SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[x]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e) (2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Alarmguard Holdings, Inc.
(Name of Registrant as Specified In Its Charter)
Alarmguard Holdings, Inc.
(Name of Person(s) Filing Proxy Statement, if Other Than the Reg
istrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
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ALARMGUARD HOLDINGS, INC.
125 FRONTAGE ROAD
ORANGE, CT 06477
(203) 795-9000
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 30, 1998
The Annual Meeting of Stockholders of Alarmguard Holdings,
Inc. (the "Company") will be held at the offices of the Company
at 125 Frontage Road, Orange, Connecticut on Tuesday, June 30,
1998, at 9:00 a.m. local time for the following purposes:
(1) To ratify the sale of 35,700 shares of Series A
Convertible Preferred Stock at $1,000 per share and
5,000 shares of Series B Convertible Preferred Stock at
$1,000 per share, consummated on February 2 and 13,
1998;
(2) To elect two Class I Directors to serve for a term of
three years; and
(3) To act upon such other matters as may properly come
before the meeting or any reconvened meeting following
any adjournment thereof.
The Board of Directors has fixed the close of business on
April 30, 1998 as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting.
The Annual Meeting of Stockholders may be adjourned from
time to time without notice other than announcement at the Annual
Meeting, and any business for which notice of the Annual Meeting
is hereby given may be transacted at a reconvened meeting
following such adjournment.
We urge you to sign and date the enclosed proxy card and
return it promptly in the enclosed envelope. In the event you
are able to attend the meeting, you may revoke your proxy and
vote your shares in person.
By Order of the Board of Directors
RUSSELL R. MACDONNELL
Chairman, Chief Executive Officer and
President
Orange, CT
April 30, 1998
ALARMGUARD HOLDINGS, INC.
125 FRONTAGE ROAD
ORANGE, CT 06477
PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 30, 1998
This proxy solicitation is made by the Board of Directors of
Alarmguard Holdings, Inc. (the "Company"). By signing and
returning the enclosed proxy card, you authorize the
representatives of the Board of Directors named on it to
represent you and vote your shares.
If you attend the Annual Meeting, you may vote by ballot.
If you are not present at the Annual Meeting, your shares can be
voted only when represented by proxy. You may indicate a vote
for or against each proposal on the proxy card and your shares
will be voted accordingly. If you indicate a preference to
abstain on any proposal, no vote will be recorded. You may
withhold your vote for any nominee for director by writing his
name in the appropriate space on the proxy card. You may cancel
your proxy before balloting begins by notifying the Corporate
Secretary in writing at 125 Frontage Road, Orange, CT 06477. In
addition, you may revoke any proxy signed and returned by you at
any time before it is voted by signing and duly delivering a new
proxy bearing a later date or by attending the meeting and voting
in person. If you return a signed proxy card that does not
indicate your voting preferences, the proxy holders will vote
your shares for the listed matters and in their discretion on any
other matters that properly come before the meeting.
The cost of soliciting proxies will be borne by the Company.
In addition to solicitation by mail, proxy solicitations may also
be made personally or by telephone or telegram by directors or
officers of the Company, as yet undesignated, without added
compensation. The Company will reimburse brokers, custodians and
nominees for their expenses in sending proxies and proxy
materials to beneficial owners.
Only stockholders of record as of the close of business on
April 30, 1998 will be entitled to notice of and to vote at the
Annual Meeting of Stockholders. As of April 30, 1998, the
Company had outstanding 5,593,948 shares of its common stock, par
value $0.0001 per share (the "Common Stock"), held of record by
approximately ___ holders. Each share of Common Stock is
entitled to one vote. In addition, the Company had outstanding
35,700 shares of Series A Preferred Stock ("Series A Preferred
Stock") and 5,000 shares of Series B Preferred Stock ("Series B.
Preferred Stock") held by a total of 18 stockholders of record.
Each share of Preferred Stock is entitled to one vote for each
share of Common Stock issuable upon conversion of the Preferred
Stock. Accordingly, each share of Series A Preferred Stock is
entitled to 121.21 votes and each share of Series B Preferred
Stock is entitled to 129.03 votes.
Abstentions and broker non-votes are counted for purposes of
determining the number of shares represented at the Annual
Meeting, but are deemed not to have voted on the proposals.
Broker non-votes occur when a broker nominee, holding shares in
street name for the beneficial owner thereof, has not received
voting instructions from the beneficial owner and does not have
discretionary authority to vote. Each proposal requires the
affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy and voting.
Accordingly, abstentions, broker non-votes or the failure to
either return a proxy or to attend the Annual Meeting will be
deemed not to have voted on the proposals.
The officers and directors of the Company will vote the
shares of Common Stock beneficially owned or controlled by them
(representing approximately 37.9% of the votes to be cast by the
holders of shares of Common Stock and Preferred Stock issued and
outstanding and approximately 32.2% of the votes to be cast by
the holders of shares of Common Stock issued and outstanding) in
favor of each of the proposals.
This proxy statement and form of proxy are first being sent
to stockholders on or about May 1, 1998. The Company's 1997
Annual Report to Stockholders is being distributed along with
this proxy statement to all stockholders of record as of the
record date of the Annual Meeting of Stockholders and should be
read in conjunction with the matters set forth herein.
1. Ratification of the sale of 35,700 shares of Series A
Preferred Stock at $1,000 per share and 5,000 shares of
Series B Preferred Stock at $1,000 per share.
On February 2 and 13, 1998, the Company completed an
offering of 40,000 shares of Convertible Preferred Stock (35,000
shares of Series A Preferred Stock and 5,000 shares of Series B
Preferred Stock) at $1,000 per share yielding gross proceeds
totaling $40 million. As part of the offering, the Company
issued 700 additional shares of the Series A Preferred Stock in
exchange for $700,000 of the Company's subordinated debt. Of
these shares, Russell R. MacDonnell, Chairman, Chief Executive
Officer and President of the Company received 125 shares and
David Heidecorn, Executive Vice President and Chief Financial
Officer, received 75 shares.
