proxy Statement/Prospectus, the
Company shall promptly inform Beta and Merger Sub. The Joint Proxy
Statement/Prospectus shall comply in all material respects with the
requirements of the Securities Act and the Exchange Act. Notwithstanding
the foregoing, the Company makes no representation or warranty with respect
to any information supplied by Tyco, Beta or Merger Sub which is contained
or incorporated by reference in, or furnished in connection with the
preparation of, the Joint Proxy Statement/Prospectus.
SECTION 2.14. Restrictions on Business Activities. Except for
this Agreement or as set forth in Section 2.14 of the Company Disclosure
Schedule or the Company SEC Reports, to the best of the Company's
knowledge, there is no agreement, judgment, injunction, order or decree
binding upon the Company or any of its subsidiaries which has or would
reasonably be expected to have the effect of prohibiting or impairing the
conduct of business by the Company or any of its subsidiaries as currently
conducted by the Company or such subsidiary, except for any prohibition or
impairment as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 2.15. Title to Property. Except as set forth in
Sections 2.15 and 2.19(b) of the Company Disclosure Schedule or the
Supplemental Company Disclosure Schedule, the Company and each of its
subsidiaries have good title to all of their real properties and other
assets, free and clear of all liens, charges and encumbrances, except liens
for taxes not yet due and payable and such liens or other imperfections of
title, if any, as do not materially interfere with the present use of the
property affected thereby or which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, and
except for liens which secure indebtedness reflected in the 1998 Balance
Sheet; and, to the knowledge of the Company, all leases pursuant to which
the Company or any of its subsidiaries lease from others material amounts
of real or personal property, are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge
of the Company, under any of such leases, any existing material default or
event of default (or event which with notice or lapse of time, or both,
would constitute a material default), except where the lack of such good
standing, validity and effectiveness or the existence of such default or
event of default would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 2.16. Taxes. Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect:
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(a) The Company and each of its subsidiaries has timely and
accurately filed, or caused to be timely and accurately filed, all material
Tax Returns (as hereinafter defined) required to be filed by it, and has
paid, collected or withheld, or caused to be paid, collected or withheld,
all material amounts of Taxes (as hereinafter defined) required to be paid,
collected or withheld, other than such Taxes for which adequate reserves in
the 1998 Balance Sheet have been established or which are being contested
in good faith. Except as set forth in Section 2.16(a) of the Company
Disclosure Schedule, there are no material claims or assessments pending
against the Company or any of its subsidiaries for any alleged deficiency
in any Tax, there are no pending or threatened audits or investigations for
or relating to any liability in respect of any Taxes, and the Company has
not been notified in writing of any proposed Tax claims or assessments
against the Company or any of its subsidiaries (other than in each case,
claims or assessments for which adequate reserves in the 1998 Balance Sheet
have been established or which are being contested in good faith or are
immaterial in amount). Neither the Company nor any of its subsidiaries has
executed any waivers or extensions of any applicable statute of limitations
to assess any material amount of Taxes. There are no outstanding requests
by the Company or any of its subsidiaries for any extension of time within
which to file any material Tax Return or within which to pay any material
amounts of Taxes shown to be due on any Tax Return. To the best knowledge
of the Company, there are no liens for material amounts of Taxes on the
assets of the Company or any of its subsidiaries except for statutory liens
for current Taxes not yet due and payable. Other than with respect to the
Company and its subsidiaries, neither the Company nor any of its
subsidiaries is liable for Taxes of any other Person, or is currently under
any contractual obligation to indemnify any person with respect to Taxes
(except for customary agreements to indemnify lenders or security holders
in respect of taxes other than income taxes), or is a party to any tax
sharing agreement or any other agreement providing for payments by the
Company or any of its subsidiaries with respect to Taxes.
(b) For purposes of this Agreement, the term "Tax" shall mean
any United States federal, state, local, non-United States or provincial
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, alternative or add-on minimum, ad valorem, transfer or
excise tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge imposed by any Governmental Authority, together with
any interest or penalty imposed thereon. The term "Tax Return" shall mean a
report, return or other information (including any attached schedules or
any amendments to such report, return or other information) required to be
supplied to or filed with a Governmental Authority with respect to any Tax,
including an information return, claim for refund, amended return or
declaration or estimated Tax.
SECTION 2.17. Environmental Matters. (a) Except as set forth in
Section 2.17(a) to the Company Disclosure Schedule or in the Company SEC
Reports or as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, the operations and properties
of the Company and its subsidiaries are in compliance with the
Environmental Laws (as hereinafter defined), which compliance includes the
possession by the Company and its subsidiaries of all permits and
governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof.
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(b) Except as set forth in Section 2.17(b) of the Company
Disclosure Schedule or the Company SEC Reports or as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect, there are no Environmental Claims (as hereinafter defined),
including claims based on "arranger liability," pending or, to the best
knowledge of the Company, threatened against the Company or any of its
subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained or
assumed.
(c) Except as set forth on Section 2.17(c) of the Company
Disclosure Schedule or in the Company SEC Reports, there are no past or
present actions, circumstances, conditions, events or incidents, including
the release, emission, discharge, presence or disposal of any Materials of
Environmental Concern (as hereinafter defined), that are reasonably likely
to form the basis of any Environmental Claim against the Company or any of
its subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries have retained or
assumed, except for such Environmental Claims that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
(d) Except as would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect or as set forth in
Section 2.17(d) of the Company Disclosure Schedule or the Company SEC
Reports, (i) there are no off-site locations where the Company or any of
its subsidiaries has stored, disposed or arranged for the disposal of
Materials of Environmental Concern which have been listed on the National
Priority List, CERCLIS, or state Superfund site list, and the Company and
its subsidiaries have not been notified that any of them is a potentially
responsible party at any such location; (ii) there are no underground
storage tanks located on property owned or leased by the Company or any of
its subsidiaries; (iii) there is no friable asbestos containing material
contained in or forming part of any building, building component, structure
or office space owned, leased or operated by the Company or any of its
subsidiaries; and (iv) there are no polychlorinated biphenyls (PCBs) or
PCB-containing items contained in or forming part of any building, building
component, structure or office space owned, leased or operated by the
Company or any of its subsidiaries.
(e) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action, cause of
action, investigation or written notice by any person or entity alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on
or resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location, whether or not owned or
operated by the Company or any of its subsidiaries.
(ii) "Environmental Laws" means all United States federal,
state, local and non-United States laws, regulations, codes and ordinances,
relating to pollution or protection of human health and the environment
(including ambient air, surface water, ground water, land surface or
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sub-surface strata), including laws and regulations relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the use, treatment,
storage, disposal, transport or handling of Materials of Environmental
Concern, including, but not limited to CERCLA, RCRA, TSCA, OSHA, the Clean
Air Act, the Clean Water Act, each as amended or supplemented, and any
applicable transfer statutes or laws.
(iii) "Materials of Environmental Concern" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances and
hazardous wastes, medical waste, toxic substances, petroleum and petroleum
products, asbestos-containing materials, polychlorinated biphenyls, and any
other chemicals, pollutants or substances regulated under any Environmental
Law.
SECTION 2.18. Brokers. No broker, finder or investment banker
(other than Credit Suisse First Boston ("CSFB") and Donaldson, Lufkin &
Jenrette ("DLJ"), the fees and expenses of each of whom will be paid by the
Company) is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Beta a complete and correct copy of all agreements
between the Company and CSFB and DLJ pursuant to which such firms would be
entitled to any payment relating to the transactions contemplated
hereunder.
SECTION 2.19. Intellectual Property. (a) As used herein, the
term "Intellectual Property Assets" shall mean all worldwide intellectual
property rights, including, without limitation, patents, trademarks,
service marks and copyrights, and registrations and applications therefor,
trade names, know-how, trade secrets, computer software programs and
proprietary information. As used herein, "Company Intellectual Property
Assets" shall mean the Intellectual Property Assets used or owned by the
Company or any of its subsidiaries.
(b) Except as set forth in Section 2.19(b) of the Company
Disclosure Schedule or the Supplemental Company Disclosure Schedule, the
Company and/or each of its subsidiaries owns, or is licensed or otherwise
possesses legally enforceable rights to use all Intellectual Property
Assets that are used in and otherwise material to the business of the
Company and its subsidiaries as currently conducted, without conflict with
the rights of others.
(c) Except as disclosed in Section 2.19(c) of the Company
Disclosure Schedule or as would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect, no claims (i) are
currently pending or, to the knowledge of the Company, are threatened by
any person with respect to the Company Intellectual Property Assets, or
(ii) are, to the knowledge of the Company, currently pending or threatened
by any person with respect to the Intellectual Property Assets of a third
party (the "Third Party Intellectual Property Assets") to the extent
arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Assets by or through the Company or any of its
subsidiaries.
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(d) Except as disclosed in Section 2.19(d) of the Company
Disclosure Schedule or as would not reasonably be expected to have a
Material Adverse Effect, neither the Company nor any of its subsidiaries
knows of any valid grounds for any bona fide claim to the effect that the
manufacture, sale, licensing or use of any product now used, sold or
licensed or proposed for use, sale, license by the Company or any of its
subsidiaries infringes on any Third Party Intellectual Property Assets.
(e) Section 2.19(e) of the Company Disclosure Schedule or the
Supplemental Company Disclosure Schedule sets forth or will set forth a
list of (i) all patents and patent applications owned by the Company and/or
each of its subsidiaries worldwide; (ii) all trademark and service mark
registrations and all trademark and service mark applications, material
common law trademarks, material trade dress and material slogans, and all
trade names owned by the Company and/or each of its subsidiaries worldwide;
(iii) all copyright registrations and copyright applications owned by the
Company and/or each of its subsidiaries worldwide; and (iv) all licenses
owned by the Company and/or each of its subsidiaries in which the Company
and/or each of its subsidiaries is (A) a licensor with respect to any of
the patents, trademarks, service marks, trade names or copyrights listed in
Section 2.19(e) of the Company Disclosure Schedule or the Supplemental
Company Disclosure Schedule; or (B) a licensee of any other person's
patents, trade names, trademarks, service marks or copyrights material to
the Company except for any licenses of software programs that are
commercially available "off the shelf." Except as disclosed in Section
2.19(e)(v) of the Company Disclosure Schedule or the Supplemental Company
Disclosure Schedule, the Company and/or each of its subsidiaries has made
all necessary filings and recordations to protect and maintain its interest
in the patents, patent applications, trademark and service mark
registrations, trademark and service mark applications, copyright
registrations and copyright applications and licenses set forth in Section
2.19(e) of the Company Disclosure Schedule or the Supplemental Company
Disclosure Schedule, except where the failure to so protect or maintain
would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect.
(f) To the knowledge of the Company, except as set forth in
Section 2.19(e)(v) or 2.19(f) of the Company Disclosure Schedule or the
Supplemental Company Disclosure Schedule or the Company SEC Reports: (i)
each patent, patent application, trademark or service mark registration,
and trademark or service mark application and copyright registration or
copyright application of the Company and/or each of its subsidiaries is
valid and subsisting and (ii) each material license of Company Intellectual
Property Assets listed on Section 2.19(e) of the Company Disclosure
Schedule or the Supplemental Company Disclosure Schedule is valid,
subsisting and enforceable.
(g) Except as set forth in Section 2.19(g) of the Company
Disclosure Schedule, to the Company's knowledge, there is no material
unauthorized use, infringement or misappropriation of any of the Company's
Intellectual Property Assets by any third party, including any employee,
former employee, independent contractor or consultant of the Company or any
of its subsidiaries which would reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect.
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(h) Except as set forth in Section 2.19(h) of the Company
Disclosure Schedule, the disclosure under the heading "YEAR 2000" contained
in the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1998 is accurate and in compliance with applicable law in all
material respects.
SECTION 2.20. Interested Party Transactions. Except as set
forth in Section 2.20 of the Company Disclosure Schedule or the Company SEC
Reports or for events as to which the amounts involved do not, in the
aggregate, exceed $300,000, since the Company's proxy statement dated March
16, 1998, no event has occurred that would be required to be reported as a
Certain Relationship or Related Transaction pursuant to Item 404 of
Regulation S-K promulgated by the SEC.
SECTION 2.21. Insurance. Except as disclosed in Section 2.21 of
the Company Disclosure Schedule or the Company SEC Reports, all material
fire and casualty, general liability, business interruption, product
liability and sprinkler and water damage insurance policies maintained by
the Company or any of its subsidiaries are with reputable insurance
carriers, provide full and adequate coverage for all normal risks incident
to the business of the Company and its subsidiaries and their respective
properties and assets and are in character and amount appropriate for the
businesses conducted by the Company, except as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
SECTION 2.22. Product Liability and Recalls. (a) Except as
disclosed in Section 2.22(a) of the Company Disclosure Schedule or the
Company SEC Reports, the Company is not aware of any claim, pending or
threatened, against the Company or any of its subsidiaries for injury to
person or property of employees or any third parties suffered as a result
of the sale of any product or performance of any service by the Company or
any of its subsidiaries, including claims arising out of the defective or
unsafe nature of its products or services, which would reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
(b) Except as disclosed in Section 2.22(b) of the Company
Disclosure Schedule or the Company SEC Reports, there is no pending or, to
the knowledge of the Company, overtly threatened recall or investigation of
any product sold by the Company, which recall or investigation would
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
SECTION 2.23. Opinion of Financial Advisor. The Board of
Directors of the Company has been advised by its financial advisor, CSFB,
to the effect that in its opinion, as of the date of this Agreement, the
Exchange Ratio is fair to the holders of Shares from a financial point of
view.
SECTION 2.24. Pooling Matters. To the Company's knowledge and
based upon consultation with its independent accountants, the Company has
provided to Beta and its independent accountants all information concerning
actions taken or agreed to be taken by the Company or any of its affiliates
on or before the date of this Agreement that, if taken, might
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reasonably be expected to affect adversely the ability of Tyco to account
for the business combination to be effected by the Merger as a pooling of
interests, and the Company has no knowledge that such business combination
cannot be accounted for in that manner. For purposes of this Section 2.24,
references to "knowledge" mean to the actual knowledge of the Company's
Chairman and Chief Executive Officer, Chief Financial Officer or
Controller.
SECTION 2.25. Tax Matters. The representations, statements and
covenants set forth in paragraph 2 through 14 of Section 2.25 of the
Company Disclosure Schedule are true and correct in all material respects.
SECTION 2.26. Rights Agreement. The Board of the Directors of
the Company has authorized and approved an amendment to the Rights
Agreement (as defined in Section 4.02(d)) to the effect that (i) none of
Beta, Merger Sub and their affiliates, either individually or as a group,
shall become an "Acquiring Person" (as defined in the Rights Agreement),
(ii) no Distribution Date, Section 11(a)(ii) Event, Section 13 Event, Stock
Acquisition Date or Triggering Event (as each such term is defined in the
Rights Agreement) (each a "Rights Event") shall occur, and (iii) an
Unsolicited Acquisition Proposal (as defined in the Rights Agreement) shall
not be deemed to have been announced, with respect to each of clauses (i),
(ii) and (iii), by reason of the approval, execution or delivery of this
Agreement, the Stock Option Agreement, the consummation of the transactions
contemplated hereby and thereby or any announcement of the same. The
Company and the Rights Agent (as defined in the Rights Agreement) shall
execute such amendment to the Rights Agreement no later than the second
business day following the date hereof.
SECTION 2.27. Supplemental Company Disclosure Schedule. No
disclosure which will be made on the Supplemental Company Disclosure
Schedule will be of a matter which would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BETA AND MERGER SUB
Beta and Merger Sub hereby, jointly and severally, represent
and warrant to the Company as follows:
SECTION 3.01. Organization and Qualification; Subsidiaries.
Each of Tyco and its subsidiaries is a corporation duly organized and
validly existing under the laws of the jurisdiction of its incorporation
and has the requisite corporate power and authority necessary to own, lease
and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the
failure to be so organized and existing or to have such power or authority
would not reasonably be expected to have a Material Adverse Effect. Each of
Tyco and its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where the character of its properties owned, leased or operated by it or
the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed
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and in good standing that would not reasonably be expected to have a
Material Adverse Effect. A true and complete list of all of Tyco's
subsidiaries, together with the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital
stock owned by Tyco or another subsidiary of Tyco, is set forth in Section
3.01 of the written disclosure schedule previously delivered by Beta to the
Company (the "Beta Disclosure Schedule"). Except as set forth in Section
3.01 of the Beta Disclosure Schedule or the Tyco SEC Reports (as defined in
Section 3.07 below), Tyco does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity (other
than its wholly-owned subsidiaries), with respect to which Tyco has
invested and currently owns or is required to invest $7,500,000 or more,
excluding securities in any publicly traded company held for investment by
Tyco and comprising less than five percent of the outstanding capital stock
of such company.
SECTION 3.02. Memorandum of Association and Bye-Laws. Beta has
heretofore made available to the Company a complete and correct copy of
Tyco's Memorandum of Association and Bye-Laws, as amended to date (the
"Tyco Charter Documents"). Such Tyco Charter Documents are in full force
and effect. Neither Tyco, Beta nor Merger Sub is in violation of any of the
provisions of its Memorandum of Association (or Articles of Incorporation)
or bye-laws (or by-laws).
SECTION 3.03. Capitalization. (a) The authorized capital stock
of Tyco consists of 1,503,750,000 Tyco Common Shares and 125,000,000
Preference Shares, $1.00 par value per share ("Tyco Preferred Shares"). (i)
As of November 6, 1998, (I) 647,323,419 Tyco Common Shares were issued and
outstanding, all of which are validly issued, fully paid and
non-assessable, (II) no Tyco Preferred Shares were outstanding and (III) no
more than 10,000,000 Tyco Common Shares and no Tyco Preferred Shares were
held by subsidiaries of Tyco (excluding such Tyco Common Shares held or to
be held by Beta for delivery to the shareholders of the Company as Merger
Consideration); (ii) as of September 30, 1998, warrants to purchase 157,778
Tyco Common Shares were outstanding; and (iii) as of October 21, 1998,
approximately 29,500,000 Common Shares were reserved for issuance upon
exercise of stock options issued under Tyco's stock option plans. No
material change in such capitalization has occurred since such dates,
respectively, other than as a result of the exercise of options or warrants
outstanding as of such dates. Except as set forth in Section 3.03 of the
Beta Disclosure Schedule or the Tyco SEC Reports or as contemplated by this
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character binding on Tyco or any of its
subsidiaries relating to the issued or unissued capital stock of Tyco or
any of its subsidiaries or obligating Tyco or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in,
Tyco or any of its subsidiaries. Except as set forth in Section 3.01 or
3.03 of the Beta Disclosure Schedule, all of the outstanding shares of
capital stock (other than directors' qualifying shares) of each of Tyco's
subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and all such shares (other than directors' qualifying
shares) are owned by Tyco or another subsidiary free and clear of all
security interests, liens, claims, pledges, agreements, limitations in
Tyco's voting rights, charges or other encumbrances of any nature
whatsoever.
