<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
ALARMGUARD HOLDINGS, INC.
(Name of Subject Company)
TYCO INTERNATIONAL LTD.
T16 ACQUISITION CORP.
(Bidders)
------------------------
COMMON STOCK, PAR VALUE $.0001 PER SHARE
(including the associated preferred stock purchase rights)
(Title of class of securities)
------------------------
011649100
(CUSIP number of class of securities)
------------------------
MARK H. SWARTZ, EXECUTIVE VICE PRESIDENT
C/O TYCO INTERNATIONAL (US) INC.
ONE TYCO PARK
EXETER, NEW HAMPSHIRE 03833
(603) 778-9700
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of bidders)
------------------------
WITH A COPY TO:
ABBE L. DIENSTAG, ESQ.
KRAMER, LEVIN, NAFTALIS & FRANKEL LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 715-9100
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
$62,576,296 $12,515.26
</TABLE>
* For purposes of calculating fee only. Assumes purchase of 6,765,005 shares
of Common Stock, par value $.0001 per share, including the associated
preferred stock purchase rights, of Alarmguard Holdings, Inc. at $9.25 per
share, representing 5,569,983 shares outstanding and 1,195,022 shares
reserved for issuance pursuant to outstanding options and warrants.
** 1/50th of 1% of Transaction Valuation.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount previously paid: Not applicable Filing party: Not applicable.
Form or registration no.: Not applicable. Date filed: Not applicable.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit Index is located on Page 9
<PAGE>
14D-1
Page 2 of 7 Pages
<TABLE>
<S> <C> <C>
1 NAMES OF REPORTING PERSONS:
TYCO INTERNATIONAL LTD.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)/ /
(b)/ /
3 SEC USE ONLY
4 SOURCES OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(e) OR 2(f)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
BERMUDA
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
NONE. SEE ITEM 6 AND ITEM 7
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
SEE ITEM 6 AND ITEM 7
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
SEE ITEM 6 AND ITEM 7
10 TYPE OF REPORTING PERSON
CO
</TABLE>
<PAGE>
14D-1
Page 3 of 7 Pages
<TABLE>
<S> <C> <C>
1 NAMES OF REPORTING PERSONS:
T16 ACQUISITION CORP.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)/ /
(b)/ /
3 SEC USE ONLY
4 SOURCES OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(e) OR 2(f)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
NONE. SEE ITEM 6 AND ITEM 7
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
SEE ITEM 6 AND ITEM 7
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
SEE ITEM 6 AND ITEM 7
10 TYPE OF REPORTING PERSON
CO
</TABLE>
<PAGE>
This Statement relates to the offer by T16 Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly-owned subsidiary of Tyco
International Ltd., a Bermuda company ("Tyco"), to purchase all outstanding
shares of common stock, par value $.0001 per share, including the associated
preferred stock purchase rights (the "Common Shares"), of Alarmguard Holdings,
Inc., a Delaware corporation (the "Company"), upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated January 15, 1999, annexed
hereto as Exhibit (a)(1) (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
constitute the "Offer"), at a purchase price of $9.25 per Common Share, net to
each tendering stockholder in cash. The item numbers below and responses thereto
are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Alarmguard Holdings, Inc., a Delaware
corporation. The address of the Company's principal executive offices is 125
Frontage Road, Orange, CT 06477.
(b) The securities to which this statement relates are the Common Shares.
The information set forth in the Introduction of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Common Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(g) This Statement is being filed by Purchaser and Tyco (collectively,
the "Reporting Persons"). Purchaser is an indirect wholly-owned subsidiary of
Tyco.
The information set forth in Section 9 ("Certain Information Concerning Tyco
and Purchaser") and in Annex I and II of the Offer to Purchase is incorporated
herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction, Section 9 ("Certain
Information Concerning Tyco and Purchaser"), Section 11 ("Contacts with the
Company; Background of the Offer") and Section 13 ("The Merger Agreement;
Preferred Stock Purchase Agreement") of the Offer to Purchase is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in Section 10 ("Source and Amount of Funds")
of the Offer to Purchase is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER.
(a)-(g) The information set forth in the Introduction and Sections 7
("Effects of the Offer on the Market for Common Shares; Stock Quotations;
Registration Under the Exchange Act") and 12 ("Purpose of the Offer; Short Form
Merger; Plans for the Company; Dissenters' Rights; Going Private Transactions")
of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
The information set forth in Sections 9 ("Certain Information Concerning
Tyco and Purchaser") and 13 ("The Merger Agreement; Preferred Stock Purchase
Agreement") of the Offer to Purchase is incorporated herein by reference.