Each share of Series A Preferred Stock pays current
quarterly dividends of $50 per annum. Each holder of the Series
A Preferred Stock and Series B Preferred Stock has the right to
convert shares, at the option of the holder, at any time into
shares of the Company's Common Stock at the conversion price of
$8.25 per share and $7.75 per share, respectively, subject to
certain anti-dilution provisions. At the initial date of
issuance, the market value of the Common Stock of the Company was
$10.00 per share. The Series A Preferred Stock and Series B
Preferred Stock also rank prior to all other classes of equity
securities of the Company, including the Common Stock, as to
dividends and distribution of assets upon liquidation,
dissolution or winding up of the Company. The holders of the
newly issued Preferred Stock have the right to elect two members
to the Company's expanded Board of Directors. Holders of shares
of Series A Preferred Stock and Series B Preferred Stock also
have the right to vote in all matters submitted to a vote of
stockholders of the Company, with each share being entitled to
cast that number of votes equal to the number of shares of Common
Stock into which the Series A Preferred Stock or Series B
Preferred Stock is convertible. Accordingly, the holders of
Series A Preferred Stock and Series B Preferred Stock will be
entitled to cast 4,972,434 votes for the election of directors at
the Annual Meeting, which equals 47.1% of the votes entitled to
be cast at the Meeting.
Concurrent with the offering, the Company increased its
credit facility from $60 million to $90 million. The proceeds
from the offering of the Series A Preferred Stock and the Series
B Preferred Stock and borrowings from the expanded credit
facility have been and are intended to continue to be used to
finance acquisitions and expand the Company's Direct Marketing
and Dealer Programs.
If all of the shares of Series A Preferred Stock and Series
B Preferred Stock were converted into Common Stock of the
Company, the holders of the Convertible Preferred Stock would,
collectively, own approximately 47.1% of the Common Stock of the
Company. Under the rules of the American Stock Exchange
("Amex"), stockholder approval is required for the sale or
issuance by the Company of Common Stock (or securities
convertible into Common Stock) equal to 20% or more of presently
outstanding stock for less than the greater of book or market
value of the Common Stock. Because the conversion of the Series
A Stock and Series B Stock could result in the issuance of shares
of Common Stock in excess of 20% of the number of shares of
Common Stock outstanding before such conversion for a price less
than the greater of book or market value of such Common Stock,
the Company seeks the approval of such issuance in order to
comply with the Amex standards.
The Amex standards also require stockholder approval for
transactions deemed to constitute a "change in control."
Although the Company does not believe that the issuance of the
Series A Preferred Stock and Series B Preferred Stock or the
issuance of the Common Stock upon conversion of the Series A
Preferred Stock and Series B Preferred Stock constitutes a
"change in control", if the transactions were to be so construed,
the approval sought hereby would also be effective to satisfy the
stockholder vote require thereby.
The issuance of Common Stock upon the conversion of the
Series A Preferred Stock and Series B Preferred Stock will have
no effect on the rights or privileges of existing holders of
Common Stock except that the economic interests of each
stockholder will be diluted as a result of such issuance.
Further, prior to conversion, holders of Series A Preferred Stock
will be entitled to receive dividends and holders of Series A
Preferred Stock and Series B Preferred Stock will be entitled to
receive distributions upon a liquidation of the Company in
preference to claims of holders of the Common Stock.
Accordingly, the Company is seeking ratification by holders
of Common Stock of the sale of the Convertible Preferred Stock at
this meeting of stockholders. In the event that the stockholders
do not ratify the transaction described above, the Common Stock
of the Company could become subject to possible delisting from
trading by the Amex, which management of the Company believes
would not be in the best interest of the Company's shareholders.
This proposal will be determined solely by the holders of
Common Stock. Shares of Series A Preferred Stock and Series B
Preferred Stock will not be entitled to vote on this proposal.
The Board of Directors recommends a vote FOR the proposal
set forth above.
2. Election of Directors
Directors Standing for Election
The Board of Directors is currently divided into three
classes. The term of office of Directors in Class I expires at
the 1998 annual meeting. Class II Directors serve for a two-year
term and such term will expire at the 1999 annual meeting. Class
III Directors serve for a three-year term and such term will
expire at the year 2000 annual meeting. The Board of Directors
proposes that the nominees described below, each of whom are
currently serving as Class I directors, be re-elected to Class I
for a new term of three years or until their successors are duly
elected and qualified.
Each of the nominees has consented to serve a three-year
term. If either of them should become unavailable to serve as a
director, the Board may designate a substitute nominee. In that
case, the persons named as proxies will vote for the substitute
nominee designated by the Board.
The following table sets forth the age and title of each
nominee director and each director continuing in office. Also
set forth below are descriptions of such person's additional
business experience during the past five years.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
Name Age Position
David Heidecorn 41 Executive Vice President,
Chief Financial Officer
and Director
Thomas W. Janes 42 Director
DIRECTORS WHOSE TERMS HAVE NOT EXPIRED
Name Age Position
Russell R. 50 Chairman, Chief Executive
MacDonnell Officer and
President
Stuart L. Bell 44 Director
Michael E. Cahr 58 Director
Michael M. Earley 42 Director
Stephen L. Green 47 Director
Timothy A. Holt 45 Director
Jeffrey T. Leeds 42 Director
Class I Directors. The directors standing for election are:
DAVID HEIDECORN
David Heidecorn serves as Executive Vice President, Chief
Financial Officer and a director of the Company. Mr. Heidecorn
is one of the founding investors in the Company. In 1984, Mr.
Heidecorn joined General Electric Company in the International
Sector. From 1986 to 1992, Mr. Heidecorn was employed by GE
Capital Corporation as a Vice President in the Leveraged Finance
Group and a Senior Vice President for the Corporate Finance
Group, where he led the Bankruptcy and Reorganization Finance
activity for the Northeast. He received his B.A. in Economics
from Lehigh University and his M.B.A. in Finance from Columbia
University.