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(b) The Tyco Common Shares to be issued pursuant to the Merger
will be duly authorized, validly issued, fully paid and nonassessable and
shall be listed, upon official notice of issuance, for trading on the NYSE.
SECTION 3.04. Authority Relative to this Agreement and the
Stock Option Agreement. Each of Tyco, Beta and Merger Sub has all necessary
corporate power and authority to execute and deliver this Agreement and the
Stock Option Agreement, as applicable, and the Tyco guarantees hereof and
thereof, as applicable, and to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Stock Option
Agreement, and the Tyco guarantees thereof, by Tyco, Beta and Merger Sub,
as applicable, and the consummation by Tyco, Beta and Merger Sub of the
transactions, contemplated hereby and thereby, as applicable, have been
duly and validly authorized by all necessary corporate action on the part
of Tyco, Beta and Merger Sub, as applicable, and no other corporate
proceedings on the part of Tyco, Beta or Merger Sub are necessary to
authorize this Agreement or the Stock Option Agreement or to consummate the
transactions so contemplated (other than the approval of the issuance of
the Tyco Common Shares in connection with the Merger by a majority of the
votes cast on a proposal to such effect, provided that the total votes cast
on such proposal represent over 50% of the interest of all securities
entitled to vote on such proposal, in accordance with the rules and
regulations of the NYSE, the Companies Act of 1981, as amended, and the
Tyco Charter Documents). The respective Boards of Directors of Tyco and
Beta, as applicable, have each determined that it is advisable and in the
best interest of Tyco's and Beta's shareholders, as applicable, for Beta to
enter into this Agreement and the Stock Option Agreement, for Tyco to
guarantee Beta's obligations hereunder and thereunder, and for Beta to
consummate the Merger upon the terms and subject to the conditions of this
Agreement. This Agreement, the Stock Option Agreement and/or the Tyco
guarantees thereof have been duly and validly executed and delivered by
Tyco, Beta and Merger Sub, as applicable, and, assuming due authorization,
execution and delivery by the Company, constitute the legal, valid and
binding obligations of Tyco, Beta and Merger Sub, as applicable.
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
Section 3.05(a) of the Beta Disclosure Schedule includes, as of the date
hereof, a list of (i) other than intercompany, all loan agreements,
indentures, mortgages, pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, guaranties, standby
letters of credit, equipment leases or lease purchase agreements to which
Tyco or any of its subsidiaries is a party or by which any of them is
bound, each in an amount exceeding $25,000,000; (ii) all contracts,
agreements, commitments or other understandings or arrangements to which
Tyco or any of its subsidiaries is a party or by which any of them or any
of their respective properties or assets are bound or affected, but
excluding contracts, agreements, commitments or other understandings or
arrangements entered into in the ordinary course of business and involving,
in each case, payments or receipts by Tyco or any of its subsidiaries of
less than $20,000,000 in any single instance; and (iii) all agreements
which, as of the date hereof, are required to be filed with the SEC
pursuant to the requirements of the Exchange Act as "material contracts"
but have not been so filed with the SEC.
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(b) Except as set forth in Section 3.05(b) of the Beta
Disclosure Schedule, the execution and delivery of this Agreement, the
Stock Option Agreement and guarantees thereof by Tyco, Beta and Merger Sub,
as applicable, do not, and the performance of this Agreement, the Stock
Option Agreement and the guarantees thereof by Tyco, Beta and Merger Sub,
as applicable, will not, (i) conflict with or violate the Memorandum of
Association (or Articles of Incorporation) or bye-laws (or by-laws) of
Tyco, Beta or Merger Sub, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Tyco or any of its
subsidiaries or by which its or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or impair Tyco's or any of its subsidiaries' rights or alter the
rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance (including a right to
purchase) on any of the properties or assets of Tyco or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Tyco or any of its subsidiaries is a party or by which
Tyco or any of its subsidiaries or its or any of their respective
properties are bound or affected, except, in the case of clauses (ii) or
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement, the Stock
Option Agreement and the guarantees thereof by Tyco, Beta and Merger Sub,
as applicable, do not, and the performance of this Agreement, the Stock
Option Agreement and the guarantees thereof by Tyco, Beta and Merger Sub,
as applicable, will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority,
except (i) for applicable requirements, if any, of the Securities Act, the
Exchange Act, the Blue Sky Laws, the pre-merger notification requirements
of the HSR Act, filings under the Exon-Florio Act, Foreign Monopoly Laws,
and the filing and recordation of appropriate merger or other documents as
required by the PBCL, (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the
Merger, or otherwise prevent or materially delay Tyco, Beta or Merger Sub
from performing their respective material obligations under this Agreement,
the Stock Option Agreement and the guarantees thereof, and would not
otherwise be reasonably expected, individually or in the aggregate, to have
a Material Adverse Effect or (iii) as to which any necessary consents,
approvals, authorizations, permits, filings or notifications have
heretofore been obtained or filed, as the case may be, by Tyco, Beta or
Merger Sub.
SECTION 3.06. Compliance; Permits. (a) Except as disclosed in
Section 3.06(a) of the Beta Disclosure Schedule or the Tyco SEC Reports,
neither Tyco nor any of its subsidiaries is in conflict with, or in default
or violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to Tyco or any of its subsidiaries or by which its or any of
their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Tyco or any of its subsidiaries
is a party or by which Tyco or any of its subsidiaries or its or any of
their respective properties is bound or affected, except for any such
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conflicts, defaults or violations which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
(b) Except as disclosed in Section 3.06(b) of the Beta
Disclosure Schedule or the Tyco SEC Reports, Tyco and its subsidiaries hold
all permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from governmental authorities which are
material to the operation of the business of Tyco and its subsidiaries
taken as a whole as it is now being conducted (collectively, the "Tyco
Permits") except where the failure to hold such Tyco Permits would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. Tyco and its subsidiaries are in compliance with
the terms of the Tyco Permits, except as described in the Tyco SEC Reports
or where the failure to so comply would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) Tyco has
filed all forms, reports and documents required to be filed with the SEC
since December 31, 1995 (collectively, the "Tyco SEC Reports"). The Tyco
SEC Reports (i) were prepared in all material respects in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may
be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing) 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 the light of the circumstances
under which they were made, not misleading. Except as set forth in Section
3.07(a) of the Beta Disclosure Schedule, none of Tyco's subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Tyco SEC Reports
has been prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto or in the Tyco SEC Reports), and each fairly presents in all
material respects the consolidated financial position of Tyco and its
subsidiaries as at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except
that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not
expected to be material in amount.
SECTION 3.08. Absence of Certain Changes or Events. Except as
set forth in Section 3.08 of the Beta Disclosure Schedule or the Tyco SEC
Reports, since June 30, 1998, Tyco has conducted its business in the
ordinary course and there has not occurred: (i) any changes, effects or
changed circumstances constituting, individually or in the aggregate, a
Material Adverse Effect; (ii) any amendments or changes in the Tyco Charter
Documents; (iii) any damage to, destruction or loss of any assets of Tyco
(whether or not covered by insurance) that would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; (iv)
any material change by Tyco in its accounting methods; or (v) any sale of a
material amount of assets of Tyco, except in the ordinary course of
business.
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SECTION 3.09. No Undisclosed Liabilities. Except as set forth
in Section 3.09 of the Beta Disclosure Schedule or the Tyco SEC Reports,
neither Tyco nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (a) in the aggregate
adequately provided for in Tyco's unaudited balance sheet (including any
related notes thereto) as of June 30, 1998 included in Tyco's Quarterly
Report on Form 10-Q for the fiscal period ended June 30, 1998 (the "1998
Tyco Balance Sheet"), (b) incurred in the ordinary course of business and
not required under GAAP to be reflected on the 1998 Balance Sheet, (c)
incurred since June 30, 1998 in the ordinary course of business, (d)
incurred in connection with this Agreement, or the Merger or the other
transactions contemplated hereby, or (e) which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
SECTION 3.10. Absence of Litigation. Except as set forth in
Sections 3.10 and 3.19(b) of the Beta Disclosure Schedule or the Tyco SEC
Reports or arising out of transactions contemplated by this Agreement,
there are no claims, actions, suits, proceedings or investigations pending
or, to the knowledge of Beta, threatened against Tyco or any of its
subsidiaries, or any properties or rights of Tyco or any of its
subsidiaries, before any court, arbitrator or administrative, governmental
or regulatory authority or body, domestic or foreign, that would reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
SECTION 3.11. Employee Benefit Plans; Employment Agreements.
(a) Section 3.11(a) of the Beta Disclosure Schedule lists all employee
pension benefit plans (as defined in Section 3(2) of ERISA), all employee
welfare benefit plans (as defined in Section 3(1) of ERISA), and all other
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar fringe or employee
benefit plans, programs or arrangements, and any employment, executive
compensation or severance agreements, written or otherwise, as amended,
modified or supplemented, for the benefit of, or relating to, any former or
current employee, officer, director or consultant (or any of their
beneficiaries) of Tyco or any entity (whether or not incorporated) which is
a member of a controlled group including Tyco or which is under common
control with Tyco within the meaning of Sections 414(b), (c), (m) or (o) of
the Code or Section 4001(a) (14) or (b) of ERISA ("Tyco ERISA Affiliate"),
or any subsidiary of Tyco, as well as each plan with respect to which Tyco
or a Tyco ERISA Affiliate could incur liability under Title IV of ERISA or
Section 412 of the Code (together for the purposes of this Section 3.11,
the "Tyco Employee Plans"). For purposes of this Section 3.11, the term
"material," when used with respect to (i) any Tyco Employee Plan, shall
mean that Tyco or a Tyco ERISA Affiliate has incurred or may incur
obligations in an amount exceeding $5,000,000 with respect to such Tyco
Employee Plan, and (ii) any liability, obligation, breach or
non-compliance, shall mean that Tyco or a Tyco ERISA Affiliate has incurred
or may incur obligations in an amount exceeding $3,000,000, with respect to
any one such or series of liabilities, obligations, breaches, defaults,
violations or instances of non-compliance.
(b) Except as set forth in Section 3.11(b) of the Beta
Disclosure Schedule or the Tyco SEC Reports, (i) none of the Tyco Employee
Plans promises or provides retiree medical or other retiree welfare
benefits to any person, and none of the Tyco Employee Plans
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is a "multiemployer plan" as such term is defined in Section 3(37) of
ERISA; (ii) no party in interest or disqualified person (as defined in
Section 3(14) of ERISA and Section 4975 of the Code) has at any time
engaged in a transaction with respect to any Tyco Employee Plan which could
subject Tyco or any Tyco ERISA Affiliate, directly or indirectly, to a
material tax, penalty or other material liability for prohibited
transactions under ERISA or Section 4975 of the Code; (iii) no fiduciary of
any Tyco Employee Plan has breached any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA, which breach
would reasonably be expected to result in any material liability to Tyco or
any Tyco ERISA Affiliate; (iv) all Tyco Employee Plans have been
established and maintained substantially in accordance with their terms and
have operated in compliance in all material respects with the requirements
of applicable law, and may by their terms be amended and/or terminated at
any time subject to applicable law and the terms of each Tyco Employee
Plan, and Tyco and each of its subsidiaries have performed all material
obligations required to be performed by them under, are not in any material
respect in default under or violation of, and have no knowledge of any
default or violation by any other party to, any of the Tyco Employee Plans;
(v) each Tyco Employee Plan which is intended to be qualified under Section
401(a) of the Code is the subject of a favorable determination letter from
the IRS, and, to Beta's knowledge, nothing has occurred which may
reasonably be expected to impair such determination; (vi) all contributions
required to be made with respect to any Tyco Employee Plan pursuant to
Section 412 of the Code, or the terms of the Tyco Employee Plan or any
collective bargaining agreement, have been made on or before their due
dates (including any extensions thereof); (vii) with respect to each Tyco
Employee Plan, no "reportable event" within the meaning of Section 4043 of
ERISA (excluding any such event for which the 30 day notice requirement has
been waived under the regulations to Section 4043 of ERISA) has occurred
for which there is any material outstanding liability to Tyco or any Tyco
ERISA Affiliate nor would the consummation of the transaction contemplated
hereby (including the execution of this agreement) constitute a reportable
event for which the 30-day requirement has not been waived; and (viii)
neither Tyco nor any Tyco ERISA Affiliate has incurred or reasonably
expects to incur any material liability under Title IV of ERISA including,
without limitation, with respect to an event described in Section 4062,
4063 or 4041 of ERISA (other than liability for premium payments to the
PBGC arising in the ordinary course).
(c) Section 3.11(c) of the Beta Disclosure Schedule sets forth
a true and complete list of the aggregate number of (i) options to purchase
Tyco Common Shares as of the date hereof, together with the number of Tyco
Common Shares subject to such options, the option prices of such options
(to the extent determined as of the date hereof), whether such options are
intended to qualify as ISOs, and the expiration date of such options; (ii)
any Tyco Common Shares that are restricted; and (iii) any other rights,
directly or indirectly, to receive Tyco Common Shares, together with the
number of Tyco Common Shares subject to such rights, held by each current
or former employee, officer or director of Tyco or any of its subsidiaries.
(d) To the extent not already included and so indicated in
Section 3.11(a) of the Company Disclosure Schedule, Section 3.11(d) of the
Beta Disclosure Schedule sets forth a true and complete list of (i) all
employment agreements with officers of Tyco or any of its subsidiaries;
(ii) all agreements with consultants who are individuals obligating Tyco or
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any of its subsidiaries to make annual cash payments in an amount exceeding
$1,500,000; (iii) all agreements with respect to the services of
independent contractors or leased employees whether or not they participate
in any of the Tyco Employee Plans obligating Tyco or any of its
subsidiaries to make annual cash payments in the aggregate exceeding
$1,500,000; (iv) all officers of Tyco or any of its subsidiaries who have
executed a non-competition agreement with Tyco or any of its subsidiaries;
(v) all severance agreements, programs and policies of Tyco or any of its
subsidiaries with or relating to its employees, in each case with
outstanding commitments exceeding $1,500,000, excluding programs and
policies required to be maintained by law; and (vi) all plans, programs,
agreements and other arrangements of Company which contain change in
control provisions.
(e) Except as set forth in Section 3.11(e) of the Beta
Disclosure Schedule: (i) the PBGC has not instituted proceedings to
terminate any Tyco Employee Plan that is subject to Title IV of ERISA
(each, a "Tyco Defined Benefit Plan"); (ii) the Tyco Defined Benefit Plans
have no accumulated or waived funding deficiencies within the meaning of
Section 412 of the Code nor have any extensions of any amortization period
within the meaning of Section 412 of the Code or 302 of ERISA been applied
for with respect thereto; (iii) as of January 1, 1998, the present value of
the benefit liabilities (within the meaning of Section 4041 of ERISA) of
the Company Defined Benefit Plans, determined on an ongoing basis using the
actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such plan's actuary with respect to such
plan's most recently completed fiscal year, does not exceed by more than
$10,000,000 the value of the Tyco Defined Benefit Plans' assets and to the
knowledge of Beta, nothing has occurred since the end of the most recently
completed fiscal year that would adversely affect the funding status of
such plans; (iv) all applicable premiums required to be paid to the PBGC
with respect to the Tyco Defined Benefit Plans have been paid; (v) no facts
or circumstances exist with respect to any Tyco Defined Benefit Plan which
would give rise to a lien on the assets of Tyco under Section 4068 of ERISA
or otherwise; and (vi) substantially all the assets of the Tyco Defined
Benefit Plans are readily marketable securities or insurance contracts.
(f) Except as set forth in Schedule 3.08 or 3.11(f) of the Beta
Disclosure Schedule, Tyco does not maintain an employee stock ownership
plan (within the meaning of Section 4975(e)(7) of the Code) or any other
Tyco Employee Plan that invests in Beta stock.
(g) Each Tyco Employee Plan covering non-U.S. employees (a
"Tyco International Plan") has been maintained in substantial compliance
with its terms and with the requirements prescribed by any and all
applicable laws (including any special provisions relating to registered or
qualified plans where such Tyco International Plan was intended to so
qualify) and has been maintained in good standing with applicable
regulatory authorities. The benefit liabilities of the Tyco International
Plans are adequately provided for on the consolidated financial statements
of Tyco.
(h) Tyco and its affiliates have, in the aggregate, fiduciary
liability insurance of at least $15,000,000 in effect covering the
fiduciaries of the Tyco Employee Plans (including Tyco) with respect to
whom Tyco may have liability.
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SECTION 3.12. Labor Matters. Except as set forth in Section
3.12 of the Beta Disclosure Schedule or the Tyco SEC Reports, (i) there are
no controversies pending or, to the knowledge of Tyco or any of its
subsidiaries, threatened, between Tyco or any of its subsidiaries and any
of their respective employees, which controversies have or would reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect; (ii) neither Tyco nor any of its United States subsidiaries is in
breach of any material collective bargaining agreement or other labor union
contract applicable to persons employed by Tyco or its United States
subsidiaries which would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, nor does Tyco or any of its
United States subsidiaries know of any activities or proceedings of any
labor union to organize any significant number of such employees; and (iii)
neither Tyco nor any of its subsidiaries is in breach of any material
collective bargaining agreement or other labor union contract, nor has any
knowledge of any strikes, activities or proceedings of any labor union to
organize employees, or of any slowdowns, work stoppages, lockouts, or
threats thereof, by or with respect to any employees of Tyco or any of its
subsidiaries, which would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 3.13. Registration Statement; Joint Proxy
Statement/Prospectus. Subject to the accuracy of the representations of the
Company in Section 2.13, the registration statement on Form S-4 (or on such
other form as shall be appropriate) (as it may be amended, the
"Registration Statement") pursuant to which the Tyco Common Shares to be
issued in connection with the Merger will be registered with the SEC shall
not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements included therein, in light of the
circumstances under which they were made, not misleading. The information
supplied by Tyco, Beta or Merger Sub in writing specifically for inclusion
in the Joint Proxy Statement/Prospectus will not, on the date the Joint
Proxy Statement/Prospectus is first mailed to shareholders or at the time
of the Shareholders Meetings, contain any statement which, at such time and
in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not false or
misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Shareholders Meetings which has become false or misleading.
If at any time prior to the Effective Time any event relating to Tyco,
Beta, Merger Sub or any of their respective affiliates, officers or
directors should be discovered by Tyco, Beta or Merger Sub which should be
set forth in an amendment to the Registration Statement or a supplement to
the Joint Proxy Statement/Prospectus, Beta or Merger Sub will promptly
inform the Company. The Registration Statement and Joint Proxy
Statement/Prospectus shall comply in all material respects with the
requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, Beta and Merger Sub
make no representation or warranty with respect to any information supplied
by the Company which is contained or incorporated by reference in, or
furnished in connection with the preparation of, the Registration Statement
or the Joint Proxy Statement/Prospectus.
