Exhibit 10.4
Execution Copy
REORGANIZATION
AGREEMENT
REORGANIZATION AGREEMENT, dated as
of December 18, 2006 (this “ Agreement ”), by
and among PROTECTION ONE, INC., a Delaware corporation (the “
Company ”), POI ACQUISITION I, INC., a Delaware
corporation and minority stockholder of the Company and its
successors (“ Parent ”), QUADRANGLE CAPITAL
PARTNERS LP, a Delaware limited partnership (“ QCP
”), QUADRANGLE SELECT PARTNERS LP, a Delaware limited
partnership (“ QSP ”), QUADRANGLE CAPITAL
PARTNERS-A LP, a Delaware limited partnership (“ QCP-A
” and, together with QCP and QSP, the “ Quadrangle
Investors ”, who are collectively indirect owners of
Parent), QUADRANGLE MASTER FUNDING LTD, a Cayman Islands exempted
company incorporated with limited liability (“ QMFL
”), QDRF MASTER LTD, a Cayman Islands exempted company
incorporated with limited liability and an owner of QMFL (“
QDRF ”), QUADRANGLE DEBT OPPORTUNITIES FUND MASTER
LTD, a Cayman Islands exempted company incorporated with limited
liability and an owner of QMFL (“ QDOF ” and,
together with QMFL, QDRF and the Quadrangle Investors,
collectively, the “ Parent Stockholders
”).
WHEREAS, Parent Stockholders, Parent
and the Company desire to restructure the ownership of the Company
by Parent and Parent Stockholders;
WHEREAS, Parent will be converted to
a Delaware limited liability company immediately after and pursuant
to a plan including the Reorganization (as defined below) (the
“Conversion”); and
WHEREAS, the parties intend for the
transactions contemplated by this Agreement (including the
Conversion) to constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended
(the “ Code ”), and that this Agreement will
constitute a “plan of reorganization” for such
purposes.
NOW, THEREFORE, in consideration of
the foregoing and the respective representations, warranties,
covenants and agreements set forth in this Agreement, and intending
to be legally bound hereby, the Company, Parent and the Parent
Stockholders agree as follows:
ARTICLE I
THE REORGANIZATION
2.1.
The Reorganization . Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing Parent shall
transfer to the Company all of the Company common stock, par value
$0.01 per share (the “ Company Common Stock ”),
owned by it immediately prior to the Closing (as defined below) in
exchange for an equal number of shares of newly-issued Company
Common Stock or Company Common Stock held by the Company as
treasury shares (the “Reorganization”).
1.2.
Tax Treatment . Parent, the Company and the Parent
Stockholders intend that the Reorganization and the Conversion be
treated as a reorganization within the meaning of Section 368(a) of
the Code. Neither the Company, Parent nor any Parent
Stockholder will (i)
take any position with the Internal
Revenue Service or any other federal, state or local taxing
authority with respect to the Reorganization or Conversion that is
inconsistent with the intended tax treatment described in this
Section 1.2 or (ii) take any action that would cause the
Reorganization and Conversion to fail to qualify as a
reorganization within the meaning of Section 368(a) of the
Code.
1.3
Closing . Subject to the satisfaction or waiver of the
conditions set forth in Article IV hereto, the closing of the
Reorganization and the transactions contemplated by this Agreement
(the “ Closing ”) will take place at a date and
time to be determined by Parent and the Company (the “
Closing Date ”). The Closing shall be held at
the offices of Simpson Thacher & Bartlett LLP, 425 Lexington
Avenue, New York, New York, 10017, unless another place is agreed
to in writing by the parties hereto. At the Closing or
promptly thereafter, (i) Parent will deliver and surrender, or will
cause to be delivered and surrendered with the assistance of the
Company, to the Company the stock certificate or stock certificates
representing the Company Common Stock, in each case duly endorsed
for transfer to the Company or accompanied by stock or other
appropriate powers duly endorsed in blank, (ii) the Company will
deliver, or cause to be delivered, to Parent a stock certificate or
stock certificates representing the Company Common Stock, and (iii)
Parent shall file, or cause to be filed, a certificate of
conversion with the Secretary of State of the State of Delaware in
accordance with the requirements of the DGCL.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE PARTIES
2.1.
Representations of Parent . Parent represents and
warrants to the Company as of the date hereof that:
(a)
The delivery to the Company of the certificate or certificates
representing the Company Common Stock (with respect to which Parent
has good and marketable title) in accordance with Article I hereto
will transfer to the Company record and beneficial ownership
of the Company Common Stock owned by it free and clear of any
charge, claim, community property interest, condition, equitable
interest, lien, option, pledge security interest, right of first
refusal or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income or exercise of any other
attribute of ownership (the foregoing, collectively, “
Encumbrances ”) (other the Encumbrances created or
placed thereon by the Company).
(b)
The execution, delivery and performance by Parent of this Agreement
and consummation of the Reorganization by Parent has been duly
authorized by all necessary corporate, partnership or limited
liability company action, if applicable, and this Agreement
constitutes, and upon execution and delivery by the Company, will
constitute, a valid and binding obligation of Parent, enforceable
against Parent in accordance with its terms.
2.2.
Representations of the Parent Stockholders . Each
Parent Stockholder, severally as to itself and not jointly or as to
the other Parent Stockholders, represents and warrants to the
Company as of the date hereof that the execution, delivery and
performance by
2
such Parent Stockholder of this
Agreement and the consummation of the Reorganization by such Parent
Stockholder has been duly authorized by all necessary corporate,
partnership or limited liability company action, if applicable, and
this Agreement constitutes, and upon execution and delivery by the
Company, will constitute, a valid and binding obligation of such
Parent Stockholder, enforceable against such Parent Stockholder in
accordance with its terms.
2.3.
Representations of the Company . The Company
represents and warrants to Parent and the Parent Stockholders, as
of the date hereof:
(a)
The delivery to Parent of the certificate or certificates
representing the Company Common Stock in accordance with Article I
hereto will transfer to Parent record and beneficial ownership of
the Company Common Stock free and clear of any Encumbrances (other
than Encumbrances created or placed thereon by Parent).
(b)
The execution, delivery and performance by the Company of this
Agreement and the consummation of the Reorganization by the Company
has been duly authorized by all necessary corporate action, and
this Agreement constitutes, and upon execution and delivery by
Parent, will constitute, a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms.
(c)
The newly-issued Company Common Stock, if applicable, will be, upon
delivery of the Company Common Stock owned by Parent in accordance
with the terms of this Agreement, and payment of the par value
thereof, duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights.
ARTICLE III
TAX MATTERS
3.1.
Tax Indemnification .
(a)
Parent and each Parent Stockholder shall jointly and severally
indemnify and hold harmless the Company and its affiliates and each
of their respective officers, directors, employees, stockholders,
agents and other representatives from and against any loss, claim,
liability, expense, or other damage attributable to (i) all Taxes
(as defined below) of Parent (other than any consolidated income
Taxes arising from the consolidated group including the Company for
which Parent was the common parent and attributable to the income
of a member of such consolidated group other than Parent) with
respect to any taxable period of Parent ending on or before the
Closing Date (“ Pre-Closing Tax Period ”), (ii)
all Taxes (as defined below) of the Company attributable to its
status as a withholding agent with respect to the payment of
$6,592,346.75 the Company or its agents made on behalf of Parent to
the Parent’s stockholders on May 12, 2006 and (iii) all Taxes
(as defined below) resulting from the
Reorganization.&nb