THOMAS W. JANES
Thomas W. Janes serves as Managing Director of Triumph
Capital Group, Inc., ("Triumph Capital"), a private equity money
management firm which, through its affiliates, manages Triumph
Partners III, L.P., Triumph-California Limited Partnership and
Triumph-Connecticut Limited Partnership, of which Mr. Janes is a
general partner. He has been affiliated with Triumph Capital
since 1990. Mr. Janes also serves as a director of Ascent
Pediatrics, Inc. and Dairy Mart Convenience Stores, Inc.
The Board of Directors recommends a vote FOR the nominees set
forth above.
Class II Directors. The following Class II directors' terms will
expire at the 1999 annual meeting:
STEPHEN L. GREEN
Stephen L. Green is general partner of Canaan Partners, a
venture capital fund located in Rowayton, Connecticut. Prior to
joining Canaan Partners in November 1991, he served as Managing
Director in GE Capital's Corporate Finance Group for more than
five years. Mr. Green also serves as director for the following
public companies: Chartwell RE Corporation; Suiza Foods
Corporation; and Advance Paradigm Inc.
MICHAEL E. CAHR
Michael E. Cahr serves as Chairman of Allscripps Inc., a
privately-owned company engaged in providing medication
management solutions through the use of technology. He has
served in this position since 1994 and also served as President
and Chief Executive Officer until October 1997. He served as a
Venture Group Manager for Allstate Venture Capital, a division of
Allstate Insurance Company, between 1987 and June 1994. He
served as a director of Triton Group Ltd., from June 1993 to
April 1997 and is also a director of LifeCell Corporation, Optek
Technologies, Inc.
Class III Directors. The following Class III directors' terms
will expire at the 2000 annual meeting:
RUSSELL R. MACDONNELL
Russell R. MacDonnell serves as the Chief Executive Officer
and Chairman of the Board of Directors of the Company. From 1973
to 1985, Mr. MacDonnell served as President of Sonitrol Security
Systems ("Sonitrol Security") which was the Northeast distributor
for Sonitrol Corporation. From July 1986 to May 1991, Mr.
MacDonnell served as Chairman and Chief Executive Officer of
SecurityLink Corporation, which provided security alarm services
and equipment in the Northeast, Midwest, Mid-Atlantic and
Southeast regions. In December 1991, Mr. MacDonnell founded the
Company. Mr. MacDonnell is a member of the Fairchester Chapter
of Young Presidents Organization, the American Society for
Industrial Security, the National Burglar and Fire Alarm
Association, as well as various other security alarm industry
organizations. Mr. MacDonnell received a B.A. from Williams
College in 1970 and a J.D. from Boston University School of Law
in 1973.
MICHAEL M. EARLEY
Michael M. Earley serves as President of Triton Group
Management, Inc., a management consulting firm. He served as
President and Chief Executive Officer of Triton Group Ltd., from
February 1996 to April 1997 and as a director since June 1993.
Mr. Earley served as President and Chief Operating Officer (June
1994 to January 1996) and Senior Vice President and Chief
Financial Officer of Triton and Intermark, Inc. (1991 to 1994).
He is also a director of Ridgewood Hotels, Inc.
STUART L. BELL
Stuart L. Bell served as the Executive Vice President and
Chief Financial Officer of CUC International from 1983 to January
1995 and is the Vice Chairman of Interval. Mr. Bell also serves
as director of Harbinger Corp. and International
Telecommunication Data Systems, Inc. and the Chairman of
Innovative Medical Research, Inc.
Directors Nominated by Preferred Stockholders:
TIMOTHY A. HOLT
Mr. Holt has been Chief Investment Officer for Aetna Inc.
since September 1997. Mr. Holt has been employed by Aetna since
1977 in a variety of positions, including Senior Vice President
and Chief Financial Officer for Aetna Retirement Services
beginning in January, 1996 and prior to that as Vice President,
Portfolio Management Group. Mr. Holt received a B.A. from the
University of Connecticut and an MBA from the Amos Tuck School at
Dartmouth College. Mr. Holt is a Chartered Financial Analyst.
JEFFREY T. LEEDS
Mr. Leeds has been a principal of Advance Capital
Management, LLC, a private equity firm located in New York, since
1995. Mr. Leeds is also President and co-founder of Leeds Group
Inc., a New York private investment banking firm founded in 1993.
From 1986 to 1993, Mr. Leeds worked in the investment banking
firm of Lazard Freres & Co. Mr. Leeds presently serves on the
boards of The Edison Project, Elsinore Corporation and The
World Resources Institute. Mr. Leeds graduated from Yale
University, attended Oxford University as a Marshall Scholar and
received a law degree from Harvard law School.
Executive Officers of the Registrant
The following table provides certain information about the
Company's current Executive Officers not serving as directors of
the Company:
Name Age Position
Gregory J. Westhoff 48 Vice President of the Company
and President and Chief Operating
Officer of Alarmguard, Inc.
Joseph J. Monachino 47 Vice President, Sales and
Marketing of Alarmguard, Inc.
Peter M. Rogers 44 Vice President, Operations of
Alarmguard, Inc.
Gregory J. Westhoff serves as Vice President of the Company
and President and Chief Operating Officer of Alarmguard, Inc.
Mr. Westhoff was the Vice President, Mid-Atlantic Region, and
Chief Operating Officer of SecurityLink Corporation, where he
served from December 1989 until May 1992 in Philadelphia,
Pennsylvania. Prior to joining SecurityLink Corporation, Mr.
Westhoff was Eastern Regional Manager of Westec Security in
Philadelphia from 1988 to 1989. From 1985 to 1988, Mr. Westhoff
was District Manager of Rollins Protective Services and General
Manager for Warner Amex Security Systems from 1981 to 1985. Mr.
Westhoff was General Manager for American Alarm from 1976 to 1981
and District Manager for Westinghouse Security System from 1969
to 1976. Mr. Westhoff graduated from Edinboro University of
Pennsylvania in 1969.
Joseph J. Monachino serves as Vice President, Sales and
Marketing of Alarmguard, Inc. Mr. Monachino joined Alarmguard,
Inc. in July 1994 to manage its sales and marketing functions.