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SECTION 3.14. Restrictions on Business Activities. Except for
this Agreement, to the best of Beta's knowledge, there is no agreement,
judgment, injunction, order or decree binding upon Tyco or any of its
subsidiaries which has or would reasonably be expected to have the effect
of prohibiting or materially impairing the conduct of business by Tyco or
any of its subsidiaries as currently conducted by Tyco or such Subsidiary,
except for any prohibition or impairment as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
SECTION 3.15. Title to Property. Tyco and each of its
subsidiaries have good title to all of their real properties and other
assets, free and clear of all liens, charges and encumbrances, except liens
for taxes not yet due and payable and such liens or other imperfections of
title, if any, as do not materially interfere with the present use of the
property affected thereby or which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, and
except for liens which secure indebtedness reflected in the 1998 Balance
Sheet; and, to Beta's knowledge, all leases pursuant to which Tyco or any
of its subsidiaries lease from others material amounts of real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, to the knowledge of Tyco, under any of
such leases, any existing material default or event of default (or event
which with notice or lapse of time, or both, would constitute a material
default), except where the lack of such good standing, validity and
effectiveness, or the existence of such default or event of default would
not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
SECTION 3.16. Taxes. Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect:
Tyco and each of its subsidiaries has timely and accurately
filed, or caused to be timely and accurately filed, all material Tax
Returns required to be filed by it, and has paid, collected or withheld, or
caused to be paid, collected or withheld, all material amounts of Taxes
required to be paid, collected or withheld, other than such Taxes for which
adequate reserves in the September 1998 Tyco Balance Sheet have been
established or which are being contested in good faith. There are no
material claims or assessments pending against Tyco or any of its
subsidiaries for any alleged deficiency in any Tax, except as set forth in
Section 3.16 of the Beta Disclosure Schedule, there are no pending or
threatened audits or investigations for or relating to any liability in
respect of any Taxes, and Tyco has not been notified in writing of any
proposed Tax claims or assessments against Tyco or any of its subsidiaries
(other than in each case, claims or assessments for which adequate reserves
in the 1998 Tyco Balance Sheet have been established or which are being
contested in good faith or are immaterial in amount). Neither Tyco nor any
of its subsidiaries has executed any waivers or extensions of any
applicable statute of limitations to assess any material amount of Taxes.
There are no outstanding requests by Tyco or any of its subsidiaries for
any extension of time within which to file any material Tax Return or
within which to pay any material amounts of Taxes shown to be due on any
Tax Return. To the best knowledge of Beta, there are no liens for material
amounts of Taxes on the assets of Tyco or any of its subsidiaries except
for statutory liens for current Taxes not yet due and payable. Other than
with respect to Tyco and its subsidiaries, neither Tyco nor any of its
subsidiaries is liable for Taxes of any other Person, or is currently
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under any contractual obligation to indemnify any person with respect to
Taxes (except for customary agreements to indemnify lenders or security
holders in respect of taxes other than income taxes), or is a party to any
tax sharing agreement or any other agreement providing for payments by Tyco
or any of its subsidiaries with respect to Taxes.
SECTION 3.17. Environmental Matters. (a) Except as set forth in
Section 3.17(a) of the Beta Disclosure Schedule or the Tyco SEC Reports or
as would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect, the operations and properties of Tyco and
its subsidiaries are in compliance with the Environmental Laws, which
compliance includes the possession by Tyco and its subsidiaries of all
permits and governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof.
(b) Except as set forth in Section 3.17(b) of the Beta
Disclosure Schedule or the Tyco SEC Reports or as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect, there are no Environmental Claims, including claims based on
"arranger liability," pending or, to the best knowledge of Tyco, threatened
against Tyco or any of its subsidiaries or against any person or entity
whose liability for any Environmental Claim Tyco or any of its subsidiaries
has retained or assumed.
(c) Except as set forth on Section 3.17(c) of the Beta
Disclosure Schedule or in the Tyco SEC Reports, there are no past or
present actions, circumstances, conditions, events or incidents, including
the release, emission, discharge, presence or disposal of any Materials of
Environmental Concern, that is reasonably likely to form the basis of any
Environmental Claim against Tyco or any of its subsidiaries or against any
person or entity whose liability for any Environmental Claim Tyco or any of
its subsidiaries have retained or assumed, except for such Environmental
Claims that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(d) Except as would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect or as set forth in
Section 3.17(d) of the Beta Disclosure Schedule or the Tyco SEC Reports:
(i) there are no off-site locations where Tyco or any of its subsidiaries
has stored, disposed or arranged for the disposal of Materials of
Environmental Concern which have been listed on the National Priority List,
CERCLIS, state Superfund site list, and Tyco and its subsidiaries have not
been notified that any of them is a potentially responsible party at any
such location; (ii) there are no underground storage tanks located on
property owned or leased by Tyco or any of its subsidiaries; (iii) there is
no friable asbestos containing material contained in or forming part of any
building, building component, structure or office space owned, leased or
operated by Tyco or any of its subsidiaries; and (iv) there are no
polychlorinated biphenyls (PCBs) or PCB-containing items contained in or
forming part of any building, building component, structure or office space
owned, leased or operated by Beta or any of its subsidiaries.
SECTION 3.18. Brokers. No broker, finder or investment banker
(other than Merrill Lynch, Pierce, Fenner & Smith Incorporated and Lehman
Brothers Inc., the fees and expenses of whom will be paid by Beta) is
entitled to any brokerage, finder's or other fee or commission in
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connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Tyco.
SECTION 3.19. Intellectual Property. (a) Tyco and/or each of
its subsidiaries owns, or is licensed or otherwise possesses legally
enforceable rights to use all Tyco Intellectual Property Assets that are
used in the business of Tyco and its subsidiaries as currently conducted
without conflict with the rights of others except as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect. As used herein, "Tyco Intellectual Property Assets" shall mean the
Intellectual Property Assets used or owned by Tyco or any of its
subsidiaries.
(b) Except as disclosed in Section 3.19(b) of the Beta
Disclosure Schedule or as would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect, no claims (i) are
currently pending or, to the knowledge of Beta, threatened by any person
with respect to the Tyco Intellectual Property Assets, or (ii) are, to the
knowledge of Beta, currently pending or threatened by any person with
respect to Third Party Intellectual Property Assets to the extent arising
out of any use, reproduction or distribution of such Third Party
Intellectual Property Assets by or through Tyco or any of its subsidiaries.
(c) Except as set forth in Section 3.19(c) of the Beta
Disclosure Schedule or the Tyco SEC Reports or as could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect, each patent, patent application, trademark or service mark
registration, and trademark or service mark application and copyright
registration or copyright application of Beta and/or each of its
subsidiaries is valid and subsisting.
(d) Except as set forth in Section 3.19(d) of the Beta
Disclosure Schedule, to Tyco's knowledge, there is no material unauthorized
use, infringement or misappropriation of any of Tyco's Intellectual
Property Assets by any third party, including any employee, former
employee, independent contractor or consultant of Tyco or any of its
subsidiaries which would reasonably be expected, individually or in the
aggregate, to result in Material Adverse Effect.
(e) The disclosure under the heading "Year 2000 Compliance" as
set forth in Section 3.19(e) of the Beta Disclosure Schedule is accurate
and would comply in all material respects with the legal requirements for
disclosure of such matters if included in Tyco's periodic reports filed
with the SEC pursuant to the Exchange Act.
SECTION 3.20. Interested Party Transactions. Except as set
forth in Section 3.20 of the Beta Disclosure Schedule or the Tyco SEC
Reports, since Tyco's proxy statement dated February 20, 1998, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by
the SEC.
SECTION 3.21. Insurance. Except as disclosed in Section 3.21 of
the Beta Disclosure Schedule or the Tyco SEC Reports, all material fire and
casualty, general liability, business interruption, product liability and
sprinkler and water damage insurance policies maintained by Tyco or any of
its subsidiaries are with reputable insurance carriers, provide
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full and adequate coverage for all normal risks incident to the business of
Tyco and its subsidiaries and their respective properties and assets and
are in character and amount appropriate for the businesses conducted by
Tyco, except as would not reasonably be expected to have a Material Adverse
Effect.
SECTION 3.22. Product Liability and Recalls. (a) Except as
disclosed in Section 3.22(a) of the Beta Disclosure Schedule or the Tyco
SEC Reports, Tyco is not aware of any claim, pending or threatened, against
Tyco or any of its subsidiaries for injury to person or property of
employees or any third parties suffered as a result of the sale of any
product or performance of any service by Tyco or any of its subsidiaries,
including claims arising out of the defective or unsafe nature of its
products or services, which would reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
(b) Except as disclosed in Section 3.22(b) of the Beta
Disclosure Schedule or the Tyco SEC Reports, there is no pending or, to the
knowledge of Tyco, overtly threatened, recall or investigation of any
product sold by Tyco, which recall or investigation would reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
SECTION 3.23. Ownership of Beta and Merger Sub; No Prior
Activities.
(a) Merger Sub is a direct, wholly-owned subsidiary of Beta and
was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except
for this Agreement and any other agreements or arrangements contemplated by
or undertaken in connection with this Agreement, Merger Sub has not and
will not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person.
SECTION 3.24. Pooling Matters. To Beta's knowledge and based
upon consultation with its independent accountants, Tyco has provided to
the Company and its independent accountants all information concerning
actions taken or agreed to be taken by Tyco or any of its affiliates on or
before the date of this Agreement that, if taken, might reasonably be
expected to affect adversely the ability of Tyco to account for the
business combination to be effected by the Merger as a pooling of
interests, and Beta has no knowledge that such business combination cannot
be accounted for in that manner. For purposes of this Section 3.24,
references to "knowledge" mean to the actual knowledge of L. Dennis
Kozlowski and Mark H. Swartz.
SECTION 3.25. Tax Matters. The representations, statements, and
covenants set forth in paragraph 2 through 26 of Section 3.25 of the Beta
Disclosure Schedule hereto are true and correct in all material respects.
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SECTION 3.26. PBCL Section 2538. Other than by reason of this
Agreement or the transactions contemplated hereby, Beta is not an
"interested shareholder" of the Company, as that term is defined in Section
2538 of the PBCL.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by the Company Pending the
Merger. The Company covenants and agrees that, during the period from the
date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, unless Beta shall otherwise agree
in writing, and except as set forth in Section 4.01 of the Company
Disclosure Schedule, the Company shall conduct its business and shall cause
the businesses of its subsidiaries to be conducted only in, and the Company
and its subsidiaries shall not take any action except in, the ordinary
course of business and in a manner consistent with past practice; and the
Company shall use reasonable commercial efforts to preserve substantially
intact the business organization of the Company and its subsidiaries, to
keep available the services of the present officers, employees and
consultants of the Company and its subsidiaries and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers
and other persons with which the Company or any of its subsidiaries has
significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, neither the Company nor any of
its subsidiaries shall, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or
the Effective Time, and except as set forth in Section 4.01 of the Company
Disclosure Schedule, directly or indirectly do, or propose to do, any of
the following without the prior written consent of Beta, which will not be
unreasonably withheld or delayed:
(a) amend or otherwise change the Company's Restated Articles of
Incorporation or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any shares
of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest (including, without
limitation, any phantom interest) in the Company, any of its
subsidiaries or affiliates (except for the issuance of shares of
Company Common Stock issuable pursuant to Stock Options under the
Company Stock Option Plans, which options are outstanding on the date
hereof, or pursuant to the Company Stock Purchase Plan as in effect
on the date hereof);
(c) sell, pledge, dispose of or encumber any assets of the
Company or any of its subsidiaries (except for (i) sales of assets in
the ordinary course of business and in a manner consistent with past
practice, (ii) dispositions of obsolete or worthless
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assets, and (iii) sales of immaterial assets not in excess of
$20,000,000 in the
aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a
wholly-owned subsidiary of the Company may declare and pay a dividend
to its parent, except in no case may the aggregate of such
intercompany cross-border dividends exceed $10,000,000, and except
that the Company may declare and pay prior to the Effective Time
quarterly cash dividends of $0.27 per share consistent with past
practice, (ii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its
capital stock, (iii) except as required by the terms of any security
as in effect on the date hereof and set forth in Section 4.01(d) of
the Company Disclosure Schedule, amend the terms or change the period
of exercisability of, purchase, repurchase, redeem or otherwise
acquire, or permit any subsidiary to amend the terms or change the
period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, any of its securities or any securities of its
subsidiaries, including, without limitation, shares of Company Common
Stock, or any option, warrant or right, directly or indirectly, to
acquire any such securities, or propose to do any of the foregoing,
or (iv) settle, pay or discharge any claim, suit or other action
brought or threatened against the Company with respect to or arising
out of a shareholder equity interest in the Company;
(e) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof other than those listed on Section
4.01(e) of the Company Disclosure Schedule; (ii) incur any
indebtedness for borrowed money, except for borrowings and
reborrowing under the Company's existing credit facilities or other
borrowings not in excess of $15,000,000 plus the amount, if any, used
under such credit facilities as required to fund the Company's Rabbi
Trust in the aggregate or issue any debt securities or assume,
guarantee (other than guarantees of the Company's subsidiaries
entered into in the ordinary course of business) or endorse or
otherwise as an accommodation become responsible for, the obligations
of any person, or make any loans or advances, except in the ordinary
course of business consistent with past practice; or (iii) authorize
any capital expenditures or purchases of fixed assets which are, in
the aggregate, in excess of $500,000,000 over the next 12 month
period; or (iv) enter into or materially amend any contract,
agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 4.01(e);
(f) except as set forth in Section 4.01(f) of the Company
Disclosure Schedule, increase the compensation or severance payable
or to become payable to its directors, officers or employees, except
for increases in salary or wages of employees of the Company or its
subsidiaries in accordance with past practices, or grant any
severance or termination pay (except to make payments required to be
made under obligations existing on the date hereof in accordance with
the terms of such obligations) to, or enter into any employment or
severance agreement, with any new employee of the Company
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or any of its subsidiaries, except for an agreement entered
into in the ordinary course of business and providing for
annual base and bonus compensation not to exceed $200,000, or
establish, adopt, enter into or amend any collective bargaining
agreement, Company Employee Plan (within the meaning of Section 2.11
of this Agreement), trust, fund, policy or arrangement for the
benefit of any current or former directors, officers or employees or
any of their beneficiaries, except, in each case, as may be required
by law or as would not result in a material increase in the cost of
maintaining such collective bargaining agreement, Company Employee
Plan, trust, fund, policy or arrangement.
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable) except as required by a change in GAAP occurring after
the date hereof;
(h) make any material tax election inconsistent with past
practice or settle or compromise any material United States federal,
state, local or non-United States tax liability, except to the extent
the amount of any such settlement has been reserved for in the
financial statements contained in the Company SEC Reports filed prior
to the date of this Agreement or other settlements not in excess of
$10,000,000 in the aggregate;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) in excess of $10,000,000 in the aggregate, other than the
payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of liabilities reflected or
reserved against in the financial statements contained in the Company
SEC Reports filed prior to the date of this Agreement or incurred in
the ordinary course of business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.01(a) through (i) above, or any
action which would make any of the representations or warranties of
the Company contained in this Agreement or the Stock Option Agreement
untrue or incorrect or prevent the Company from performing or cause
the Company not to perform its covenants hereunder or under the Stock
Option Agreement.
SECTION 4.02. No Solicitation. (a) The Company shall not,
directly or indirectly, through any officer, director, employee,
representative or agent of the Company or any of its subsidiaries, solicit
or encourage the initiation of (including by way of furnishing information)
any inquiries or proposals regarding any merger, sale of assets, sale of
shares of capital stock (including without limitation by way of a tender
offer) or similar transactions involving the Company or any subsidiaries of
the Company that if consummated would constitute an Alternative Transaction
(as defined in Section 7.01) (any of the foregoing inquiries or proposals
being referred to herein as an "Acquisition Proposal"). Nothing contained
in this Agreement shall prevent the Board of Directors of the Company from
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(i) furnishing information to a third party which has made a bona fide
Acquisition Proposal that is a Superior Proposal (as defined below) not
solicited in violation of this Agreement, provided that such third party
has executed an agreement with confidentiality provisions substantially
similar to those then in effect between the Company and Tyco or (ii)
subject to compliance with the other terms of this Section 4.02, including
Sections 4.02(c) and (d), considering and negotiating a bona fide
Acquisition Proposal that is a Superior Proposal not solicited in violation
of this Agreement; provided that, as to each of clauses (i) and (ii), (x)
such actions occur at a time prior to approval of the Merger and this
Agreement at the Company Shareholders Meeting and (y) the Board of
Directors of the Company reasonably determines in good faith (after due
consultation with independent counsel, which may be Skadden, Arps, Slate,
Meagher & Flom LLP ("Skadden, Arps"), Pepper Hamilton LLP and/or Harkins
Cunningham), that it is or is reasonably likely to be required to do so in
order to discharge properly its fiduciary duties. For purposes of this
Agreement, a "Superior Proposal" means any proposal made by a third party
to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, all of the equity securities of the Company entitled to
vote generally in the election of directors or all or substantially all the
assets of the Company, on terms which the Board of Directors of the Company
reasonably believes (i) (after consultation with a financial advisor of
nationally recognized reputation) to be more favorable from a financial
point of view to its shareholders than the Merger and the transactions
contemplated by this Agreement taking into account at the time of
determination any changes to the financial terms of this Agreement proposed
by Beta and (ii) to be more favorable to the Company than the Merger and
the transactions contemplated by this Agreement after taking into account
all pertinent factors deemed relevant by the Board of Directors of the
Company under the laws of the Commonwealth of Pennsylvania.
(b) The Company shall immediately notify Beta after receipt of
any Acquisition Proposal, or any modification of or amendment to any
Acquisition Proposal, or any request for nonpublic information relating to
the Company or any of its subsidiaries in connection with an Acquisition
Proposal or for access to the properties, books or records of the Company
or any subsidiary by any person or entity that informs the Board of
Directors of the Company or such subsidiary that it is considering making,
or has made, an Acquisition Proposal. Such notice to Beta shall be made
orally and in writing, and shall indicate the identity of the person making
the Acquisition Proposal or intending to make an Acquisition Proposal or
requesting non-public information or access to the books and records of the
Company, the terms of any such Acquisition Proposal or modification or
amendment to an Acquisition Proposal, and whether the Company is providing
or intends to provide the person making the Acquisition Proposal with
access to information concerning the Company as provided in Section
4.02(a). The Company shall also immediately notify Beta, orally and in
writing, if it enters into negotiations concerning any Acquisition
Proposal.