Page 4 of 7 Pages
<PAGE>
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Sections 9 ("Certain
Information Concerning Tyco and Purchaser"), 11 ("Contacts with the Company;
Background of the Offer"), 12 ("Purpose of the Offer; Short Form Merger; Plans
for the Company; Dissenters' Rights; Going Private Transactions") and 13 ("The
Merger Agreement; Preferred Stock Purchase Agreement") of the Offer to Purchase
is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Sections 17 ("Fees and Expenses") and 18
("Miscellaneous") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning Tyco
and Purchaser") of the Offer to Purchase is incorporated herein by reference.
The incorporation by reference herein of such financial information does not
constitute an admission that such information is material to a decision by a
stockholder of the Company whether to sell, tender or hold the Common Shares
being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("Contacts with the Company;
Background of the Offer") and Section 13 ("The Merger Agreement; Preferred Stock
Purchase Agreement") of the Offer to Purchase is incorporated herein by
reference.
(b)-(c) The information set forth in Section 16 ("Certain Legal Matters") of
the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Sections 7 ("Effects of the Offer on the
Market for Common Shares; Stock Quotations; Registration Under the Exchange
Act") and 16 ("Certain Legal Matters") of the Offer to Purchase is incorporated
herein by reference.
(e) None
(f) The information set forth in the Offer to Purchase and the related
Letter of Transmittal, to the extent not otherwise set forth herein, is
incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated January 15, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Nominees.
(a)(4) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Text of Joint Press Release issued January 11, 1999.
(a)(7) Form of Summary Advertisement, dated January 15, 1999.
(a)(8) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b) Not applicable.
(c)(1) Confidentiality Agreement executed by Tyco International (US) Inc. in
favor of the Company, dated November 5, 1998.
Page 5 of 7 Pages
<PAGE>
(c)(2) Agreement and Plan of Merger, dated as of January 8, 1999, among the
Purchaser, Tyco and the Company.
(c)(3) Preferred Stock Purchase Agreement, dated as of January 8, 1999,
among Tyco, the Purchaser and the individuals listed on the signature pages
thereto.
(d)-(f) Not applicable.
SIGNATURE
After due inquiry and to the best of the undersigned's knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
<TABLE>
<S> <C> <C>
TYCO INTERNATIONAL LTD.
Dated: January 15, 1999 By: /s/ MARK H. SWARTZ
-----------------------------------------
Name: Mark H. Swartz
Title: Executive Vice President
and Chief Financial Officer
</TABLE>
SIGNATURE
After due inquiry and to the best of the undersigned's knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
<TABLE>
<S> <C> <C>
T16 ACQUISITION CORP.
Dated: January 15, 1999 By: /s/ MARK H. SWARTZ
-----------------------------------------
Name: Mark H. Swartz
Title: Vice President
</TABLE>
Page 6 of 7 Pages
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. DESCRIPTION NUMBERED PAGE
- ----------- ---------------------------------------------------------------------------------------- -----------------
<C> <S> <C>
(a)(1) Offer to Purchase, dated January 15, 1999...............................................
(a)(2) Letter of Transmittal...................................................................
(a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees..............
(a)(4) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Nominees..............................................................................
(a)(5) Notice of Guaranteed Delivery...........................................................
(a)(6) Text of Joint Press Release issued January 11, 1999.....................................
(a)(7) Form of Summary Advertisement, dated January 15, 1999...................................
(a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9...
(c)(1) Confidentiality Agreement executed by Tyco International (US) Inc. in favor of the
Company, dated November 5, 1998.......................................................
(c)(2) Agreement and Plan of Merger, dated as of January 8, 1999, among the Purchaser, Tyco and
the Company...........................................................................
(c)(3) Preferred Stock Purchase Agreement, dated as of January 8, 1999, among Tyco, the
Purchaser and the individuals listed on the signature pages thereto...................
</TABLE>
Page 7 of 7 Pages
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED
PREFERRED STOCK PURCHASE RIGHTS)
OF
ALARMGUARD HOLDINGS, INC.