Prior to joining Alarmguard, Inc., Mr. Monachino formed his own
marketing consulting group located in Westport, Connecticut
serving clients including Holmes Protection Group, LTD and
Dictograph Franchise Corporation. Mr. Monachino also served as
Vice President of Marketing for SecurityLink Corporation from
1987 to 1991. Mr. Monachino earned his B.A. from Franklin
College in 1973 and a Masters of Divinity from Yale University in
1976.
Peter M. Rogers serves as Vice President, Operations, of
Alarmguard, Inc. Mr. Rogers joined Alarmguard, Inc. in November
of 1994 to direct Alarmguard's MIS, telecommunications,
purchasing and inventory, training and standards/procedures
areas. Mr. Rogers served as Vice President of Operations with
SecurityLink Corporation from 1989 to 1991. Mr. Rogers served as
Eastern Regional Manager with Eddie Bauer from 1981 to 1984,
Beekly Corporation as Vice President Operations from 1984 to
1989, and Windsor Marketing Group as Vice President of Sales from
1991 to 1994. Mr. Rogers earned his B.A. from Harvard University
in 1976 and his M.B.A. from Rensselaer Polytechnic Institute in
1990.
Meetings and Certain Committees of the Directors
The Board of Directors held four regular meetings and four
telephonic meetings during 1997. All directors attended at least
75% of the total number of meetings of the Board of Directors and
all committees of the Board of Directors on which they served.
The Board of Directors has delegated certain functions to
the following standing committees:
The Audit Committee recommends to the Board of Directors the
engagement of the independent auditors of the Company and reviews
with the independent auditors the scope and results of the
Company's audits, the Company's internal accounting controls, and
the professional services furnished by the independent auditors
of the Company. The Audit Committee held one meeting during
1997. The current members of the Audit Committee are Messrs.
Bell and Earley.
The Compensation Committee's functions are to review,
approve, recommend and report to the Chief Executive Officer and
the Board of Directors matters specifically relating to the
compensation of the Company's Chief Executive Officer and other
key executives. The committee held no meetings during 1997, but
did meet in March, 1998 to review the total compensation for the
operating management of the Company. The current members of the
Compensation Committee are Messrs. Bell, Cahr and Green.
The Company does not have a nominating committee of its
Board of Directors.
Compensation of Directors
In 1997, each director of the Company who was not employed
by the Company received $1,000 for each meeting attended in
person or a committee thereof. Directors are also reimbursed for
their out of pocket expenses in attending meetings for the
Company.
Directors who are not employees of the Company also received
options to purchase shares of the Company's Common Stock as
follows:
(1) Each director of the Company who was first elected or
appointed a director at the time of the merger with Triton
Group Ltd. on April 15, 1997, received a non-discretionary
automatic grant of non-qualified ten-year stock options for
the purchase of 10,000 shares of the Company's Common Stock
at an exercise price of $7.50, the value of the Common Stock
at date of grant. Options granted vest ratably over a three-
year period.
(2) Thereafter as of the day after the Annual Meeting of
Stockholders of the Company to be held in calendar years
1998 and 1999, each non-employee Director will receive
additional non-discretionary automatic grants of non-
qualified stock options for the purchase of 10,000 shares of
the Company's Common Stock in each such year. The exercise
price of each share of the Company's Common Stock subject to
any eligible Director's option will be equal to the fair
market value of a share of the Company's Common Stock on
the date such option is granted.
Certain Transactions
Prior to April 15, 1997, Triumph Capital and BF Partners
("BF Partners") held debentures issued by the Company (the "Old
Debentures") in the principal amounts of $2,014,800 and $99,000
respectively. Stuart L. Bell , a member of the Company's Board,
is a general partner of BF Partners. Thomas W. Janes, a member
of the Company's Board, is a managing director of Triumph
Capital.
Pursuant to the terms of the Old Debentures, Alarmguard paid
interest to each Subordinated Debt Holder at the rate of 10% per
annum through April 15, 1997 and the Old Debentures were to be
redeemed at par by March 31, 1998. On April 15, 1997, in
connection with the consummation of the Merger with Triton Group
Ltd. (the "Merger"), the Company refinanced the Old Debentures
with newly issued subordinated debentures (the "New Debentures").
The Old Debentures held by Triumph Capital were redeemed at par.
The Old Debentures of BF Partners were exchanged for New
Debentures and BF Partners purchased additional New Debentures in
the principal amount of $301,000. The New Debentures bear
interest at 15% per annum. In addition, the Company issued
warrants to each of the former holders of Old Debentures to
purchase an aggregate of 215,939 shares of Common Stock at an
exercise price of $11.11 per share. Russell R. MacDonnell and
David Heidecorn received $125,000 and $75,000 in New Debentures
as well as a pro rata share of the Warrants. The New Debentures
were paid to Messrs. MacDonnell and Heidecorn in lieu of cash
bonus compensation.
The Company paid Triton Group Management, Inc., an entity in
which Mr. Earley, a Director of the Company, is the President and
50% stockholder, $140,000 during 1997 for management consulting
services in connection with the disposition of certain assets of
the Company and in connection with operating as a public company.
On July 1, 1993, the Company entered into a lease with
respect to the Company's executive offices, central monitoring
station and administrative headquarters located at 125 Frontage
Road, Orange Connecticut, with 125 Frontage Road LLC, a company
controlled by Russell R. MacDonnell, Chairman, Chief Executive
Officer and President of the Company. This lease expires on June
30, 2005 and provides for monthly rent payments of $27,000 per
month for an aggregate of $324,000 per year. The Company
believes that the lease is on terms no less favorable than are
available from an unaffiliated third party.
The wife of Russell R. MacDonnell owns a controlling
interest in Rapid Response ("Rapid Response"), a company that
performs wholesale security alarm monitoring services. In
connection with the Company's acquisition program, the Company
from time to time purchases subscriber accounts from sellers
which utilize the service of Rapid Response pursuant to contracts
that pre-date such acquisitions. The Company allows such
contracts to be completed before integrating the subscribers into
the Company's monitoring services. The Company paid Rapid
Response $73,000 in 1997. The Company believes that the
transactions with Rapid Response are on terms no less favorable
than are available from unaffiliated third parties.