(c) Unless this Agreement shall have been terminated in
accordance with its terms, neither the Company nor the Board of Directors
of the Company shall withdraw or modify, or propose to withdraw or modify,
in a manner adverse to Beta, the approval by such Board of Directors of
this Agreement or the Merger.
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(d) Prior to November 6, 1999, without the prior written
consent of Beta, the Company and the Board of Directors of the Company
shall not (i) redeem the rights (the "Rights") issued under the Rights
Agreement, dated as of October 25, 1989, as amended, between the Company
and ChaseMellon Shareholder Services L.L.C., as Successor Rights Agents
(the "Rights Agreement"), or waive or amend any provision of the Rights
Agreement, in any such case to permit or facilitate the consummation of any
Acquisition Proposal or Alternative Transaction, or (ii) enter into any
agreement with respect to, or otherwise approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or Alternative Transaction,
unless the Merger Agreement is terminated prior to such time pursuant to
Sections 7.01(b), 7.01(c), 7.01(d)(ii) or 7.01(i) or is terminated prior to
such time by the Company pursuant to Sections 7.01(f), 7.01(g) or 7.01(h).
It is understood and agreed that a deferral of the distribution of Rights
following the commencement of a tender offer or exchange offer shall not be
prohibited hereunder.
(e) Nothing contained in this Section 4.02 shall prohibit the
Company from taking and disclosing to its shareholders a position required
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to its shareholders required by applicable law, rule or
regulation.
(f) The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any persons (other
than Beta and Merger Sub) conducted heretofore with respect to any of the
foregoing. The Company agrees not to release any third party from the
confidentiality and standstill provisions of any agreement to which the
Company is a party.
(g) The Company shall ensure that the officers and directors of
the Company and the Company Significant Subsidiaries and any investment
banker or other advisor or representative retained by the Company are aware
of the restrictions described in this Section 4.02.
SECTION 4.03. Conduct of Business by Tyco Pending the Merger.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, Beta
covenants and agrees that, except as set forth in Section 4.03 of the Beta
Disclosure Schedule or unless the Company shall otherwise agree in writing,
Beta shall take all action necessary so that (i) Tyco shall conduct its
business, and cause the businesses of its subsidiaries to be conducted, in
the ordinary course of business and consistent with past practice, other
than actions taken by Tyco or its subsidiaries in contemplation of the
Merger, and (ii) Tyco shall not directly or indirectly do, or propose to
do, any of the following without the prior written consent of the Company:
(a) amend or otherwise change Tyco's Charter Documents;
(b) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets of any
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other person, or dispose of any assets, which, in any such case, would
materially delay or prevent the consummation of the Merger and the
other transactions contemplated by this Agreement;
(c) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly
owned subsidiary of Tyco may declare and pay a dividend to its
parent, and except that Tyco may declare and pay quarterly cash
dividends on the Tyco Common Shares of $0.025 per share consistent
with past practice;
(d) take any action to change its accounting policies or
procedures (including, without limitation, procedures with respect to
revenue recognition, payments of accounts payable and collection of
accounts receivable) except as required by a change in GAAP occurring
after the date hereof; or
(e) take or agree in writing or otherwise to take any action
that would make any of the representations or warranties of Beta
contained in this Agreement untrue or incorrect or prevent Beta from
performing or cause Beta not to perform its covenants hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Joint Proxy Statement/Prospectus; Registration
Statement. As promptly as practicable after the execution of this
Agreement, the Company shall prepare and file, and Beta shall take all
action necessary such that Tyco will prepare and file, with the SEC
preliminary proxy materials which shall constitute the Joint Proxy
Statement/ Prospectus and, if the parties so agree at the time, the
Registration Statement. As promptly as practicable after comments are
received from the SEC thereon and after the furnishing by the Company and
Tyco of all information required to be contained therein, the Company shall
file, and Beta shall take all action necessary such that Tyco will file,
with the SEC the definitive Joint Proxy Statement/Prospectus and the
Registration Statement (or, if the Registration Statement has been
previously filed, an amendment thereto) relating to the adoption of this
Agreement and approval of the transactions contemplated hereby by the
shareholders of the Company pursuant to this Agreement, and the approval by
the shareholders of Tyco of the issuance of the Tyco Common Shares in
connection with the Merger, and shall use all reasonable efforts to cause
the Registration Statement to become effective as soon thereafter as
practicable.
SECTION 5.02. Company Shareholders Meeting. The Company shall
call the Company Shareholders Meeting as promptly as practicable for the
purpose of voting upon the approval of the Merger, and the Company shall
use its reasonable best efforts to hold the Company Shareholders Meeting as
soon as practicable after the date on which the Registration Statement
becomes effective. The Joint Proxy Statement/Prospectus shall include the
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recommendation of the Board of Directors of the Company in favor of this
Agreement and the Merger. The Company shall solicit from its shareholders
proxies in favor of approval of this Agreement and the Merger and shall
take all other reasonable action necessary or advisable to secure the vote
or consent of shareholders in favor of such approval.
SECTION 5.03. Tyco Shareholders Meeting. Beta shall take all
action necessary such that Tyco will call the Tyco Shareholders Meeting as
promptly as practicable for the purpose of voting upon the approval of the
issuance of the Tyco Common Shares in connection with the Merger, and Beta
shall take all action necessary such that Tyco will use its reasonable best
efforts to hold the Tyco Shareholders Meeting as soon as practicable after
the date on which the Registration Statement becomes effective. Unless
otherwise required under the applicable fiduciary duties of the directors
of Tyco, as determined by such directors in good faith after consultation
with and based upon the advice of independent legal counsel, (i) the Joint
Proxy Statement/Prospectus shall include the recommendation of the Board of
Directors of Tyco in favor of the issuance of Tyco Common Shares in
connection with the Merger and the other matters contemplated hereby
requiring approval of the shareholders of Tyco; and (ii) Beta shall take
all action necessary such that Tyco will solicit from its shareholders
proxies in favor of approval of the issuance of Tyco Common Shares in
connection with the Merger and the other matters contemplated hereby
requiring approval of the shareholders of Tyco and take all other
reasonable action necessary or advisable to secure the vote or consent of
shareholders in favor of such approval.
SECTION 5.04. Access to Information; Confidentiality. Upon
reasonable notice and subject to restrictions contained in confidentiality
agreements to which such party is subject (from which such party shall use
reasonable efforts to be released), the Company shall (and shall cause its
subsidiaries to) and Beta shall take all action necessary such that Tyco
shall (i) afford to the officers, employees, accountants, counsel and other
representatives of the other, reasonable access, during the period after
the execution and delivery of this Agreement and prior to the Effective
Time, to its properties, books, contracts, commitments and records and,
(ii) during such period, furnish promptly to the other all information
concerning its business, properties and personnel as such other party may
reasonably request, and each shall make available to the other the
appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties and
personnel as either Beta or the Company may reasonably request. Each party
shall keep such information confidential in accordance with the terms of
the confidentiality letters, dated November 16, 1998 (the "Confidentiality
Letters"), between Tyco and the Company.
SECTION 5.05. Consents; Approvals. The Company and Beta shall
each use its reasonable best efforts to obtain all consents, waivers,
approvals, authorizations or orders (including, without limitation, all
United States and non-United States governmental and regulatory rulings and
approvals), and the Company and Beta shall make (or Beta shall take all
action necessary such that Tyco will make) all filings (including, without
limitation, all filings with United States and non-United States
governmental or regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by the Company and
Beta and the consummation by them of the transactions contemplated hereby.
The Company and Beta shall furnish (or Beta shall take all action necessary
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such that Tyco will furnish) all information required to be included
in the Joint Proxy Statement/Prospectus and the Registration
Statement, or for any application or other filing to be made pursuant to
the rules and regulations of any United States or non-United States
governmental body in connection with the transactions contemplated by this
Agreement.
SECTION 5.06. Agreements with Respect to Affiliates. (a) The
Company shall deliver to Beta, prior to the date the Registration Statement
becomes effective under the Securities Act, a letter (the "Company
Affiliate Letter") identifying all persons who are anticipated to be
"affiliates" of the Company at the time of the Company Shareholders Meeting
for purposes of Rule 145 under the Securities Act ("Rule 145"), or the
rules and regulations of the SEC relating to pooling of interests
accounting treatment for merger transactions (the "Pooling Rules"). The
Company shall use its reasonable best efforts to cause each person who is
identified as an "affiliate" in the Affiliate Letter to deliver to Beta, no
less than 35 days prior to the date of the Company Shareholders Meeting, a
written agreement (an "Affiliate Agreement") restricting the sales of
securities by such affiliates in accordance with the restrictions on
affiliates under Rule 145 and the Pooling Rules, in a form mutually
agreeable to the Company and Beta.
(b) Beta shall deliver to the Company, prior to the date the
Registration Statement becomes effective under the Securities Act, a letter
(the "Beta Affiliate Letter") identifying all persons who are anticipated
to be "affiliates" of Tyco at the Effective Time for purposes of the
Pooling Rules. Beta shall use its reasonable best efforts to cause each
person who is identified as an "affiliate" in the Beta Affiliate Letter to
deliver to Beta, no less than 35 days prior to the date of the Effective
Time, a written agreement restricting the sales of securities by such
affiliates in accordance with the restrictions on affiliates under the
Pooling Rules, in a form mutually agreeable to the Company and Beta.
SECTION 5.07. Indemnification and Insurance. (a) The Articles
of Incorporation and Bylaws of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the Restated
Articles of Incorporation and the Bylaws of the Company, which provisions
shall not be amended, modified or otherwise repealed for a period of six
years from the Effective Time in any manner that would adversely affect the
rights thereunder as of the Effective Time of individuals who at the
Effective Time were directors, officers, employees or agents of the
Company, unless such modification is required after the Effective Time by
law.
(b) The Surviving Corporation shall, to the fullest extent
permitted under applicable law or under the Surviving Corporation's
Articles of Incorporation or Bylaws, indemnify and hold harmless, each
present and former director, officer or employee of the Company or any of
its subsidiaries (collectively, the "Indemnified Parties") against any
costs or expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, (x) arising out of or pertaining
to the transactions contemplated by this Agreement or (y) otherwise with
respect to any acts or omissions occurring at or prior to the Effective
Time, to the same extent as provided in the Company's Restated Articles of
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Incorporation or Bylaws or any applicable contract or agreement as
in effect on the date hereof, in each case for a period of six years
after the date hereof. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time) and subject to the specific terms of any indemnification contract,
(i) any counsel retained by the Indemnified Parties for any period after
the Effective Time shall be reasonably satisfactory to the Surviving
Corporation, (ii) after the Effective Time, the Surviving Corporation shall
pay the reasonable fees and expenses of such counsel, promptly after
statements therefor are received and (iii) the Surviving Corporation will
cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably
withheld); and provided, further, that, in the event that any claim or
claims for indemnification are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent
them in each applicable jurisdiction with respect to any single action
unless there is, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties, in which case each Indemnified Person with respect to
whom such a conflict exists (or group of such Indemnified Persons who among
them have no such conflict) may retain one separate law firm in each
applicable jurisdiction.
(c) The Surviving Corporation shall honor and fulfill in all
respects the obligations of the Company pursuant to indemnification
agreements and employment agreements (the employee parties under such
agreements being referred to as the "Officer Employees") with the Company's
directors and officers existing at or before the Effective Time.
(d) In addition, Beta will provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's current directors and officers an insurance
and indemnification policy that provides coverage for events occurring at
or prior to the Effective Time (the "D&O Insurance") that is no less
favorable than the existing policy or, if substantially equivalent
insurance coverage is unavailable, the best available coverage; provided,
however, that Beta and the Surviving Corporation shall not be required to
pay an annual premium for the D&O Insurance in excess of 200% of the annual
premium currently paid by the Company for such insurance, but in such case
shall purchase as much such coverage as possible for such amount.
(e) From and after the Effective Time, Beta shall
unconditionally guarantee the timely payment of all funds owing by, and the
timely performance of all other obligations of, the Surviving Corporation
under this Section 5.07.
(f) This Section shall survive the consummation of the Merger
at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors
and assigns of the Surviving Corporation and shall be enforceable by the
Indemnified Parties.
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SECTION 5.08. Notification of Certain Matters. The Company
shall give prompt notice to Beta, and Beta shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence
or nonoccurrence of which would reasonably be expected to cause any
representation or warranty contained in this Agreement to be materially
untrue or inaccurate, or (ii) any failure of the Company, Beta or Merger
Sub, as the case may be, materially 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
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice; and provided further that failure to give such
notice shall not be treated as a breach of covenant for the purposes of
Sections 6.02(b) or 6.03(b) unless the failure to give such notice results
in material prejudice to the other party.
SECTION 5.09. Further Action/Tax Treatment. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, to obtain in a timely manner all necessary
waivers, consents and approvals and to effect all necessary registrations
and filings, and otherwise to satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement. The foregoing
covenant shall not include any obligation by Tyco to agree to divest,
abandon, license or take similar action with respect to any assets
(tangible or intangible) of Tyco or the Company or any of their
subsidiaries. Each of Beta, Merger Sub and the Company shall use its
reasonable best efforts to cause the Merger to qualify, and will not
(either before or after consummation of the Merger) take any actions, or
fail to take any action, that might reasonably be expected to prevent the
Merger from qualifying as a reorganization under the provisions of Section
368 of the Code that is not subject to Section 367(a)(1) of the Code
pursuant to Treasury Regulation Section 1.367(a)-(3)(c) (other than with
respect to Company shareholders who are or will be "5% transferee
shareholders" within the meaning of Treasury Regulation Section
1.367(a)-3(c)(5)(ii)). Beta shall, and shall use its reasonable best
efforts to cause the Surviving Corporation and Tyco, to report, to the
extent required by the Code, the Merger for United States federal income
tax purposes as a reorganization within the meaning of Section 368 of the
Code.
SECTION 5.10. Public Announcements. Beta and the Company shall
consult with each other before issuing any press release or making any
written public statement with respect to the Merger or this Agreement and
shall not issue any such press release or make any such public statement
without the prior consent of the other party, which shall not be
unreasonably withheld; provided, however, that either party may, without
the prior consent of the other, issue such press release or make such
public statement as may upon the advice of counsel be required by law or
the rules and regulations of the NYSE if it has used all reasonable efforts
to consult with the other party.
SECTION 5.11. Tyco Common Shares. (a) Prior to the Effective
Time, Beta shall obtain from Tyco, and shall take all action necessary so
that Tyco shall transfer to Beta, the Tyco Common Shares to be delivered by
Beta to the holders of Company Common Stock in the Merger.
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(b) Beta will take all action necessary so that Tyco will use
its best efforts to cause the Tyco Common Shares to be delivered by Beta to
the holders of Company Common Stock in the Merger and upon exercise of the
Adjusted Options to be listed, upon official notice of issuance, on the
NYSE prior to the Effective Time.
SECTION 5.12. Conveyance Taxes. Beta and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real
property transfer or gains, sales, use, transfer, value added, stock
transfer and stamp taxes, any transfer, recording, registration and other
fees, and any similar taxes which become payable in connection with the
transactions contemplated hereby that are required or permitted to be filed
on or before the Effective Time, and the Company shall be responsible for
the payment of all such taxes and fees. In no event shall Beta or any
affiliate thereof (other than a subsidiary of the Company) reimburse the
Company for the payment of such taxes and fees.
SECTION 5.13. Option Plans and Benefits, etc. (a) Prior to the
Effective Time, the parties to this Agreement shall take all such actions
as shall be necessary to effectuate the provisions of Section 1.06(c).
(b) The Company shall take such action as is necessary to cause
the ending date of the then current offering period under the Stock
Purchase Plan to be prior to the Effective Time and to terminate such plan
as of the Effective Time.
(c) Beta agrees that, effective as of the Effective Time, and
through December 31, 1999, Beta shall, or shall cause the Surviving
Corporation and its subsidiaries and successors to, provide those persons
who, immediately prior to the Effective Time, were employees of the Company
or its subsidiaries ("Retained Employees") with employee welfare and
retirement plans and programs which provide benefits that are, in the
aggregate, substantially similar to those provided to such Retained
Employees immediately prior to the date hereof. With respect to such
benefits, (i) service accrued by such Retained Employees during employment
with the Company and its subsidiaries prior to the Effective Time shall be
recognized for all purposes, except to the extent necessary to prevent
duplication of benefits, (ii) any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under the applicable Company Employee Plan (as defined in Section
2.11(a)) and eligibility waiting periods under any group health plan shall
be waived with respect to such Retained Employees and their eligible
dependents, and (iii) Retained Employees shall be given credit for amounts
paid under any Company Employee Plan during the same period for purposes of
applying deductibles, co-payments and out-of-pocket maximums as though such
amounts had been paid in accordance with the terms and conditions of the
employee welfare plans maintained by Tyco or its subsidiaries. Without
limiting the generality of the foregoing, Beta shall, or shall cause the
Surviving Corporation and its subsidiaries and successors to, provide to
any person who, immediately prior to the Effective Time, is a retiree under
the terms of the Company's retiree medical program retiree medical benefits
in accordance with the Company's current practice.
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(d) Beta agrees to assume, honor, maintain and perform, and
cause the Surviving Corporation to assume, honor, maintain and perform in
accordance with their respective terms, without deductions, counterclaims,
interruptions or deferments (other than withholding under applicable law),
the Company's employee Severance Plan and all other employment and
severance agreements and arrangements, as amended through the date hereof
or as contemplated hereby, with respect to employees and former employees
and directors and former directors of the Company, including, but not
limited to, those agreements and arrangements set forth on Section 5.13 of
the Company Disclosure Schedule (collectively, the "Severance Agreements")
and any other Company Benefit Plan, agreement or arrangement which provides
for the payment or acceleration of benefits to employees, former employees
or directors or former directors of the Company upon or in connection with
a change of control of the Company.
(e) It is expressly agreed that the provisions of this Section
5.13 are not intended to be for the benefit of or otherwise be enforceable
by any third party, including, without limitation, any Retained Employee or
any collective bargaining unit or employee organization.
(f) Nothing herein shall prevent Beta or the Surviving
Corporation from amending or modifying any employee benefit plan, program
or arrangement in any respect or terminating or modifying the terms and
conditions of employment of any particular Retained Employee or any other
person.
SECTION 5.14. Rights Agreement. The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 2.26), if any, necessary in order to render the Rights inapplicable
to the Merger and the other transactions contemplated by this Agreement and
the Stock Option Agreement.
SECTION 5.15. Accountant's Letters. Upon reasonable notice from
the other, the Company shall use its best efforts to cause Arthur Andersen
LLP to deliver to Beta, and Beta shall use its best efforts to cause
PricewaterhouseCoopers to deliver to the Company, a letter covering such
matters as are reasonably requested by Beta or the Company, as the case may
be, and as are customarily addressed in accountants' "comfort letters."