AT
$9.25 NET PER SHARE
BY
T16 ACQUISITION CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
TYCO INTERNATIONAL LTD.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME,
ON FRIDAY, FEBRUARY 12, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.0001 PER SHARE, INCLUDING THE
ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS (THE "COMMON SHARES"), OF ALARMGUARD
HOLDINGS, INC., WHICH (1) WOULD CONSTITUTE 51% OF THE OUTSTANDING COMMON SHARES
AND (2) TOGETHER WITH THE SHARES OF THE COMPANY'S SERIES A PREFERRED STOCK AND
SERIES B PREFERRED STOCK, EACH PAR VALUE $.0001 PER SHARE (THE "PREFERRED
SHARES"), SUBJECT TO THE PREFERRED STOCK PURCHASE AGREEMENT, DATED JANUARY 8,
1999 (THE "PREFERRED STOCK PURCHASE AGREEMENT"), AMONG T16 ACQUISITION CORP. AND
THE HOLDERS OF THE PREFERRED SHARES, WOULD CONSTITUTE AT LEAST 51% OF THE TOTAL
VOTING POWER OF THE COMPANY ON A FULLY DILUTED BASIS. STOCKHOLDERS OWNING
964,195 COMMON SHARES (CONSTITUTING 17.3% OF THE OUTSTANDING COMMON SHARES) AND
ALL 40,700 OUTSTANDING PREFERRED SHARES (WHICH, TOGETHER WITH THE AFORESAID
COMMON SHARES, CONSTITUTE 50.6% OF THE TOTAL VOTING POWER OF THE COMPANY ON A
FULLY DILUTED BASIS) HAVE AGREED TO TENDER SUCH COMMON SHARES IN THE OFFER AND
TO SELL SUCH PREFERRED SHARES TO PURCHASER PURSUANT TO THE PREFERRED STOCK
PURCHASE AGREEMENT.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE
MERGER (AS HEREINAFTER DEFINED) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT (AS HEREINAFTER
DEFINED), THE OFFER AND THE MERGER AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR COMMON SHARES PURSUANT TO THE
OFFER.
------------------------
IMPORTANT
ANY STOCKHOLDER DESIRING TO TENDER ALL OR ANY PORTION OF SUCH STOCKHOLDER'S
COMMON SHARES SHOULD EITHER (1) COMPLETE AND SIGN THE LETTER OF TRANSMITTAL (OR
A FACSIMILE THEREOF) IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF
TRANSMITTAL, MAIL OR DELIVER IT AND ANY OTHER REQUIRED DOCUMENTS TO THE
DEPOSITARY AND EITHER DELIVER THE CERTIFICATE(S) FOR SUCH TENDERED COMMON SHARES
TO THE DEPOSITARY ALONG WITH THE LETTER OF TRANSMITTAL OR TENDER SUCH COMMON
SHARES PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER SET FORTH IN SECTION 2
OF THIS OFFER TO PURCHASE, OR (2) REQUEST SUCH STOCKHOLDER'S BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE TRANSACTION FOR
THE STOCKHOLDER. STOCKHOLDERS HAVING COMMON SHARES REGISTERED IN THE NAME OF A
BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT
SUCH BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IF THEY
DESIRE TO TENDER SUCH COMMON SHARES.
A STOCKHOLDER WHO DESIRES TO TENDER COMMON SHARES AND WHOSE CERTIFICATE(S)
FOR COMMON SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY WITH THE
PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, MAY TENDER SUCH COMMON
SHARES BY FOLLOWING THE PROCEDURES FOR GUARANTEED DELIVERY SET FORTH IN SECTION
2 OF THIS OFFER TO PURCHASE.
QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION
AGENT AT ITS ADDRESS AND TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS
OFFER TO PURCHASE. REQUESTS FOR ADDITIONAL COPIES OF THIS OFFER TO PURCHASE, THE
LETTER OF TRANSMITTAL AND THE NOTICE OF GUARANTEED DELIVERY MAY BE DIRECTED TO
THE INFORMATION AGENT OR TO BROKERS, DEALERS, COMMERCIAL BANKS OR TRUST
COMPANIES.