Ownership of Company Stock by Certain Holders, Directors and
Officers
The following table sets forth, as of the close of business
on April ____, 1998, information as to the ownership of the
Company's Common Stock, including (i) those stockholders known to
the Company to be the beneficial owners of more than 5% of the
outstanding shares of the Company's Common Stock (based solely
upon filings by each of such stockholders with the Securities and
Exchange Commission (the "Commission"), on Schedule 13D or
Schedule 13G), and (ii) each director and the nominees for
director, (iii)
each of the executive officers named in the Summary Compensation
Table and (iv) the directors and all executive officers as a
group.
Beneficial Owner Shares Percent of
Beneficially Class
Owned
Canaan Entities (1) 1,438,264 23.05%
105 Rowayton Avenue
Rowayton, CT 06853
OZ Management, L.L.C.(2) 1,121,212 16.70%
153 E. 53RD Street, 44th
Floor
New York, NY 10022
Triumph-Connecticut 767,554 13.72%
Limited Partnership
60 State Street, 21st
Floor
Boston, MA 02109
Advance Capital Partners, 878,787 13.58%
L.P.(3)
Advance Capital Offshore
Partners, L.P.
660 Madison Avenue, 15th
Floor
New York, NY 10021
Elliott Associates L.P. 484,848 7.98%
(4)
712 Fifth Avenue, 36th
Floor
New York, NY 10019
Ryback Management 369,430 6.60%
Corporation (5)
7711 Carondelet Ave.
Box 16900
St. Louis, MO 63105
The Capital Group 360,000 6.44%
Companies, Inc. (6)
333 South Hope Street
Los Angeles, CA 90071
Lehman Brothers Capital 606,061 9.78%
Partners III, L.P.(7)
c/o Lehman Brothers
Three World Financial
Center
New York, NY 10285
Aetna Life Insurance 606,061 9.78%
Company (8)
151 Farmington Avenue
Hartford, CT 06516
Exeter Capital Partners 303,030 5.14%
IV, L.P. (9)
10 East 53rd Street
New York, NY 10022
Russell R. MacDonnell (10) 144,550 2.56%
David Heidecorn (11) 71,708 1.27%
Stuart L. Bell (12) 125,719 2.22%
Michael E. Cahr (13) 10,833 *
Michael M. Earley (14) 43,453 *
Stephen L. Green (15) 1,438,264 23.05%
Thomas W. Janes (16) 767,554 13.72%
Joseph J. Monachino (17) 8,830 *
Peter M. Rogers (18) 4,552 *
Gregory J. Westhoff (19) 37,969 *
Jeffrey T. Leeds (20) 878,787 13.58%
Timothy A. Holt (21) 606,061 9.78%
Directors and Executive 4,138,280 52.19%
Officers as a Group
(12 persons) (22)
* Less than 1%
(1) Shares indicated as beneficially owned by Canaan include
231,014 shares beneficially owned by Canaan Venture Limited
Partnership and 562,089 shares beneficially owned by Canaan
Venture Offshore Limited Partnership. Each of the Canaan
entities has sole voting power with respect to its shares.
Shares indicated as beneficially owned by Canaan include shares
issuable upon the conversion of 5,000 shares of Series B
Preferred Stock.
(2) Issuable upon the conversion of 9,250 shares of Series A
Preferred Stock.
(3) Issuable upon the conversion of 7,250 shares of Series A
Preferred Stock.
(4) Issuable upon the conversion of 4,000 shares of Series A
Preferred Stock.
(5) Includes 369,430 shares beneficially owned by Lindner Growth
Fund. Ryback has sole voting and dispositive power over all of
such shares.
(6) Includes The Capital Group Companies, Inc., Capital Research
and Management Company and SMALLCAP World Fund, Inc.
(7) Issuable upon the conversion of 5,000 shares of Series A
Preferred Stock.
(8) Issuable upon the conversion of 5,000 shares of Series A
Preferred Stock.
(9) Issuable upon the conversion of 2,500 shares of Series A
Preferred Stock.
(10) Includes 15,152 shares of Common Stock issuable upon the
conversion of 125 shares of Series A Preferred Stock, 5,868
shares of Common Stock issuable upon the exercise of Warrants and
options exercisable within 60 days to purchase 42,773 shares of
Common Stock.
(11) Includes 9,091 shares of Common Stock issuable upon the
conversion of 75 shares of Series A Preferred Stock, 3,521 shares
of Common Stock issuable upon the exercise of Warrants and
options exercisable within 60 days to purchase 23,886 shares of
Common Stock.
(12) Includes 9,200 shares held by Mr. Bell as custodian for the
benefit of his three minor children and 6,105 shares held by BF
Partners, of which Mr. Bell is a partner. Mr. Bell has sole
voting power with respect to such 6,105 shares. Also includes
48,484 shares of Common Stock issuable upon the conversion of 400
shares of Series A Preferred Stock, 18,777 shares of Common Stock
issuable upon the exercise of Warrants and options exercisable
within 60 days to purchase 3,333 shares of Common Stock.
(13) Includes options exercisable within 60 days to purchase
3,333 shares of Common Stock.
(14) Includes 120 shares held by Mr. Earley's spouse and options
exercisable within 60 days to purchase 3,333 shares of Common
Stock.
(15) Mr. Green is a general partner of various venture capital
investment funds that may be deemed to be affiliated with the
Canaan entities, and thus, under the rules and regulations of the
Commission, may be deemed to be the beneficial owner of the
shares of the Company's Common Stock owned by those funds.
Accordingly, such shares are included in the table as
beneficially owned by Mr. Green. Mr. Green is not a general
partner of the Canaan entities, and has no voting power with
respect to such shares. Mr. Green disclaims beneficial ownership
of such shares.
(16) Mr. Janes is a general partner of Triumph, and thus, under
the rules and regulation of the Commission, may be deemed to be
the beneficial owner of Triumph's Common Stock. Accordingly,
such shares are included in the table as beneficially owned by
Mr. Janes. Triumph has sole voting power with respect to such
shares. Mr. Janes disclaims beneficial ownership of such shares.