SECTION 5.16. Pooling Accounting Treatment. (a) Beta and the
Company each agrees to use its best efforts not to take, and to cause their
respective affiliates not to take, any action that, if taken, might
reasonably be expected to affect adversely the ability of Tyco to account
for the business combination to be effected by the Merger as a pooling of
interests, and Beta and the Company each agrees to use its best efforts to
take such action, and to cause their respective affiliates to take such
action, as may be reasonably required to negate the impact of any past
actions by Beta, the Company or their respective affiliates which might
reasonably be expected to impact adversely the ability of Tyco to treat the
Merger as a pooling of interests. The taking by Beta or the Company or by
their respective affiliates of any action prohibited by the previous
sentence, or the failure of Beta or the Company to use its best efforts to
take, or to cause to be taken, any action required by the previous
sentence, if the Merger is not able to be accounted for as a pooling of
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interests because of such action or failure to take action, shall
constitute a breach of this Agreement by such party for the purposes
of Section 7.01(h).
(b) Beta shall use its best efforts to obtain an opinion of
PricewaterhouseCoopers, independent public accountants, to the effect that
the Merger, to the best of their knowledge after due inquiry, qualifies for
pooling of interests accounting treatment if consummated in accordance with
this Agreement, and the Company shall use its best efforts to obtain an
opinion of Arthur Andersen LLP, independent public accountants, to the
effect that the Company, to the best of their knowledge after due inquiry,
qualifies as an entity that may be party to a business combination for
which pooling of interests method of accounting would be available.
SECTION 5.17. Compliance with State Property Transfer Statutes.
The Company agrees that it shall use its reasonable commercial efforts to
comply promptly with all requirements of applicable state property transfer
laws as may be required by the relevant state agency and shall take all
action necessary to cause the transactions contemplated hereby to be
effected in compliance with applicable state property transfer laws. The
Company, after consultation with Beta, shall determine which actions must
be taken prior to or after the Effective Time to comply with applicable
state property transfer laws. The Company agrees to provide Beta with any
documents required to be submitted to the relevant state agency prior to
submission, and the Company shall not take any action to comply with
applicable state property transfer laws without Beta's prior consent, which
consent shall not be unreasonably withheld or delayed. Beta shall provide,
and shall take all action necessary such that Tyco shall provide, to the
Company any assistance reasonably requested by the Company with respect to
such compliance.
SECTION 5.18. Director Appointment. Subject to the applicable
fiduciary obligations of Tyco's Board of Directors, Beta shall use its best
efforts to have the Board of Directors of Tyco (i) propose at Tyco's
Shareholders Meeting to increase the size of Tyco's Board of Directors from
eleven to twelve members; (ii) nominate Robert Ripp, the Company's current
Chairman and Chief Executive Officer, to fill such newly created vacancy;
and (iii) recommend to Tyco's Shareholders that they elect Mr. Ripp to
Tyco's Board of Directors.
SECTION 5.19. Termination of Flexitrust. The Company will
cause, at or prior to the Effective Time, the termination of the Stock
Purchase Agreement, dated September 28, 1998, between the Company and
Wachovia Bank N.A., as trustee (the "Trustee"), relating to the creation of
the Flexitrust, prior to the closing thereunder and without the issuance or
sale of any shares of Company Common Stock pursuant thereto and without any
material liability resulting from such termination.
SECTION 5.20. Charities. After the Effective Time, Beta shall
cause the Company to provide charitable contributions and community support
within the communities in which the Company and each of its commercial
business units are located and do business at levels substantially
comparable to the levels of charitable contributions and community support
provided by the Company and its commercial business units within such areas
for the two-year period immediately prior to the Effective Time. Section
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5.20 of the Company Disclosure Schedule sets forth all of such charitable
contributions and community support provided by the Company for
the two-year period immediately prior to the Effective Date.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligation of Each Party to Effect
the Merger. The respective obligations of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) Effectiveness of the Registration Statement. The
Registration Statement shall have been declared effective by the SEC
under the Securities Act. No stop order suspending the effectiveness
of the Registration Statement shall have been issued by the SEC and
no proceedings for that purpose and no similar proceeding in respect
of the Joint Proxy Statement/Prospectus shall have been initiated or
threatened by the SEC;
(b) Shareholder Approval. This Agreement and the Merger shall
have been approved by the requisite vote of the shareholders of the
Company, and the issuance of the Tyco Common Shares in connection
with the Merger shall have been approved in accordance with the rules
of the NYSE by the requisite vote of the shareholders of Tyco;
(c) Antitrust. All waiting periods applicable to the
consummation of the Merger under the HSR Act shall have expired or
been terminated, and all clearances and approvals required to be
obtained in respect of the Merger prior to the Effective Time under
any Foreign Monopoly Laws shall have been obtained, except where the
failure to have obtained any such clearances or approvals with
respect to any Foreign Monopoly Laws would not reasonably be expected
to have a Material Adverse Effect on the Company, Tyco or Tyco's
electrical and electronic component business;
(d) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation
or other inquiry that is reasonably likely to result in such an
action or proceeding) by any governmental authority or administrative
agency before any governmental authority, administrative agency or
court of competent jurisdiction, United States or non-United States,
that is reasonably likely to result in an order, nor shall there be
in effect any judgment, decree or order of any governmental
authority, administrative agency or court of competent jurisdiction,
or any other legal restraint (i) preventing or seeking to prevent
consummation of the Merger, (ii) prohibiting or seeking to prohibit
or limiting or seeking to limit, Beta from exercising all material
rights and privileges pertaining to its ownership of the Surviving
Corporation or the ownership or operation by Tyco or any of its
subsidiaries of all or a material portion of the business or assets
of the Surviving Corporation and its subsidiaries, or (iii)
compelling or seeking to compel Tyco or any of its subsidiaries to
dispose of or hold separate all or any material portion of the
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business or assets of Tyco or any of its subsidiaries (including the
Surviving Corporation and its subsidiaries), as a result of the
Merger or the transactions contemplated by this Agreement;
(e) Illegality. No statute, rule, regulation or order shall be
enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal;
(f) Tax Opinions. The Company shall have received a written
opinion of Skadden, Arps, and Beta shall have received a written
opinion of PricewaterhouseCoopers LLP, in form and substance
reasonably satisfactory to each of them, to the effect that (i) the
Merger will constitute a reorganization within the meaning of Section
368 of the Code and (ii) the transfer of Company Common Stock by
Company shareholders pursuant to the Merger, other than Company
shareholders who are or will be "5% transferee shareholders" within
the meaning of Treasury Regulation Section 1.367(a)-3(c)(5)(ii), will
qualify for an exception under Treasury Regulation Section 1.367(a)-3
and, accordingly, Tyco will be treated as a corporation for United
States federal income tax purposes. Each party agrees to make all
reasonable representations and covenants in connection with the
rendering of such opinions; and
(g) Opinion of Accountant. Beta shall have received an opinion
of PricewaterhouseCoopers, independent public accountants, to the
effect that the Merger, to the best of their knowledge after due
inquiry, qualifies for pooling of interests accounting treatment if
consummated in accordance with this Agreement. Such opinion shall be
in form and substance reasonably satisfactory to Beta and the
Company.
SECTION 6.02. Additional Conditions to Obligations of Beta and
Merger Sub. The obligations of Beta and Merger Sub to effect the Merger are
also subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true
and correct in all respects on and as of the Effective Time, with the
same force and effect as if made on and as of the Effective Time,
except for (i) changes contemplated by this Agreement, (ii) those
representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such
date, subject to clause (iii)), or (iii) where the failure to be true
and correct would not reasonably be expected, individually or in the
aggregate with all other such failures, to have a Material Adverse
Effect, and Beta and Merger Sub shall have received a certificate of
the Company to such effect signed by the Chief Executive Officer or
Chief Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with
by it on or prior to the Effective Time,
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and Beta and Merger Sub shall have received a certificate to such
effect signed by the Chief Executive Officer or Chief Financial
Officer of the Company;
(c) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all
filings required to be made, by the Company for the authorization,
execution and delivery of this Agreement and the consummation by it
of the transactions contemplated hereby shall have been obtained and
made by the Company, except where the failure to receive such
consents, waivers, approvals, authorizations or orders would not
reasonably be expected, individually or in the aggregate with all
other such failures, to have a Material Adverse Effect on the Company
or Beta;
(d) Affiliate Agreements. Tyco shall have received from each
person who is identified in the Affiliate Letter as an "affiliate" of
the Company an Affiliate Agreement, and such Affiliate Agreement
shall be in full force and effect; and
(e) Rights Agreement. A Distribution Date shall not have
occurred under the Rights Agreement.
SECTION 6.03. Additional Conditions to Obligation of the
Company. The obligation of the Company to effect the Merger is also subject
to the following conditions:
(a) Representations and Warranties. The representations and
warranties of Beta and Merger Sub contained in this Agreement shall
be true and correct in all respects on and as of the Effective Time,
with the same force and effect as if made on and as of the Effective
Time, except for (i) changes contemplated by this Agreement, (ii)
those representations and warranties which address matters only as of
a particular date (which shall have been true and correct as of such
date, subject to clause (iii)), or (iii) where the failure to be true
and correct could not reasonably be expected, individually or in the
aggregate with all other such failures, to have a Material Adverse
Effect, and the Company shall have received a certificate to such
effect signed by the President or Chief Financial Officer of Beta;
(b) Agreements and Covenants. Beta and Merger Sub shall have
performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied
with by them on or prior to the Effective Time, and the Company shall
have received a certificate of Beta to such effect signed by the
President or Chief Financial Officer of Beta;
(c) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all
filings required to be made, by Beta or Merger Sub for the
authorization, execution and delivery of this Agreement and the
consummation by them of the transactions contemplated hereby shall
have been obtained and made by Beta or Merger Sub, except where the
failure to receive such consents, waivers, approvals, authorizations
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or orders would not reasonably be expected, individually or in the
aggregate with all other such failures, to have a Material Adverse
Effect on the Company or Beta;
(d) Listing. The Tyco Common Shares issuable in connection with
the Merger and upon exercise of the Adjusted Options shall have been
authorized for listing on the NYSE upon official notice of issuance;
and
(e) Shareholder Rights Plan. A Distribution Date shall not have
occurred under Tyco's Shareholder Rights Plan dated November 6, 1996,
as amended.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, notwithstanding approval thereof by
the shareholders of the Company or approval of the issuance of the Tyco
Common Shares in connection with the Merger by the shareholders of Tyco:
(a) by mutual written consent duly authorized by the Boards of
Directors of Beta and the Company; or
(b) by either Beta or the Company if the Merger shall not have
been consummated by July 31, 1999 (other than for the reasons set
forth in clause (d) below); provided, however, that the right to
terminate this Agreement under this Section 7.01(b) shall not be
available to any party whose failure to fulfill any obligation under
this agreement has been the cause of, or resulted in, the failure of
the Merger to be consummated on or prior to such date; or
(c) by either Beta or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a nonappealable final order, decree or
ruling or taken any other nonappealable final action having the
effect of permanently restraining, enjoining or otherwise prohibiting
the Merger; or
(d) by either Beta or the Company (i) if the requisite vote of
the shareholders of the Company shall not have been obtained by July
31, 1999, or if the shareholders of the Company shall not have
approved the Merger and this Agreement at the Company Shareholders
Meeting, or (ii) if the requisite vote of the shareholders of Tyco
shall not have been obtained by July 31, 1999 or if the shareholders
of Tyco shall not have approved the issuance of the Tyco Common
Shares in connection with the Merger at the Tyco Shareholders
Meeting; or
(e) by Beta, if, whether or not permitted to do so by this
Agreement, the Board of Directors of the Company or the Company shall
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(x) (i) withdraw, modify or change its approval or
recommendation of this Agreement or the Merger in a manner adverse to
Beta, (ii) approve or recommend to the shareholders of the Company an
Acquisition Proposal or Alternative Transaction; or (iii) approve or
recommend that the shareholders of the Company tender their shares in
any tender or exchange offer that is an Alternative Transaction or
(y) take any position or make any disclosures to the Company's
shareholders permitted pursuant to Section 4.02(e) which has the
effect of any of the foregoing; or
(f) by Beta or the Company, if any representation or warranty
of the Company, or Beta and Merger Sub, respectively, set forth in
this Agreement shall be untrue when made, such that the conditions
set forth in Sections 6.02(a) or 6.03(a), as the case may be, would
not be satisfied (a "Terminating Misrepresentation"); provided, that,
if such Terminating Misrepresentation is curable prior to July 31,
1999 by the Company or Beta, as the case may be, through the exercise
of its reasonable best efforts and for so long as the Company or
Beta, as the case may be, continues to exercise such reasonable best
efforts, neither Beta nor the Company, respectively, may terminate
this Agreement under this Section 7.01(f); or
(g) by Beta, if any representation or warranty of the Company
shall have become untrue such that the condition set forth in Section
6.02(a) would not be satisfied (a "Company Terminating Change"), or
by the Company, if any representation or warranty of Beta and Merger
Sub shall have become untrue such that the condition set forth in
Section 6.03(a) would not be satisfied (a "Beta Terminating Change"
and together with a Company Terminating Change, a "Terminating
Change"), in either case other than by reason of a Terminating Breach
(as hereinafter defined); provided that, if any such Terminating
Change is curable prior to July 31, 1999 by the Company or Beta, as
the case may be, through the exercise of its reasonable best efforts,
and for so long as the Company or Beta, as the case may be, continues
to exercise such reasonable best efforts, neither Beta nor the
Company, respectively, may terminate this Agreement under this
Section 7.01(g); or
(h) by Beta or the Company, upon a breach of any covenant or
agreement on the part of the Company or Beta, respectively, set forth
in this Agreement such that the conditions set forth in Sections
6.02(b) or 6.03(b), as the case may be, would not be satisfied (a
"Terminating Breach"); provided, that, except for any breach of the
Company's obligations under Section 4.02, if such Terminating Breach
is curable prior to July 31, 1999 by the Company or Beta, as the case
may be, through the exercise of its reasonable best efforts and for
so long as the Company or Beta, as the case may be, continues to
exercise such reasonable best efforts, neither Beta nor the Company,
respectively, may terminate this Agreement under this Section
7.01(h); or
(i) by Beta prior to the time of the Company Shareholder
Meeting, if (x) the Average Stock Price is less than $60.00 and (y)
on or before the second trading day prior to the date of the Company
Shareholders Meeting, the Company has not agreed by notice to Beta in
writing to an Exchange Ratio equal to 0.8500; provided that, in the
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event of such notice, the Exchange Ratio shall thereafter, for all
purposes of this Agreement, be deemed to be such ratio.
As used herein, "Alternative Transaction" means any of (i) a
transaction pursuant to which any person (or group of persons) other than
Beta or its affiliates (a "Third Party") acquires or would acquire more
than 20% of the outstanding shares of any class of equity securities of the
Company, whether from the Company or pursuant to a tender offer or exchange
offer or otherwise, (ii) a merger or other business combination involving
the Company pursuant to which any Third Party acquires more than 20% of the
outstanding equity securities of the Company or the entity surviving such
merger or business combination (iii) any transaction pursuant to which any
Third Party acquires or would acquire control of assets (including for this
purpose the outstanding equity securities of subsidiaries of the Company
and securities of the entity surviving any merger or business combination
including any of the Company's subsidiaries) of the Company, or any of its
subsidiaries having a fair market value (as determined by the Board of
Directors of the Company in good faith) equal to more than 20% of the fair
market value of all the assets of the Company and its subsidiaries, taken
as a whole, immediately prior to such transaction, or (iv) any other
consolidation, business combination, recapitalization or similar
transaction involving the Company or any of the Company Significant
Subsidiaries, other than the transactions contemplated by this Agreement;
provided, however, that the term Alternative Transaction shall not include
any acquisition of securities by a broker dealer in connection with a bona
fide public offering of such securities.
SECTION 7.02. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 7.01, this Agreement
shall forthwith become void and there shall be no liability on the part of
any party hereto or any of its affiliates, directors, officers or
shareholders (i) except that the Company or Beta or Merger Sub may have
liability as set forth in Section 7.03 and Section 8.01 hereof, and (ii)
nothing herein shall relieve the Company, Beta or Merger Sub from liability
for any willful material breach hereof (it being understood that the mere
existence of a Material Adverse Effect, by itself, shall not constitute
such a willful material breach).
SECTION 7.03. Fees and Expenses. (a) Except as set forth in
this Section 7.03, all fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses, whether or not the Merger is consummated;
provided, however, that Beta and the Company shall share equally all SEC
filing fees and printing expenses incurred in connection with the printing
and filing of the Joint Proxy Statement/Prospectus (including any
preliminary materials related thereto) and the Registration Statement
(including financial statements and exhibits) and any amendments or
supplements thereto.
