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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 Reorganizatio
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