(17) Includes options exercisable within 60 days to purchase
8,830 of Common Stock.
(18) Includes options exercisable within 60 days to purchase
4,552 of Common Stock.
(19) Includes options exercisable within 60 days to purchase
14,968 of Common Stock.
(20) Issuable upon the conversion of 5,000 shares of Series A
Preferred Stock beneficially owned by Advance Capital Management
("Advance"). Mr. Leeds is the founder and principal of Advance,
and thus, under the rules and regulations of the Commission, may
be deemed to be the beneficial owner of such shares.
Accordingly, such shares are included in the table as
beneficially owned by Mr. Leeds. Mr. Leeds disclaims beneficial
ownership of such shares.
(21) Issuable upon the conversion of 5,000 shares of Series A
Preferred Stock beneficially owned by Aetna Life Insurance Co.
("Aetna"). Mr. Holt is the Chief Investment Officer of Aetna,
and thus, under the rules and regulations of the Commission, may
be deemed to be the beneficial owner of such shares.
Accordingly, such shares are included in the table as
beneficially owned by Mr. Holt. Mr. Holt disclaims beneficial
ownership of such shares.
(22) Includes 105,008 shares issuable upon exercise of options
and 2,202,736 shares issuable upon conversion of Series A
Preferred Stock and Series B Preferred Stock.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows the cash compensation paid by the
Company and its subsidiaries as well as certain other
compensation paid or accrued in 1996 and 1997 to the Chairman of
the Board and Chief Executive Officer of the Company, and the
four most highly compensated Executive Officers of the Company.
The Executives of the Company were not executives of the
predecessor company, and as such their 1995 compensation is not
included below.
SUMMARY COMPENSATION TABLE
Long
Term
Annual Compensation Compensa
tion
Securiti
es
Underlyi All
ng Other
Year Salary Bonus(1) Options Compens (4)
(#)(2) ation
Russell R. 1997 $275,000 $90,000 110,000 $81,254 (3)(5)
MacDonnell, 1996 271,882 67,500 -0- 1,758
Chairman,
President and
Chief
Executive
Officer
David Heidecorn 1997 200,000 65,000 65,000 51,780 (3)
Executive 1996 193,349 57,500 -0- 1,349
Vice President
and Chief
Financial
Officer
Gregory J. 1997 150,000 65,000 40,000 1,348
Westhoff 1996 140,835 40,000 -0- 1,016
Vice
President and
President of
Alarmguard,
Inc.
Joseph J. 1997 121,000 15,000 16,000 2,219
Monachino, 1996 120,069 15,000 -0- 1,593
Vice
President, Sales
and Marketing
of Alarmguard,
Inc.
Peter M. Rogers 1997 100,000 30,000 16,000 1,719
Vice 1996 95,000 20,000 -0- 1,356
President,
Operations
of
Alarmguard, Inc.
(1) Of the compensation reported as Bonus and Other Compensation
in 1997 for Messrs. MacDonnell and Heidecorn, $125,000 and
$75,000, respectively, was paid in the form of New
Debentures. See "Certain Transactions."
(2) Number of shares of Common Stock underlying options granted
on April 16, 1997.
(3) Includes special one time bonuses in 1997 provided to
Messrs. MacDonnell and Heidecorn in connection with the
merger with Triton Group Ltd.
(4) Other compensation consists of contributions by the Company
on behalf of each of the named individuals in connection
with the Company's 401(k) Savings Plan.
(5) Includes $3,773 of life insurance premiums paid by the
Company.
Stock Options
The following table sets forth certain information regarding
stock options granted in 1997 to the five individuals named in
the Summary Compensation Table. In addition, in accordance with
the Commission's rules, the table also shows a hypothetical
potential realizable value of such options based on assumed rates
of annual compounded stock price appreciation of 5% and 10% from
the date the options were granted over the full option term. The
assumed rates of growth were selected by the Commission for
illustration purposes only, and are not intended to predict
future stock prices, which will depend upon market conditions and
the Company's future performance and prospects.
OPTION GRANT IN LAST FISCAL YEAR (1997)
Percent Potential
of Realizable
# Of Total Exerci Expir Value at
Options Options se ation Assumed Annual
Granted Granted Price Date Rates
to ($/Sh) of of Stock Price
Employees Grant Appreciation
for Option
Term
5% ($) 10%($)
Russell R. 110,000 32% $7.50 4/16/07 $518,838 $1,314,838
David 65,000 19% 7.50 4/16/07 306,586 776,949
Heidecorn
Gregory J. 40,000 12% 7.50 4/16/07 188,668 478,123
Westhoff
Joseph J. 16,000 5% 7.50 4/16/07 75,467 191,249
Monachino
Peter M. 16,000 5% 7.50 4/16/07 75,467 191,249
Rogers
A total of 339,000 stock options were granted to certain
members of management on April 16, 1997 at $7.50 per share. The
five individuals named in the above table received 247,000
options. The options expire on April 16, 2007 and vest over four
years.
Options Exercised and Holdings
The following table sets forth certain information
concerning stock option exercises by the five individuals named
in the Summary Compensation Table during 1997, including the
aggregate value of gains on the date of exercise. In addition,
this table includes the number of shares covered by both
exercisable and non-exercisable stock options as of December 31,
1997. Also reported are the values for "in-the-money" options
which represent the positive spread between the exercise price of
any such existing stock options and the closing market price of
the Common Stock at December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-
END OPTION VAUES
Number of Value of
Unexercised Unexercised
Options in the Money
at Fiscal Year- Options
End (1) at Fiscal Year-
End (2)
Exerc Unexercis Exerci Unexerc
isable able sable isable
Russell R. MacDonnell 42,773 84,524 $449,116 $887,503
David Heidecorn 23,886 49,762 250,808 522,502
Gregory H. Westhoff 14,968 30,920 157,167 324,661
Joseph J. Monachino 8,830 12,414 92,718 130,347
Peter M. Rogers 4,552 12,184 47,796 127,932
(1) Number of options that are exercisable and unexercisable as
of June 30, 1998.