(b) The Company shall pay Tyco a fee of $300 million (the
"Fee"), and shall pay Tyco's and Beta's respective actual, documented and
reasonable out-of-pocket expenses, relating to the transactions
contemplated by this Agreement (including, but not limited to, fees and
expenses of counsel and accountants and out-of-pocket expenses (but not
fees) of financial advisors) ("Expenses", as applicable to Tyco, Beta or
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the Company), such payment of Expenses not to exceed $30 million, upon the
first to occur of any of the following events (it being understood that for
these purposes this Agreement shall be deemed to be terminated by Beta pursuant
to Section 7.01(d)(i), Section 7.01(e), Section 7.01(g) or Section 7.01(h), as
the case may be, if at the time this Agreement is terminated it could have been
terminated pursuant to the appropriate Section):
(i) the termination of this Agreement by Beta or the
Company pursuant to Section 7.01(d)(i) as a result of the
failure to receive the requisite vote for approval of the
Merger and this Agreement by the shareholders of the Company by
July 31, 1999 or of the failure of the shareholders of the
Company to approve the Merger and this Agreement at the Company
Shareholders Meeting, provided that, prior to or during the
Company Shareholders Meeting an Acquisition Proposal (other
than the proposal by AlliedSignal on its currently pending or
any less favorable terms and conditions), including any
improved proposal by AlliedSignal, shall have been made
directly to the shareholders of the Company or otherwise become
publicly known or any credible third party shall have announced
a bona fide intention to make an Acquisition Proposal (in each
case whether or not conditional and whether or not such
proposal shall have been rejected or shall have been withdrawn
prior to the time of such termination or meeting); or
(ii) the termination of this Agreement by Beta pursuant
to Section 7.01(e); or
(iii) the termination of this Agreement by Beta pursuant
to Section 7.01(g) or (h), provided that, prior to such
termination an Acquisition Proposal (other than the proposal by
AlliedSignal on its currently pending or any less favorable
terms and conditions), including any improved proposal by
AlliedSignal, shall have been made directly to the shareholders
of the Company or otherwise become publicly known or any
credible third party shall have announced a bona fide intention
to make an Acquisition Proposal (in each case whether or not
conditional and whether or not such proposal shall have been
rejected or shall have been withdrawn prior to the time of such
termination) ; or
(iv) the Company shall approve or recommend, or propose
to approve or recommend, an Acquisition Proposal, or redeem the
Rights under the Rights Plan or waive or amend any provision of
the Rights Plan to permit or facilitate the consummation of any
Acquisition Proposal or Alternative Transaction, or enter into
an agreement with respect to any Acquisition Proposal, or an
Alternative Transaction shall be consummated, during the period
ending prior to one year following termination of this
Agreement, provided that at the time of any such termination,
(x) Beta was not in breach of this Agreement such that the
condition set forth in Section 6.03(b) would not be satisfied
and (y) if the Tyco Shareholders Meeting shall have occurred
prior to termination of the Agreement, the shareholders of Tyco
shall not have declined to approve the issuance of the Tyco
Common Shares, and provided further, that this
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Agreement has not been terminated pursuant to Section 7.01(c),
7.01(d)(ii) or 7.01(i) or terminated by the Company pursuant to
Section 7.01(f), 7.01(g) or 7.01(h); or
(v) the termination of this Agreement (other than
pursuant to Section 7.01(c), 7.01(d)(ii) or 7.01(i) or a
termination by the Company pursuant to Section 7.01(f), 7.01(g)
or 7.01(h)), if prior to such termination the shareholders of
the Company elect as a majority of the Board of Directors of
the Company persons who (x) are not Continuing Directors (as
defined in the Rights Agreement as in effect on the date
hereof), (y) were not initially nominated by the incumbent
directors or (z) even if nominated by the incumbent directors,
were proposed by or are affiliated with AlliedSignal or any
other third party that has made an Acquisition Proposal or who
at the time of election publicly supported any Acquisition
Proposal or Alternative Transaction other than the Merger and
the other transactions contemplated hereby.
(c) Upon a termination of this Agreement pursuant to Sections
7.01(a), 7.01(b) (provided that, at the time of termination pursuant to
Section 7.01(b), Beta was entitled to terminate the Agreement under Section
7.01(b)) or 7.01(c) or a termination of this Agreement by Beta pursuant to
Section 7.01(d)(i), 7.01(f), 7.01(g) or 7.01(h), under circumstances where
Section 7.03(b) does not apply, the Company shall pay to Tyco and Beta
their respective Expenses relating to the transactions contemplated by this
Agreement, but in no event more than $30 million. Upon termination of this
Agreement by the Company pursuant to Section 7.01(d)(ii), 7.01(f) or
7.01(g), Beta shall pay to the Company the Expenses of the Company relating
to the transactions contemplated by this Agreement, but in no event more
than $30 million.
(d) The Fee and/or Expenses payable pursuant to Section 7.03(b)
or Section 7.03(c) shall be paid within one business day after a demand for
payment following the first to occur of any of the events described in
Section 7.03(b) or Section 7.03(c); provided that, in no event shall the
Company or Beta, as the case may be, be required to pay such Fee and/or
Expenses to the entities entitled thereto, if, immediately prior to the
termination of this Agreement, the entity entitled to receive such Fee
and/or Expenses was in material breach of its obligations under this
Agreement or, in the case of Tyco, its guarantee of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties and
Agreements. (a) Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any person
controlling any such party or any of their officers or directors, whether
prior to or after the execution of this Agreement. The representations,
warranties and agreements in this Agreement shall terminate at the
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Effective Time or upon the termination of this Agreement pursuant
to Section 7.01, as the case may be, except that the agreements
set forth in Article I and Sections 5.07 and 5.09 and any other agreement
in this Agreement which contemplates performance after the Effective Time
shall survive the Effective Time indefinitely and those set forth in
Section 7.03 and 4.02(d) shall survive termination indefinitely. The
Confidentiality Letters shall survive termination of this Agreement.
(b) Any disclosure made with reference to one or more Sections
of the Company Disclosure Schedule or the Beta Disclosure Schedule shall be
deemed disclosed with respect to each other section therein as to which
such disclosure is relevant provided that such relevance is reasonably
apparent. Disclosure of any matter in the Company Disclosure Schedule or
the Beta Disclosure Schedule shall not be deemed an admission that such
matter is material.
SECTION 8.02. Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to
have been duly given or made if and when delivered personally or by
overnight courier to the parties at the following addresses or sent by
electronic transmission, with confirmation received, to the telecopy
numbers specified below (or at such other address or telecopy number for a
party as shall be specified by like notice):
(a) If to Beta or Merger Sub:
Beta Zeno Corp./Alpha Zeno Corp.
One Tyco Park
Exeter, NH 03833
Attn: President and Chief Executive Officer
Telecopy: (603) 778-7700
With a copy to:
Tyco International (US) Inc.
One Tyco Park
Exeter, NH 03833
Attn: Mark A. Belnick, Esq.
Telecopy: (603) 778-7700
and
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
Attn: Joshua M. Berman, Esq.
Telecopy: (212) 715-8000
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(b) If to the Company:
AMP Incorporated
P.O. Box 3608
470 Friendship Road
Harrisburg, PA 17105-3608
Attn: David F. Henschel, Esq.
Telecopy: (717) 564-4022
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attn: David J. Friedman, Esq.
Telecopy: (212) 735-2000
SECTION 8.03. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliates" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned person;
(b) "beneficial owner" with respect to any shares of Company
Common Stock means a person who shall be deemed to be the beneficial
owner of such shares (i) which such person or any of its affiliates
or associates (as such term is defined in Rule 12b-2 of the Exchange
Act) has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage
of time), pursuant to any agreement, arrangement or understanding or
upon the exercise of consideration rights, exchange rights, warrants
or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding, or (ii) which are
beneficially owned, directly or indirectly, by any other persons with
whom such person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on which
banks in New York are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management or policies of a person, whether through the
ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "dollars" or "$" means United States dollars;
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(f) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act); and
(g) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Beta, Tyco or any other person means any
corporation, partnership, joint venture or other legal entity of
which the Company, the Surviving Corporation, Beta or such other
person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, more than 50% of
the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity.
SECTION 8.04. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards
of Directors at any time prior to the Effective Time; provided, however,
that, after approval of the Merger and this Agreement by the shareholders
of the Company, no amendment may be made which by law requires further
approval by such shareholders without such further approval. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 8.05. Waiver. At any time prior to the Effective Time,
any party hereto may with respect to any other party hereto (a) extend the
time for the performance of any of the obligations or other acts, (b) waive
any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto, or (c) waive compliance with any
of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
SECTION 8.06. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 8.07. Severability. (a) If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon a determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as possible
in an acceptable manner to the end that transactions contemplated hereby
are fulfilled to the extent possible.
(b) The Company and Beta agree that each of the Fee provided in
Section 7.03(b) and the Stock Option Agreement is fair and reasonable in
the circumstances, considering not only the Merger Consideration but also
the outstanding funded indebtedness (including capital leases) of the
Company and its subsidiaries. If a court of competent jurisdiction shall
nonetheless, by a final, non-appealable judgment, determine that the amount
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of the Fee and/or the benefits to Beta under the Stock Option Agreement
exceeds the maximum amount permitted by law, then the amount of the Fee
and/or the benefits to Beta under the Stock Option Agreement shall be
reduced to the maximum amount permitted by law in the circumstances, as
determined by such court of competent jurisdiction.
SECTION 8.08. Entire Agreement. This Agreement and the Stock
Option Agreement constitute the entire agreement and supersede all prior
agreements and undertakings (other than the Confidentiality Letters, except
to the extent specifically superseded hereby), both written and oral, among
the parties, or any of them, with respect to the subject matters hereof and
thereof, except as otherwise expressly provided herein or therein.
SECTION 8.09. Assignment. This Agreement shall not be assigned
by operation of law or otherwise, except that all or any of the rights of
Beta and/or Merger Sub hereunder may be assigned to any wholly-owned
subsidiary of Tyco provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
SECTION 8.10. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, including, without
limitation, by way of subrogation, other than Section 5.07 (which is
intended to be for the benefit of the Indemnified Parties and Officer
Employees and may be enforced by such Indemnified Parties and Officer
Employees) and Section 7.03 (which contains provisions intended to be for
the benefit of Tyco and may be enforced by Tyco).
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to
be a waiver of, or acquiescence in, any breach of any representation,
warranty or agreement herein, nor shall any single or partial exercise of
any such right preclude other or further exercise thereof or of any other
right. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 8.12. Governing Law; Jurisdiction. (a) This Agreement
shall be governed by, and construed in accordance with, the internal laws
of the State of New York applicable to contracts executed and fully
performed within the State of New York.
(b) Each of the parties hereto submits to the non-exclusive
jurisdiction of the state and federal courts of the United States located
in the City of New York, Borough of Manhattan with respect to any claim or
cause of action arising out of this Agreement or the transactions
contemplated hereby.
SECTION 8.13. Counterparts. This Agreement may be executed in
two or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same
agreement.
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SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF BETA, MERGER SUB
AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY.
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IN WITNESS WHEREOF, Beta, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
BETA ZENO CORP.
By /s/ Mark H. Swartz
-----------------------------------
Name: Mark H. Swartz
Title: Vice President
ALPHA ZENO CORP.
By /s/ Mark A. Belnick
-----------------------------------
Name: Mark A. Belnick
Title: Vice President
AMP INCORPORATED
By /s/ Robert Ripp
____________________________________
Name: Robert Ripp
Title: Chairman and Chief Executive
Officer
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GUARANTEE
Tyco guarantees each and every representation, warranty, covenant,
agreement and other obligation of Beta and Merger Sub, and/or any of their
respective permitted assigns (and where any such representation or warranty
is made to the knowledge of Beta or Merger Sub, such guarantee shall be
deemed made to the knowledge of Tyco), and the full and timely performance
of their respective obligations under the provisions of the foregoing
Agreement. This is a guarantee of payment and performance, and not of
collection, and Tyco acknowledges and agrees that this guarantee is
unconditional, and no release or extinguishment of Beta's and Merger Sub's
obligations or liabilities (other than in accordance with the terms of the
Agreement), whether by decree in any bankruptcy proceeding or otherwise,
shall affect the continuing validity and enforceability of this guarantee,
as well as any provision requiring or contemplating performance by Tyco.
Without limiting in any way the foregoing guarantee, Tyco covenants and
agrees to adhere to the provisions of Section 1.06, Section 1.07, Section
5.01, Section 5.03 and Section 5.11 of the Agreement.
The provisions of Article VIII of the Agreement are incorporated
herein, mutatis mutandis, except that notices and other communications
hereunder to Tyco shall be delivered to Tyco International Ltd.,
The Gibbons Building, 10 Queen Street, Suite 301, Hamilton HM 11
Bermuda, Attn: Secretary, Telecopy No. (441) 295-9647, Confirm No. (441)
292-8674 (with a copy as provided therefor in Section 8.02(a)).
We understand that the Company is relying on this guarantee in entering
into the Agreement and may enforce this guarantee as if Tyco were a party
thereto.
TYCO INTERNATIONAL LTD.
By /s/ Mark A. Belnick
------------------------------------
Name: Mark A. Belnick
Title: Executive Vice President and
Chief Corporate Counsel
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EXHIBIT 2.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of November 22, 1998 (the
"Agreement"), between AMP INCORPORATED, a Pennsylvania corporation
("Company"), and Beta Zeno Corp., a Pennsylvania corporation ("Grantee").
RECITALS
A. Company, Grantee and Alpha Zeno Corp., a Pennsylvania
corporation and a wholly-owned subsidiary of Grantee ("Merger Sub"), have
entered into an Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"; defined terms used but not defined herein have the
meanings set forth in the Merger Agreement), providing for, among other
things, the merger of Merger Sub with and into Company pursuant to the
terms of the Merger Agreement; and
B. As a condition and inducement to the willingness of Grantee
and Merger Sub to enter into the Merger Agreement, Grantee has requested
that Company agree, and Company has agreed, to grant Grantee the Option (as
defined below).
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, Company and Grantee
agree as follows:
1. Grant of Option. Subject to the terms and conditions set
forth herein, Company hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 43,500,000 shares (the "Option Shares") of
common stock, without par value, of Company, including the associated
rights ("Company Common Stock"), or such lesser number of shares of Company
Common Stock constituting 19.9% of the issued and outstanding shares of
Company Common Stock on the date the Option is first exercised, at an
exercise price of $51.00 (as adjusted as set forth herein) per Option Share
(the "Exercise Price").
2. Exercise of Option. (a) Grantee may exercise the Option,
with respect to any or all of the Option Shares at any one time or from
time to time, subject to the provisions of Section 2(c), upon the
occurrence of an Exercise Event (as defined below). Subject to the last
sentence of this Section 2(a), the Option will terminate and be of no
further force and effect upon the earliest to occur of (i) the Effective
Time, (ii) termination of the Merger Agreement pursuant to Section 7.01(c),
7.01(d)(ii) or 7.01(i) of the Merger Agreement or termination of the Merger
Agreement by the Company pursuant to Section 7.01(f), 7.01(g) or 7.01(h) of
the Merger Agreement and (iii) the earlier of (x) twelve months after the
date on which an Exercise Event occurs and (y) the third business day
following the first anniversary of termination of the Merger Agreement, but
in no event, in the case of clause (iii)(x) or (y), sooner than eighteen
months and four business days after the date hereof. Any purchase of Option
Shares upon exercise of the Option will be subject to compliance with the
HSR Act and the obtaining or making of any consents, approvals, orders,
<PAGE>
notifications or authorizations, the failure of which to have obtained or
made would have the effect of making the issuance of Option Shares illegal
(the "Regulatory Approvals") and no preliminary or permanent injunction or
other order by any court of competent jurisdiction prohibiting or otherwise
restraining such issuance shall be in effect. "Exercise Event" means any
event as a result of which Tyco International Ltd. ("Tyco") is entitled to
receive the Fee (as defined in the Merger Agreement) pursuant to Section
7.03 of the Merger Agreement. Notwithstanding the termination of the
Option, Grantee will be entitled to purchase the Option Shares if it has
exercised the Option in accordance with the terms hereof prior to the
termination of the Option, and the termination of the Option will not
affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such termination.
(b) In the event that Grantee wishes to exercise the
Option, it will send to Company a written notice (an "Exercise Notice"; the
date of which being herein referred to as the "Notice Date") to that effect
which Exercise Notice will also specify the number of Option Shares, if
any, Grantee wishes to purchase pursuant to this Section 2(b), the number
of Option Shares, if any, with respect to which Grantee wishes to exercise
its Cash-Out Right (as defined herein) pursuant to Section 8, the
denominations of the certificate or certificates evidencing the Option
Shares which Grantee wishes to purchase pursuant to this Section 2(b) and a
date not earlier than 10 business days nor later than 20 business days from
the Notice Date for the closing (an "Option Closing") of such purchase (an
"Option Closing Date"). Any Option Closing will be at an agreed location
and time in New York, New York on the applicable Option Closing Date or at
such later date as may be necessary so as to comply with Section 2(a).
(c) Notwithstanding anything to the contrary contained
herein, any exercise of the Option and purchase of Option Shares shall be
subject to compliance with applicable laws and regulations, which may
prohibit the purchase of all the Option Shares specified in the Exercise
Notice without first obtaining or making certain Regulatory Approvals. In
such event, if the Option is otherwise exercisable and Grantee wishes to
exercise the Option, the Option may be exercised in accordance with Section
2(b), and Grantee shall acquire the maximum number of Option Shares
specified in the Exercise Notice that Grantee is then permitted to acquire
under the applicable laws and regulations, and if Grantee thereafter
obtains the Regulatory Approvals to acquire the remaining balance of the
Option Shares specified in the Exercise Notice, then Grantee shall be
entitled to acquire such remaining balance. Company agrees to use its
reasonable best efforts to assist Grantee in seeking the Regulatory
Approvals.
In the event (i) Grantee receives official notice that a
Regulatory Approval required for the purchase of any Option Shares will not
be issued or granted or (ii) such Regulatory Approval has not been issued
or granted within six months of the date of the Exercise Notice, Grantee
shall have the right to exercise its Cash-Out Right pursuant to Section 8
with respect to the Option Shares for which such Regulatory Approval will
not be issued or granted or has not been issued or granted.
3. Payment and Delivery of Certificates. (a) At any Option
Closing, Grantee will pay to Company an amount equal to the Exercise Price
multiplied by the number of Option Shares to be purchased at such Option
<PAGE>
Closing, at Grantee's sole election (but subject to applicable restrictions
under the HSR Act and compliance with other applicable laws), (i) in
immediately available funds by wire transfer to a bank account designated
in writing by Company or (ii) in shares of common stock, par value $0.20
per share, of Tyco ("Tyco Common Shares"), valued at the average of the
reported closing prices for Tyco Common Shares on the New York Stock
Exchange for the five trading days ending on the trading day before
exercise. If Grantee notifies Company of its desire to use Tyco Common
Shares as provided above, Company shall make promptly all filings, required
by applicable law.
(b) At any Option Closing, simultaneously with the
delivery of immediately available funds or Tyco Common Shares as provided
in Section 3(a), Company will deliver to Grantee a certificate or
certificates (or other appropriate evidence under the direct registration
system) representing the Option Shares to be purchased at such Option
Closing, which Option Shares will be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever. If at the time of issuance
of Option Shares pursuant to an exercise of the Option hereunder, Company
shall have issued any rights or similar securities under the Rights
Agreement or any similar plan or arrangement ("Shareholder Rights"), then
each Option Share issued pursuant to such exercise will also represent such
rights or similar securities with terms substantially the same as and at
least as favorable to Grantee as are provided under the Rights Agreement or
any similar plan or arrangement then in effect.
(c) Certificates (or other appropriate evidence under the
direct registration system) for the Option Shares delivered at an Option
Closing will have typed or printed thereon a restrictive legend which will
read substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993, AND MAY BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IF SO REGISTERED OR IF
ANY EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH
IN THE STOCK OPTION AGREEMENT, DATED AS OF NOVEMBER 22, 1998, A COPY
OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF AMP INCORPORATED AT
ITS PRINCIPAL EXECUTIVE OFFICES."
It is understood and agreed that (i) the reference to restrictions arising
under the Securities Act of 1933, as amended (the "Securities Act"), in the
above legend will be removed by delivery of substitute certificate(s) (or
other appropriate evidence under the direct registration system) without
such reference if such Option Shares have been sold in compliance with the
registration and prospectus delivery requirements of the Securities Act,
such Option Shares have been sold in reliance on and in accordance with
Rule 144 under the Securities Act, or Grantee has delivered to Company a
copy of a letter from the staff of the SEC, or an opinion of counsel in
form and substance reasonably satisfactory to Company and its counsel, to
the effect that such legend is not required for purposes of the Securities
Act and (ii) the reference to restrictions pursuant to this Agreement in
the above legend will be removed by delivery of substitute certificate(s)
<PAGE>
(or other appropriate evidence under the direct registration system)
without such reference if the Option Shares evidenced by certificate(s)
containing such reference have been sold or transferred in compliance with
the provisions of this Agreement under circumstances that do not require
the retention of such reference.
4. Incorporation of Representations and Warranties of Company.
The representations and warranties of Company contained in Article II of the
Merger Agreement are hereby incorporated by reference herein with the same
force and effect as though made
pursuant to this Agreement.
5. Additional Representations and Warranties of Company.
Company hereby represents and warrants to Grantee as follows:
(a) Corporate Authorization. Company has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Company, and no other
corporate proceedings on the part of Company are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Company, and assuming this
Agreement constitutes a valid and binding agreement of Grantee, this
Agreement constitutes a valid and binding agreement of Company, enforceable
against Company in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable
remedies).
(b) Authorized Stock. Company has taken all necessary
corporate and other action to authorize and reserve and, subject to the
expiration or termination of any required waiting period under the HSR Act,
to permit it to issue, and, at all times from the date hereof until the
obligation to deliver Option Shares upon the exercise of the Option
terminates, shall have reserved for issuance, upon exercise of the Option,
shares of Company Common Stock necessary for Grantee to exercise the
Option, and Company will take all necessary corporate action to authorize
and reserve for issuance all additional shares of Company Common Stock or
other securities which may be issued pursuant to Section 7 upon exercise of
the Option. The shares of Company Common Stock to be issued upon due
exercise of the Option, including all additional shares of Company Common
Stock or other securities which may be issuable upon exercise of the Option
or any other securities which may be issued pursuant to Section 7, upon
issuance pursuant hereto, will be duly and validly issued, fully paid and
nonassessable, and will be delivered free and clear of all liens, claims,
charges and encumbrances of any kind or nature whatsoever, including
without limitation any preemptive rights of any stockholder of Company.
6. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Company that:
(a) Corporate Authorization. Grantee has the corporate
power and authority to enter into this Agreement and to carry out its
<PAGE>
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by authority of the Board of Directors of Grantee, and
no other corporate proceedings on the part of Grantee are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Grantee, and
assuming this Agreement constitutes a valid and binding agreement of
Company, this Agreement constitutes a valid and binding agreement of
Grantee, enforceable against Grantee in accordance with its terms (except
insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies).
(b) Purchase Not For Distribution. Any Option Shares or
other securities acquired by Grantee upon exercise of the Option will not
be, and the Option is not being, acquired by Grantee with a view to the
public distribution thereof. Neither the Option nor any of the Option
Shares will be offered, sold, pledged or otherwise transferred except in
compliance with, or pursuant to an exemption from, the registration
requirements of the Securities Act.
7. Adjustment upon Changes in Capitalization, Etc. (a) In the
event, on one or more occasions, of any changes in Company Common Stock by
reason of a stock split, reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into Company Common
Stock), distribution, exercise or exchange of Rights, reorganization,
recapitalization, splitup, division, combination, share exchange or like
event, the class and number of securities subject to the Option, will be
adjusted appropriately, and proper provision will be made in the agreements
governing such transaction, so that Grantee will receive upon exercise of
the Option the number and class of shares or other securities or property,
cash or other form of consideration that Grantee would have received with
respect to Company Common Stock if the Option had been exercised
immediately prior to such event or the record date therefor, as applicable.
The Exercise Price will also be appropriately adjusted in any such case.
(b) Without limiting the provisions of clause (a) above
or the parties' relative rights and obligations under the Merger Agreement,
in the event that the Company enters into an agreement (i) to consolidate
with or merge with or into any person, other than Grantee or any other
subsidiary of Tyco, and Company will not be the continuing or surviving
corporation in such consolidation or merger, (ii) to permit any person,
other than Grantee or any other subsidiary of Tyco, to merge with or into
Company and Company will be the continuing or surviving corporation, but in
connection with such merger, the shares of Company Common Stock outstanding
immediately prior to the consummation of such merger will be changed into
or exchanged for stock or other securities of Company or any other person
or cash or any other property, or the shares of Company Common Stock
outstanding immediately prior to the consummation of such merger will,
after such merger represent less than 51% of the outstanding voting
securities of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Grantee or
any other subsidiary of Tyco, then, and in each such case, the agreement
governing such transaction will make proper provision so that the Option
will, upon the consummation of any such transaction and upon the terms and
condition set forth herein, be converted into, or exchanged for,
<PAGE>
an option with identical terms appropriately adjusted to acquire the number
and class of shares or other securities or property that Grantee would have
received in respect of Company Common Stock if the Option had been
exercised immediately prior to such consolidation, merger, sale, or
transfer, or the record date therefor, as applicable and make any other
necessary adjustments. If the holders of the Company Common Stock may elect
from choices the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer, then for the
purpose of this Section 7(b) the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer
shall be the available choice with the greatest aggregate value. For
purposes of this Option, the term "merger" shall be deemed to include a
share exchange pursuant to Section 1931 of the Pennsylvania Business
Corporation Law of 1988 ("PBCL") or division pursuant to Section 1951 et
seq. of the PBCL.
8. Cash-Out Right. If, at any time during the period when the
Option is exercisable in accordance with Section 2, Grantee sends to
Company an Exercise Notice indicating Grantee's election to exercise its
right (the "Cash-Out Right") pursuant to this Section 8, then Company shall
pay to Grantee in exchange for the cancellation of the Option with respect
to such number of Option Shares as Grantee specifies in the Exercise
Notice, an amount in cash equal to such number of Option Shares multiplied
by the difference between (i) the average closing price for the ten NYSE
trading days commencing on the NYSE trading day immediately preceding the
Notice Date, per share of Company Common Stock as reported on the NYSE
Composite Transactions Tape (or, if not listed on the NYSE, as reported on
any other national securities exchange or national securities quotation
system on which Company Common Stock is listed or quoted, as reported in
The Wall Street Journal (Northeast edition), or, if not reported thereby,
any other authoritative source) or, if Company is at the time of such
exercise no longer a Registered Corporation (as defined in Section 2502 of
the PBCL), the price per share paid to the shareholders of the Company in
the transaction which caused the Company Common Stock to cease being
required to be registered under the Securities Exchange Act of 1934 (the
"Closing Price") and (ii) the Exercise Price. Notwithstanding the
termination of the Option, Grantee will be entitled to exercise its rights
under this Section 8 if it has exercised such rights in accordance with the
terms hereof prior to the termination of the Option.
9. Profit Limitations. (a) Notwithstanding any other provision
of this Agreement, in no event shall the Total Option Profit (as
hereinafter defined) exceed in the aggregate $301 million minus any Fee
actually received by Tyco pursuant to the terms of the Merger Agreement
(such amount, the "Profit Limit") and, if any payment to be made to Grantee
otherwise would cause such aggregate amount to be exceeded, the Grantee, at
its sole election, shall either (i) reduce the number of shares of Company
Common Stock subject to this Option, (ii) deliver to the Company for
cancellation Option Shares previously purchased by Grantee, (iii) pay cash
to Company, (iv) deliver the undertaking described in Section 9(f) or (v)
any combination thereof, so that the Total Option Profit shall not exceed
the Profit Limit after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this
Option may not be exercised for a number of shares of Company Common Stock
as would, as of the date of exercise, result in a Notional Total Option
Profit (as hereinafter defined) which would exceed in the aggregate
<PAGE>
the Profit Limit and, if it otherwise would exceed such amount, the
Grantee, at its sole election, shall on or prior to the date of exercise
either (i) reduce the number of shares of Company Common Stock subject to
such exercise, (ii) deliver to Company for cancellation Option Shares
previously purchased by Grantee, (iii) pay cash to Company, (iv) deliver
the undertaking described in Section 9(f) or (v) any combination thereof,
so that the Notional Total Option Profit shall not exceed the Profit Limit
after taking into account the foregoing actions, provided that this
paragraph (b) shall not be construed as to restrict any exercise of the
Option that is not prohibited hereby on any subsequent date.
(c) As used herein and subject to Section 9(f), the term "Total
Option Profit" shall mean the aggregate amount (before taxes) of the
following: (i) any amount received by Grantee pursuant to the Cash-Out
Right and (ii) (x) the net consideration, if any, received by Grantee
pursuant to the sale of Option Shares (or any other securities into which
such Option Shares are converted or exchanged) to any unaffiliated party,
valuing any non-cash consideration at its fair market value (as defined
below), less (y) the Exercise Price and any cash paid by Grantee to Company
pursuant to Section 9(a)(iii) or Section 9(b)(iii), as the case may be.
(d) As used herein and subject to Section 9(f), the term
"Notional Total Option Profit" with respect to any number of shares of
Company Common Stock as to which Grantee may propose to exercise the Option
shall be the aggregate of (i) the Total Option Profit determined under
paragraph (c) above with respect to prior exercises and (ii) Total Option
Profit with respect to such number of shares of Company Common Stock as to
which Grantee proposes to exercise and all other Option Shares held by
Grantee and its affiliates as of such date, assuming that all such shares
were sold for cash at the closing market price for Company Common Stock as
of the close of business on the preceding trading day (less customary
brokerage commissions or underwriting discounts).
(e) As used herein, the "fair market value" of any non-cash
consideration consisting of:
(i) securities listed on the national securities exchange
or traded on the NASDAQ shall be equal to the average closing
price per share of such security as reported on such exchange
or NASDAQ for the five trading days after the date of
determination; and
(ii) consideration which is other than cash or securities
of the form specified in clause (i) above shall be determined
by a nationally recognized independent investment banking firm
mutually agreed upon by the parties within five business days
of the event requiring selection of such banking firm, provided
that if the parties are unable to agree within two business
days after the date of such event as to the investment banking
firm, then the parties shall each select one firm, and those
firms shall select a third nationally recognized independent
investment banking firm, which third firm shall make such
determination.
<PAGE>
(f) Total Option Profit and Notional Total Option Profit shall
be reduced by any amount that is subject to recapture by the Company
pursuant to Subchapter H of the PBCL if Grantee pays such amount or such
obligation has matured and Grantee acknowledges its liability. In addition,
if in connection with an exercise, Grantee elects, at its sole discretion,
to undertake to return to the Company any profit realized by Grantee with
respect to any Option Shares covered by such exercise, if any, when
realized (whether or not subject to Subchapter H at the time of
realization), then in all calculations of Total Option Profit and Notional
Total Option Profit the Total Option Profit and Notional Total Option
Profit related to such Option Shares shall be zero. Any undertaking
delivered pursuant to the preceding sentence shall also include an
undertaking by Grantee to dispose of the related Option Shares within nine
months after the earliest of (i) the date of exercise or (ii) the later of
(x) the first anniversary of the termination of the Merger Agreement and
(y) the first anniversary of the date on which the Exercise Event occurred,
or, if not legally permitted to do so within such period, at such time as
it is so legally permitted, and to treat as part of the profits realized
any dividends or other distributions received with respect to such Option
Shares.
10. Grantee Registration Rights.
(a) Grantee may by written notice (a "Grantee
Registration Notice") to Company request Company to register under the
Securities Act all or any part of the Option Shares or other securities
acquired by Grantee pursuant to this Agreement (collectively, the "Company
Registrable Securities") in order to permit the sale or other disposition
of such securities pursuant to a bona fide, firm commitment underwritten
public offering in which Grantee, and the underwriters shall effect as wide
a distribution of such Company Registrable Securities as is reasonably
practicable and shall use reasonable efforts to prevent any person or group
from purchasing through such offering shares representing more than 3% of
the shares of Company Common Stock then outstanding on a fully-diluted
basis.
(b) Company shall use reasonable best efforts to effect,
as promptly as practicable, but in no event later than 90 days following
receipt of the applicable Grantee Registration Notice, the registration
under the Securities Act of the Company Registrable Securities requested to
be registered in the Grantee Registration Notice; provided, however, that
(i) Grantee shall not be entitled to more than an aggregate of two
effective registration statements hereunder and (ii) Company will not be
required to file any such registration statement during any period of time
(not to exceed 40 days after receipt of a Grantee Registration Notice in
the case of clause (A) below, 90 days after receipt of a Grantee
Registration Notice in the case of clause (B) below and 60 days after
receipt of a Grantee Registration Notice in case of clause (C) below) when
(A) Company is in possession of material non-public information which it
reasonably believes would be detrimental to be disclosed at such time and,
based upon the advice of outside securities counsel to Company, believes
such information would have to be disclosed if a registration statement
were filed at that time; (B) Company would be required under the Securities
Act to include audited financial statements for any period in such
registration statement and such financial statements are not yet available
for inclusion in such registration statement; or (C) Company determines, in
its reasonable judgment, that such registration would interfere with any
financing, acquisition or other material transaction involving Company or
any of its subsidiaries. If the consummation of the sale of any Company
Registrable Securities pursuant to a registration hereunder does not
<PAGE>
occur within 90 days after the filing with the SEC of the initial
registration statement therefor, the provisions of this Section shall again
be applicable to any proposed registration, it being understood that
Grantee shall not be entitled to more than an aggregate of two effective
registration statements hereunder. Company will use reasonable efforts to
cause each such registration statement to become effective, to obtain all
consents or waivers of other parties which are required therefor, and to
keep such registration statement effective for such period not in excess of
90 calendar days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition. Company shall use reasonable best efforts to cause any Company
Registrable Securities registered pursuant to this Section to be qualified
for sale under the securities or blue sky laws of such jurisdictions as
Grantee may reasonably request and shall continue such registration or
qualification in effect in such jurisdictions; provided, however, that
Company shall not be required to qualify to do business in, or consent to
general service of process in, any jurisdiction.
(c) If Company effects a registration under the
Securities Act of Company Common Stock for its own account or for any other
shareholders of Company (other than on Form S-4 or Form S-8, or any
successor form), it will allow Grantee the right to participate in such
registration, and such participation will not affect the obligation of
Company to effect demand registration statements for Grantee under this
Section, except that, if the managing underwriters of such offering advise
Company in writing that in their opinion the number of shares of Company
Common Stock requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
offering, Company will include only the shares requested to be included
therein by Grantee which may be included therein without adversely
affecting the offering.
(d) The registration rights set forth in this Section are
subject to the condition that Grantee shall provide Company with such
information with respect to Company Registrable Securities, the plan for
distribution thereof, and such other information with respect to Grantee
as, in the reasonable judgment of counsel for Company, is necessary to
enable Company to include in a registration statement all material facts
required to be disclosed with respect to a registration hereunder.
(e) A registration effected under this Section shall be
effected at Company's expense, except for underwriting discounts and
commissions and the fees and expenses of Grantee's counsel, and Company
shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from auditors) as
are customary in connection with underwritten public offerings and as such
underwriters may reasonably require. In connection with any registration,
Grantee and Company agree to enter into an underwriting agreement
reasonably acceptable to each such party, in form and substance customary
for transactions of this type.
10A. Company Registration Rights. (a) In the event Grantee
shall elect to pay the Exercise Price in Tyco Common Shares as permitted
pursuant to Section 3(a), Company may by written notice (a "Company
Registration Notice") to Grantee request Grantee to take all action
necessary so that Tyco will register under the Securities Act all or any
part of the Tyco Common Shares so received by Company (collectively, the
<PAGE>
"Tyco Registrable Securities") in order to permit the sale or other
disposition of such securities pursuant to a bona fide, firm commitment
underwritten public offering in which Company and the underwriters shall
effect as wide a distribution of such Tyco Registrable Securities as is
reasonably practicably and shall use reasonable efforts to prevent any
person or group from purchasing through such offering shares representing
more than 3% of the Tyco Common Shares then outstanding on a fully-diluted
basis.
(b) Grantee shall take all action necessary so that Tyco
will use reasonable best efforts to effect, as promptly as practicable (but
in no event later than 90 days following receipt of the applicable Company
Registration Notice), the registration under the Securities Act of the Tyco
Registrable Securities requested to be registered in the Company
Registration Notice; provided, however, that (i) Company shall not be
entitled to more than an aggregate of two effective registration statements
hereunder and (ii) Grantee will not be required to take all action
necessary so that Tyco will file any such registration statement during any
period of time (not to exceed 40 days after receipt of a Company
Registration Notice in the case of clause (A) below, 90 days after receipt
of a Company Registration Notice in the case of clause (B) below and 60
days after receipt of a Company Registration Notice in case of clause (C)
below) when (A) Tyco is in possession of material non-public information
which it reasonably believes would be detrimental to be disclosed at such
time and, based upon the advice of outside securities counsel to Tyco,
believes such information would have to be disclosed if a registration
statement were filed at the time; (B) Tyco would be required under the
Securities Act to include audited financial statements for any period in
such registration statement and such financial statements are not yet
available for inclusion in such registration statement; or (C) Tyco
determines, in its reasonable judgment, that such registration would
interfere with any financing, acquisition or other material transaction
involving Tyco or any of its subsidiaries. If the consummation of the sale
of any Tyco Registrable Securities pursuant to a registration hereunder
does not occur within 90 days after the filing with the SEC of the initial
registration statement therefor, the provisions of this Section shall again
be applicable to any proposed registration, it being understood that
Company shall not be entitled to more than an aggregate of two effective
registration statements hereunder. Grantee will take all action necessary
so that Tyco will use reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor, and to keep such registration
statement effective for such period not in excess of 90 calendar days from
the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. Grantee
shall take all action necessary so that Tyco will use reasonable best
efforts to cause any Tyco Registrable Securities registered pursuant to
this Section to be qualified for sale under the securities or blue sky laws
of such jurisdictions as Company may reasonably request and shall continue
such registration or qualification in effect in such jurisdiction;
provided, however, that neither Tyco nor Grantee shall be required to
qualify to do business in, or consent to general services of process in,
any jurisdiction.
(c) If Tyco effects a registration under the Securities
Act of Tyco Common Shares for its own account or for any other stockholders
of Tyco (other than on Form S-4 or Form S-8, or any successor form),
Grantee shall take all action necessary so that Tyco will allow Company the
right to participate in such registration, and such participation will not
affect the obligation of Grantee to take all action necessary so that Tyco
<PAGE>
will effect demand registration statements for Company under this Section,
except that if the managing underwriters of such offering advise Grantee in
writing that in their opinion the number of shares of Tyco Common Shares
requested to be included in such registration exceeds the number which can
be sold in such offering without adversely affecting the offering, Grantee
will take all action necessary so that Tyco will include only the shares
requested to be included therein by Company which may be included therein
without adversely affecting the offering.