(2) Value of exercisable and unexercisable options with a
December 31, 1997 market price of $10.50. Grants in 1994 and
1995 have a $0.33 exercise price and the 1997 grant has a $7.50
exercise price.
Severance Agreements
Messrs. MacDonnell, Heidecorn and Westhoff are parties to
severance agreements (the "Severance Agreements") with the
Company. The Severance Agreements provide that in the event each
is involuntarily terminated by the Company without "cause" or
resigns for "good reason" (as such terms are defined in the
Severance Agreements), he will be provided with the following
termination payments and benefits: (a) any earned and accrued but
unpaid installment of his base salary; (b) an amount equal to the
sum of his annual base salary and the average of his last three
years' bonus compensation earned from the Company; (c)
reimbursements of reasonable expenses incurred for a period of
one year in seeking subsequent employment, to a maximum of
$25,000; (d) benefit continuation for a period of one year; and
(e) awards under the 1997 Stock Incentive Plan will continue to
vest or be exercisable for the duration of the term of such award
as if his employment with the Company had continued during such
term. In the event of termination of employment by reason of his
death, the Company will pay to his designated beneficiary or
estate the amounts and benefits described in subparagraphs (a)
and (b) above, and will allow an acceleration of the vesting and
exercisability of all awards granted under the 1997 Stock
Incentive Plan. In the event of termination of employment for
cause, disability, or his resignation without good reason, then
the Company will pay to him only the payments and benefits
described in subparagraph (a) above (except that, in the case of
a disability, such Executive will also receive the benefits set
forth in subparagraph (e) above).
In the event of the termination or resignation for any
reason after a "change in control" (as such term is defined in
the Severance Agreements) of the Company, the Company will pay to
each individual (i) the amounts described in subparagraph (a) in
the previous paragraph, (ii) the amounts described in paragraph
(b) and (iii) the benefits described in subparagraphs (c) and (d)
in the previous paragraph (the "Change in Control Benefits").
Termination or resignation for any reason after a change in
control will also cause the accelerated vesting and lapse of
restriction provisions of the 1997 Stock Incentive Plan to become
applicable to the awards granted. The Change in Control Benefits
and the accelerated vesting and lapse in restriction provisions
of the 1997 Stock Incentive Plan will also be applicable in the
event of his termination of employment by the Company within the
four month period (i) prior to the date of a change in control of
the Company, (ii) following commencement of certain `tender
offers" for the Company's stock, (iii) following the execution by
the Company of an agreement the consummation of which would
constitute a change in control, (iv) following the solicitation
of proxies for the election of directors by anyone other than the
Company, or (v) following the approval of the Companys'
stockholders of certain transactions the consummation of which
would result in a change of control.
The Severance Agreements provide for certain non-competition
restrictions on Messrs. MacDonnell, Heidecorn and Westhoff.
Pursuant to the Severance Agreements, they agree that they will
not (with certain exceptions) (i) during the period of their
employment with the Company, and (ii) in the event of the their
termination or resignation from their employment for any reason
(other than in connection with a change in control), for the one-
year period thereafter, own, manage, lend to or join (as an
employee or otherwise) any business which "competes" with the
Company, as defined in the Severance Agreements (generally, an
entity will be deemed to compete with the Company if it is
engaged in the residential and/or commercial security alarm
business).
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the
"Committee"), which consists of three non-employee directors, is
responsible for reviewing and making recommendations to the Board
with respect to the Company's executive compensation policies.
The Company believes that there should be a direct
relationship between executive compensation and value delivered
to stockholders and the Company's compensation structure is based
on this philosophy. The Company believes that the base
compensation for its executives should be competitive, enabling
the Company to attract and retain the best available people.
Additionally, the Company believes that bonus compensation based
on realistic targets provides the motivation to the executive to
strive to meet or exceed Company goals. Since the inception of
Alarmguard in 1992, the Company has used stock options as a means
of providing performance-based compensation to all executive
officers. The Company believes that stock options are a key
ingredient to executive compensation because they serve to align
the interest of executive officers with stockholder value.
The compensation of the Company's Chief Executive Officer,
Russell R. MacDonnell, like the other executive officers,
consists of a combination of salary, bonus and stock options. In
addition to those factors applying generally to all executives as
indicated below, Mr. McDonnell's compensation for fiscal 1997
reflects the Company's successful merger with Triton Group Ltd.
in April 1997, as well as the Company's growth in MRR,FN1 EBITDA
FN2 and Adjusted EBITDA FN3 pursuant to the Company's aggressive
growth plan.
The Company has entered into severance agreements with the
three key executives which provide for termination benefits under
certain circumstances, including a termination without cause or
the termination or resignation in connection with a change in
control of the Company. The termination benefits include one-
year's annual salary, an amount representing the average annual
bonus amount paid over the last three years and the continuation
of certain health and welfare plan benefits for up to one year.
In determining the compensation of the Company's executive
officers, which includes salary, bonus and stock options, the
Committee considers a combination of objective and subjective
performance criteria, all of which the Committee believes
___________________________
FN1 MRR means monthly recurring revenue that the Company (or, if
the context requires, another company in the security alarm
industry) is entitled to receive under contracts in effect at the
end of such period. MRR is a term commonly used in the security
alarm industry as a measure of the size of the company. It does
not measure profitability or performance, and does not include
any allowance for future subscriber attrition or for
uncollectible accounts receivable.
FN2 EBITDA is earnings before interest, taxes, depreciation and
amortization.
FN3 Adjusted EBITDA is derived by adding to EBITDA the expenses
net of related revenues associated with the Company's Direct
Marketing Program and acquisition integration expenses.
- ---------------------------
contribute to stockholder value. Objective criteria include:
- MRR, EBITDA and Adusted EBITDA growth
- MRR gross attrition
The Committee, in conjunction with the Board of Directors,
reviews the business plans and projections prepared by management
and compares the Company's actual performance to the objective
criteria set forth in such plans and projections.