(d) The registration rights set forth in this Section are
subject to the condition that Company shall provide Tyco with such
information with respect to the Tyco Registrable Securities, the plan for
distribution thereof, and such other information with respect to Company
as, in the reasonable judgment of counsel for Tyco, is necessary to enable
Tyco to include in a registration statement all material facts required to
be disclosed with respect to a registration hereunder.
(e) A registration effected under this Section shall be
effected at Grantee's expense, except for underwriting discounts and
commissions and the fees and expenses of Company's counsel, and Grantee
shall provide to the underwriter such documentation (including
certificates, opinions of counsel and "comfort" letters from auditors) as
are customary in connection with underwritten public offerings and as such
underwriters may reasonably require. In connection with any registration,
Company agrees to, and Grantee agrees to take all action necessary so that
Tyco will, enter into an underwriting agreement reasonably acceptable to
each such party, in form and substance customary for transactions of this
type.
11. Transfers. The Option Shares may not be sold, assigned,
transferred, or otherwise disposed of except (i) to Tyco or any direct or
indirect subsidiary of Tyco, (ii) in an underwritten public offering as
provided in Section 10 or (iii) to any purchaser or transferee who would
not, to the knowledge of the Grantee after reasonable inquiry, immediately
following such sale, assignment, transfer or disposal beneficially own more
than 9.9% of the then-outstanding voting power of the Company, except that
Grantee shall be permitted to sell any Option Shares if such sale is made
pursuant to a tender or exchange offer that has been approved or
recommended by a majority of the members of the Board of Directors of
Company (which majority shall include a majority of directors who were
directors as of the date hereof or any other director approved by such
directors).
12. Listing. (a) If Company Common Stock or any other
securities to be acquired upon exercise of the Option are then listed on
the NYSE (or any other national securities exchange or national securities
quotation system), Company, upon the request of Grantee, will promptly file
an application to list the shares of Company Common Stock or other
securities to be acquired upon exercise of the Option on the NYSE (and any
such other national securities exchange or national securities quotation
system) and will use reasonable efforts to obtain approval of such listing
as promptly as practicable.
(b) If Tyco Common Shares received by Company pursuant to
Section 3(a) are then listed on the NYSE (or any other national securities
exchange or national securities quotation system), Grantee, upon the
request of Company, will promptly take all action necessary so that Tyco
will file an application to list the Tyco Common Shares on the
<PAGE>
NYSE (and any such other national securities exchange or national
securities quotation system) and will take all action necessary so that
Tyco will use reasonable efforts to obtain approval of such listing as
promptly as practicable.
13. Miscellaneous. (a) Expenses. Except as otherwise provided
in the Merger Agreement, each of the parties hereto will pay all costs and
expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except
by an instrument in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party
to waive any provision of this Agreement, or to extend the time for
performance, will be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise will not constitute
a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Merger Agreement (including the documents and instruments
attached thereto as exhibits or schedules or delivered in connection
therewith) and the Confidentiality Agreements (i) constitute the entire
agreement, and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter of
this Agreement, and (ii) except as provided in Section 8.10 of the Merger
Agreement, are not intended to confer upon any person other than the
parties any rights or remedies.
(e) Governing Law. This Agreement will be governed by,
and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable
principles of conflict of laws
thereof.
(f) Notices. All notices, requests, claims, demands, and
other communications under this Agreement must be in writing and will be
deemed given if delivered personally, telecopied (which is confirmed), or
sent by overnight courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(i) If to Company to:
AMP Incorporated
P.O. Box 3608
470 Friendship
Harrisburg, Pennsylvania 17105
Attention: David F. Henschel, Esq.
Telecopy: (717) 592-4022
Confirm: (717) 592-4205
with a copy to:
<PAGE>
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David J. Friedman, Esq.
Telecopy: (212) 735-2000
(ii) If to Grantee to:
Beta Zeno Corp.
One Tyco Park
Exeter, New Hampshire 03833
Attention: President and Chief Executive Officer
Telecopy: (603) 778-7700
with a copy to:
Tyco International (US) Inc.
One Tyco Park
Exeter, New hampshire 03833
Attention: Mark A. Belnick, Esq.
Telecopy: (603) 778-7700
and
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Joshua M. Berman, Esq.
Telecopy: (212) 715-8000
Confirm: (212) 715-9100
(g) Assignment. Neither this Agreement, the Option nor
any of the rights, interests, or obligations under this Agreement may be
assigned, transferred or delegated, in whole or in part, by operation of
law or otherwise, by Company or Grantee without the prior written consent
of the other, except that Grantee may assign its rights and interest under
this Agreement to Tyco or any direct or indirect subsidiary of Tyco. Any
assignment, transfer or delegation in violation of the preceding sentence
will be void. Subject to the first and second sentences of this Section
13(g), this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
(h) Further Assurances. In the event of any exercise of
the Option by Grantee, Company and Grantee will execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
<PAGE>
(i) Enforcement; Consent to Jurisdiction The parties
agree that irreparable damage would occur and that the parties would not
have any adequate remedy at law in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties will
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement. Each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any United States federal or state court located
in the City of New York, Borough of Manhattan in the event any dispute
arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court, and (iii) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any
court other than a United States federal or state court located in the City
of New York, Borough of Manhattan.
<PAGE>
IN WITNESS WHEREOF, Company and Grantee have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the day and year first written above.
AMP INCORPORATED
By: /s/ Robert Ripp
-------------------------
Name: Robert Ripp
Title: Chairman and Chief
Executive Officer
BETA ZENO CORP.
By: /s/ Mark A. Belnick
-----------------------
Name: Mark A. Belnick
Title: Vice President
<PAGE>
GUARANTEE
Tyco International Ltd. ("Tyco") guarantees each and every
representation, warranty, covenant, agreement or other obligation of
Grantee, and/or any of its respective permitted assigns, and the full and
timely performance of their respective obligations under the provisions of
the foregoing Agreement. This is a guarantee of payment and performance,
and not of collection, and Tyco acknowledges and agrees that this guarantee
is unconditional, and no release or extinguishment of Grantee's obligations
or liabilities (other than in accordance with the terms of the Agreement),
whether by decree in any bankruptcy proceeding or otherwise, shall affect
the continuing validity and enforceability of this guarantee.
The provisions of Section 13 of the Agreement are incorporated
herein, mutatis mutandis, except that notices and other communications
hereunder to Tyco shall be delivered to Tyco International Ltd., The
Gibbons Building, 10 Queen Street, Suite 301, Hamilton HM 11 Bermuda, Attn:
Secretary, Telecopy No. (441) 295-9647, Confirm No. (441) 292-8674 (with a
copy as provided therefor in Section 13(f)(ii)). We understand that Company
is relying on this guarantee in entering into the Agreement.
Tyco International Ltd.
By: /s/ Mark A. Belnick
------------------------------
Name: Mark A. Belnick
Title: Executive Vice
President and
Chief Corporate Counsel
EXHIBIT 4.1
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT No. 5 to the Rights Agreement, dated as of November
22, 1998 (the "Amendment No. 5"), by and between AMP Incorporated, a
Pennsylvania corporation (the "Company"), and ChaseMellon Shareholder
Services L.L.C., a limited liability company organized under the laws of
the State of New Jersey (the "Rights Agent").
WHEREAS, on October 25, 1989 the Company and Manufacturers
Hanover Trust Company, a New York corporation ("MHTCo"), entered into a
Rights Agreement (the "Original Agreement");
WHEREAS, on September 4, 1992, the Company and Chemical Bank
(as successor to MHTCo.) entered into Amendment No. 1 to the Rights
Agreement, on August 12, 1998, the Company and ChaseMellon Shareholder
Services L.L.C. (as successor to Chemical Bank) entered into Amendment No.
2 to the Rights Agreement, on August 20, 1998, the Company and ChaseMellon
Shareholder Services L.L.C. entered into Amendment No. 3 to the Rights
Agreement and on September 17, 1998, the Company and ChaseMellon
Shareholder Services L.L.C. entered into Amendment No. 4 to the Rights
Agreement (the Original Agreement, as amended by each of the amendments is
hereinafter referred to as the "Agreement" and the terms of which are
incorporated herein by reference and made a part hereof); and
WHEREAS, the Company, with the approval of the Board of
Directors of the Company, and the Rights Agent have mutually agreed to
modify the terms of the Agreement in
certain respects.
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein set forth, and intending to be legally bound hereby, the
parties hereto agree that the Agreement shall be and hereby is amended in
the following manner:
Section 1. Amendment of "Issue of Rights Certificate" Section.
Section 3(a) of the Agreement is amended to add the following paragraph at
the end thereof:
"Notwithstanding any other provision of this Agreement, the
occurrence of (A) the approval, execution and delivery of the Agreement and
Plan of Merger, dated November22, 1998 (as it may be amended from time to
time, the "Merger Agreement"), by and among Beta Zeno Corp. ("Beta"), a
Delaware corporation and wholly owned subsidiary of Tyco International Ltd.
("Issuer"), Alpha Zeno Corp., a Pennsylvania corporation and wholly owned
subsidiary of Beta ("Merger Sub") and the Company and the Stock Purchase
<PAGE>
Agreement, dated as of November 22, 1998 (as it may be amended
from time to time, the "Stock Purchase Agreement"), by and between the
Company and Beta, (B) the consummation of the transactions contemplated by
the Merger Agreement and/or the Stock Purchase Agreement or (C) the
announcement of any of the foregoing events will not, individually or
collectively, cause (i) Issuer, Beta, Merger Sub and their affiliates,
either individually or as a group, to be deemed an Acquiring Person, (ii)
the occurrence of a Stock Acquisition Date, a Distribution Date, a Section
11(a)(ii) Event, a Section 13 Event or a Triggering Event to be deemed to
have occurred, or (iii) an Unsolicited Acquisition Proposal to be deemed to
have been announced."
Section 2. Rights Agreement as Amended. The term "Agreement" as
used in the Agreement shall be deemed to refer to the Agreement as amended
hereby and shall be effective as of the date hereof. All references
hereinafter to Amendment No. 5 shall be deemed to refer to this Amendment
No. 5. It is expressly understood and agreed that except as provided above,
all terms, conditions and provisions contained in the Agreement shall
remain in full force and effect without any further change or modification
whatsoever.
IN WITNESS WHEREOF, the parties have caused this Amendment No.
5 to be duly executed and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
Attest: AMP Incorporated
By:/s/ David F. Henschel By:/s/ Robert Ripp
------------------------------ ------------------------------
Name: David F. Henschel Name: Robert Ripp
Title: General Counsel and Title: Chairman and Chief
Corporate Secretary Executive Officer
Attest: ChaseMellon Shareholder
Services L.L.C.
By:/s/ Robert G. Scott, Jr. By:/s/ Constance Adams
----------------------------- ------------------------------
Name: Robert G. Scott, Jr. Name: Constance Adams
Title: Vice President Title: Assistant Vice President
Exhibit 99.1
FOR IMMEDIATE RELEASE
TYCO INTERNATIONAL ANNOUNCES MERGER AGREEMENT
WITH AMP INCORPORATED VALUED AT $11.3 BILLION
---------------------------------------------------------
BETWEEN $51 AND $55.95 PER SHARE VALUE TO AMP SHAREHOLDERS
---------------------------------------------------------
IMMEDIATELY ACCRETIVE TO TYCO SHAREHOLDERS
Hamilton, Bermuda and Harrisburg, Pennsylvania, November 23, 1998 -
Tyco International Ltd. (NYSE-TYC, LSE-TYI, BSX-TYC) (Tyco), a diversified
manufacturing and service company, and AMP Incorporated (NYSE-AMP) (AMP), a
leading manufacturer of electrical, electronic, fiber- optic and wireless
interconnection devices and systems, announced today that the boards of
directors of both companies have unanimously approved a definitive
agreement pursuant to which AMP will merge with a subsidiary of Tyco. This
tax-free, stock-for-stock transaction is valued at $51 per share to the AMP
shareholders, or $11.3 billion, based on Tyco's November 20, 1998 closing
price of $65.0625. Based on that price, AMP shareholders would receive
0.7839 shares of Tyco stock for each share of AMP. The exchange ratio is
subject to a collar as described below and in the accompanying summary.
Based upon the price of Tyco stock, AMP shareholders may receive up to
$55.95 per share. The transaction is expected to be accounted for as a
pooling of interests and will be accretive to Tyco's earnings immediately.
The combination creates a company with a total market capitalization
of approximately $54 billion, with total annual revenues in excess of $22
billion, and operations in over 80 countries.
AMP, with annual revenues of approximately $5.5 billion, designs,
manufactures and markets a broad range of electronic, electrical and
electro-optic connection devices and an expanding number of interconnection
systems and connector-intensive assemblies. AMP's products have potential
uses wherever an electronic, electrical, computer or telecommunications
system is involved, and are becoming increasingly critical to the
performance of these systems as voice, data, and video communications
converge. The leader in its markets, AMP sells into the consumer and
industrial, communications, automotive and personal computer markets.
"We are bringing to Tyco, by far, the world's largest electronics
connector company with an exceptionally strong market position and the most
respected brand name in the industry. The combination with Tyco provides
AMP a clear path to becoming the lowest cost manufacturer, while providing
attractive margin improvement resulting in double-digit earnings growth and
strong cash flows for the foreseeable future," said L. Dennis Kozlowski,
Tyco's Chairman and Chief Executive Officer. "Additionally, this
transaction meets all of Tyco's previously stated strategies for adding to
our businesses - AMP complements our existing Electrical and Electronic
Components businesses, is the leader in the markets it serves, expands our
global presence in stable industrial markets, and offers
<PAGE>
opportunities for sustainable growth. The transaction will provide an
immediate positive earnings contribution to our shareholders," he stated.
Bob Ripp, AMP's Chairman and Chief Executive Officer, said "The
merger with Tyco allows our shareholders to share in the upside potential
of this powerful combination. Tyco, with its track record of growth in both
its core businesses and through acquisitions has the unique ability to
support AMP's market position and growth strategy. We expect the positive
results of AMP's profit improvement plan to be accelerated further by this
strategic combination. Tyco is well-recognized for management strength and
willingness to invest in businesses for growth and manufacturing
productivity. We look forward to joining this exceptional company and
moving forward with Tyco."
Bob Ripp will serve on the Tyco Board of Directors and will continue
as President of AMP. "We are extremely pleased to have Bob and his team
join Tyco's management team," said Dennis Kozlowski.
AMP also announced today that its Board rescinded its authorization
for a self-tender and accordingly terminated its offer to purchase up to 30
million shares of AMP common stock at $55.00 per share. The self-tender
offer was scheduled to expire Wednesday, November 25, 1998. In addition,
AMP will be terminating the Flexitrust which was authorized by the AMP
Board in September and will not issue 25 million additional AMP shares
which were to have been sold to the Flexitrust.
Under the terms of the collar, if Tyco's weighted average stock price
is from $60.00 to $67.00 per share over a 15-day trading period ending four
days prior to AMP's shareholder vote on the merger, AMP shareholders will
receive Tyco stock valued at $51.00 per share. If Tyco's stock price is
from $67.00 to $73.50, over the relevant trading period, AMP shareholders
will receive 0.7612 shares of Tyco stock, resulting in a value between
$51.00 and $55.95 per share. If Tyco's stock price is above $73.50, AMP
shareholders will receive Tyco stock valued at $55.95 per share. If Tyco's
stock price is below $60.00, Tyco can terminate unless AMP exercises its
right to close at the ratio of 0.85 and AMP can terminate unless Tyco
exercises its right to "top up" to $51.00 per share.
Prior to November 6, 1999 AMP would be prohibited from entering into
or approving another transaction unless the Merger Agreement is terminated
under certain limited circumstances as specified in the Merger Agreement.
The merger is subject to the approval of both companies shareholders
and customary regulatory approvals. The companies anticipate that the
transaction will be completed in the first calendar quarter of 1999.
Headquartered in Harrisburg, PA, AMP is the world's leading manufacturer of
electrical, electronic, fiber-optic and wireless interconnection devices
and systems. The Company has 47,000 employees in 53 countries serving
customers in the automotive, computer, communications, consumer, industrial
and power industries.
<PAGE>
Tyco International Ltd., a diversified manufacturing and service
company, is the world's largest manufacturer and installer of fire
protection systems, the largest provider of electronic security services,
the largest manufacturer of flow control valves, and has strong leadership
positions in disposable medical products, plastics and adhesives,
electrical and electronic components and underwater telecommunications
systems. The company operates in more than 80 countries around the world
and has expected fiscal 1999 revenues in excess of $17 billion.
FORWARD LOOKING INFORMATION
Certain statements in this release are "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
All forward looking statements involve risks and uncertainties. In
particular, any statements contained herein regarding the consummation and
benefits of future acquisitions, as well as expectations with respect to
future sales, operating efficiencies and product expansion, are subject to
known and unknown risks, uncertainties and contingencies, many of which are
beyond the control of the Company, which may cause actual results,
performance or achievements to differ materially from anticipated results,
performance or achievements. Factors that might affect such forward looking
statements include, among other things, overall economic and business
conditions, the demand for the Company's goods and services, competitive
factors in the industries in which the Company competes, changes in
government regulation and the timing, impact and other uncertainties of
future acquisitions.
Note to Editors: Today's news release, and other news about Tyco and AMP,
are available on the Internet at the sites HTTP://TYCOINT.COM and
http://www.amp.com.
CONTACTS for TYCO: CONTACTS for AMP:
J. Brad McGee Media: Richard Skaare
Tyco International (US) Inc. (717) 592-2323
Senior Vice President
(603) 778-9700 Investors: Doug Wilburne
(717) 592-4965
# # #
<PAGE>
Tyco International Ltd. (NYSE-TYC, LSE-TYI, BSX-TYC)
Announces the Merger with AMP (NYSE-AMP)
Transaction Value: Approximately $11.3 billion.
(based on Tyco's November 20, 1998 closing price
of $65.0625)
Exchange Ratio: TYC share price AMP per share value Exchange Ratio
--------------- ------------------- --------------
Greater than $73.50 Fixed at $55.95 Ratio changes to
maintain $55.95
$67.00 - $73.50 $51.00 to $55.95 Fixed ratio of 0.7612
$60.00 to $66.99 Fixed at $51.00 Ratio changes to
maintain $51.00
Less than $60.00 Tyco can terminate
unless AMP exercises
its right to close at
the ratio of 0.85.
AMP can terminate
unless Tyco exercises
its right to "top
up" to $51.00.
Anticipated Closing: First calendar quarter of 1999.
Termination Fee: $300 million.
Stock Option: Option to acquire 19.9% of AMP's outstanding
shares at $51.00, although the total profit
(including the termination fee) is capped at
$301 million.
Conditions Include: Approval by AMP and TYC shareholders as well as
customary regulatory approvals.
Reimbursable
Expenses: Up to $30 million.
http://www.tycoint.com
http://www.amp.com