Subjective criteria considered by the Committee in
determining executive officer compensation include the
consummation of appropriately priced acquisitions, the successful
integration of such acquisitions, growth in Alarmguard's direct
marketing and dealer programs, the enhancement of the Company's
central monitoring station and facilities and the success in
capital raising. Bonuses paid for fiscal year 1997 performance
reflect Alarmguard's merger with Triton Group Ltd. in April 1997,
the successful acquisition of several security companies,
principally Protective Alarms, Inc., and internal growth
programs. The Committee also considers compensation paid to
other persons with comparable skills and experience in the
security industry and other service industries, the Company's
performance in comparison to its competitors and performance in
each executive's specific area of responsibility.
Submitted by the Compensation
Committee of
The Company's Board of Directors,
April 15, 1998
Stuart L. Bell
Michael E. Cahr
Stephen L. Green
STOCK PERFORMANCE GRAPH
The following chart compares the cumulative total
stockholder returns on the Common Stock since April 16, 1997 (the
date on which the Common Stock was first traded on the American
Stock exchange following the Merger with Triton Group Ltd.) to
the cumulative total returns over the same period of the Russell
2000 index and a peer group index comprised of the common stock
of Borg Warner Security Corporation, The Pittston Brinks Group,
Protection One, Inc., and Response USA (the "Peer Group"). The
Peer Group is based on the selection of companies operating in
the security alarm monitoring business. The annual returns for
the Peer Group index are weighted based on the capitalization of
each company within the Peer Group at the beginning of each
period for which a return is indicated. The chart assumes the
value of the investment in the Common Stock and each index was
$100 at April 16, 1997 and that all dividends were reinvested.
[Filed with the Commission under cover of Form SE, dated April 20, 1998.]
Compliance With Section 16(a) of the Securities and Exchange Act of 1934
Section 16(a) of the Securities and Exchange Act of 1934, as
amended, requires the Company's directors and executive officers
who own more than 10% of a registered class of the Company's
equity securities, to file with the Securities and Exchange
Commission and the American Stock Exchange initial reports of
ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and
greater than 10% stockholders are required by Securities and
Exchange Commission regulation to furnish the Company with copies
of all Section 16(a) forms they file. To the Company's
knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no
other reports were required, all Section 16(a) filing
requirements applicable to the Company's officers, directors and
greater than 10% beneficial owners were complied with by such
persons during the period ended December 31, 1997.
Other Business
No other matters are to be presented for action at the
Annual Meeting of Stockholders other than as set forth in this
proxy statement.
Independent Accountants
Ernst & Young, LLP, a firm of independent public
accountants, was engaged by the Company to examine its financial
statements for the 1997 fiscal year. The appointment of auditors
is approved annually by the Board of Directors. The decision of
the Board of Directors is based on the recommendation of the
Audit Committee. A representative of Ernst & Young is expected
to attend the Annual Meeting of Stockholders and will have the
opportunity to make a statement if he or she desires to do so.
The representative will also be available to respond to
appropriate questions from stockholders.
Stockholder Proposals
Any stockholder of the Company who wishes to present a
proposal at the 1999 Annual Meeting of Stockholders of the
Company, and who wishes to have such proposal included in the
Company's proxy statement for that meeting, must deliver a copy
of such proposal to the Company at 125 Frontage Road, Orange, CT
06477, Attention: David Heidecorn, no later than _____________,
1998; provided, however, that if the 1999 Annual Meeting of
Stockholders is held on a date more than 30 days before or after
the corresponding date of the 1998 Annual Meeting, any
stockholder who wishes to have a proposal included in the
Company's proxy statement for that meeting must deliver a copy of
the proposal to the Company a reasonable time before the proxy
solicitation is made. The Company reserves the right to decline
to include in the Company's proxy statement any stockholder's
proposal which does not comply with the rules of the Securities
and Exchange Commission for inclusion therein.
Financial Statements
The Company's 1997 Annual Report, including financial
statements for the fiscal year 1997, accompanies this proxy
statement. Stockholder's may obtain free of charge a copy of the
Company's most recent Annual Report on Form 10-K as filed with
Securities and Exchange Commission by writing to the Company at
125 Frontage Road, Orange, CT 06477, Attention: Investor
Relations.
You are encouraged to let us know your preference by marking the
appropriate boxes on the enclosed proxy.
PROXY ALARMGUARD HOLDINGS, INC. PROXY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS JUNE 30, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Russell R. MacDonnell
and David Heidecorn, and each of them, attorneys with full power
of substitution, to vote as directed below all shares of Common
Stock of Alarmguard Holdings, Inc. registered in the name of the
undersigned, or which the undersigned may be entitled to vote, at
the Annual Meeting of Stockholders to be held at 125 Frontage
Road, Orange, Connecticut, on June 30, 1998, 9:00 a.m. and at any
adjournment or postponement thereof.
1. Approval of the ratification of the issuance of Series A
Convertible Preferred Stock and Series B Convertible Preferred
Stock.
FOR AGAINST ABSTAIN
2. Election of Directors FOR all nominees WITHHOLD
listed AUTHORITY to vote
below (except as
marked to for all nominees listed
the contrary below) below
(Instruction: To withhold authority to vote for any Individual
nominee strike a line through the nominee's name in the list
below.)
David Heidecorn and Thomas W. Janes.
3. As such proxies may in their discretion determine in respect
of any other business properly to come before said meeting (the
Board of Directors knowing of no such other business).
The directors recommend a vote FOR items 1 and 2.
(Continued on reverse side)
(Continued from other side)
UNLESS THE STOCKHOLDER DIRECTS OTHERWISE, THIS PROXY WILL BE
VOTED FOR ITEMS 1 AND 2 AS PROPOSED.
PLEASE DATE, SIGN AND RETURN IN THE ENVELOPE PROVIDED.
(Please sign in the same form as name appears hereon.
Dated ______________________________, 1998
Executors and other fiduciaries should indicate
their titles. If signed on behalf of a corporation,
_________________________________________
give title of officer signing).
_________________________________________
Signature of Stockholder(s)
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 30,
1998.