------------------------
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
January 15, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
Introduction...................................................................................................... 1
The Tender Offer.................................................................................................. 4
1. Terms of the Offer; Extension of Tender Period; Termination; Amendments................................ 4
2. Procedure for Tendering Common Shares.................................................................. 6
3. Withdrawal Rights...................................................................................... 8
4. Acceptance for Payment and Payment of Offer Price...................................................... 9
5. Certain Federal Income Tax Consequences................................................................ 10
6. Price Range of Common Shares; Dividends................................................................ 11
7. Effects of the Offer on the Market for Common Shares; Stock Quotations; Registration Under the Exchange
Act.................................................................................................... 11
8. Certain Information Concerning the Company............................................................. 12
9. Certain Information Concerning Tyco and Purchaser...................................................... 14
10. Source and Amount of Funds............................................................................. 16
11. Contacts with the Company; Background of the Offer..................................................... 16
12. Purpose of the Offer; Short Form Merger; Plans for the Company; Dissenters' Rights; Going Private
Transactions........................................................................................... 18
13. The Merger Agreement; Preferred Stock Purchase Agreement............................................... 20
14. Dividends and Distributions............................................................................ 32
15. Certain Conditions of the Offer........................................................................ 33
16. Certain Legal Matters.................................................................................. 35
17. Fees and Expenses...................................................................................... 36
18. Miscellaneous.......................................................................................... 37
Annex I Certain Information Concerning the Directors and Executive Officers of Tyco International Ltd.............
38
Annex II Certain Information Concerning the Directors and Executive Officers of Purchaser......................... 41
</TABLE>
<PAGE>
To The Holders of Common Stock of
ALARMGUARD HOLDINGS, INC.
INTRODUCTION
T16 Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect
wholly owned subsidiary of Tyco International Ltd., a Bermuda company ("Tyco"),
hereby offers to purchase all outstanding shares (the "Common Shares") of common
stock (the "Common Stock"), par value $.0001 per share, of Alarmguard Holdings,
Inc., a Delaware corporation (the "Company"), at $9.25 per Common Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). All references in this Offer to Purchase to the Common
Shares include the associated preferred stock purchase rights (the "Rights)
issued pursuant to the Rights Agreement (the "Rights Agreement"), dated as of
April 10, 1998, between the Company and American Stock Transfer & Trust Company,
as Rights Agent.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of Common Shares by Purchaser pursuant to the
Offer. However, any tendering stockholder or other payee who fails to complete
and sign the Substitute Form W-9 that is included in the Letter of Transmittal
may be subject to a required backup federal income tax withholding of 31% of the
gross proceeds payable to such stockholder or other payee pursuant to the Offer.
See Section 2. The Purchaser will pay all charges and expenses of Morrow & Co.,
Inc., as Information Agent (the "Information Agent"), and American Stock
Transfer & Trust Company, as Depositary (the "Depositary"), incurred in
connection with the Offer. See Section 17.
In connection with the Offer, Purchaser has entered into an agreement (the
"Preferred Stock Purchase Agreement"), dated as of January 8, 1999, with the
holders of all of the outstanding shares (the "Preferred Shares" and, together
with the Common Shares, the "Shares") of the Company's Series A preferred stock
(the "Series A Preferred Stock") and Series B preferred stock (the "Series B
Preferred Stock" and, together with the Series A Preferred Stock, the "Preferred
Stock"), each par value $.0001 per share, pursuant to which the holders of the
Preferred Shares have agreed, among other things, to sell their Preferred Shares
to Purchaser following consummation of the Offer at a price per Preferred Share
of $1,400, together with all accrued but unpaid dividends to and including the
date of purchase, and to tender in the Offer the Common Shares owned by them.
THE OFFER IS SUBJECT TO THE CONDITION (THE "MINIMUM CONDITION"), AMONG OTHER
THINGS, THAT THERE BE VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION
OF THE OFFER AT LEAST THAT NUMBER OF COMMON SHARES WHICH (1) WOULD CONSTITUTE
51% OF THE OUTSTANDING COMMON SHARES AND (2) TOGETHER WITH THE PREFERRED SHARES
SUBJECT TO THE PREFERRED STOCK PURCHASE AGREEMENT, WOULD CONSTITUTE AT LEAST 51%
OF THE TOTAL VOTING POWER OF THE COMPANY ON A FULLY DILUTED BASIS. STOCKHOLDERS
OWNING 964,195 COMMON SHARES (CONSTITUTING 17.3% OF THE OUTSTANDING COMMON
SHARES) AND ALL 40,700 OUTSTANDING PREFERRED SHARES (WHICH, TOGETHER WITH THE
AFORESAID COMMON SHARES, CONSTITUTE 50.6% OF THE TOTAL VOTING POWER OF THE
COMPANY ON A FULLY DILUTED BASIS) HAVE AGREED TO TENDER SUCH COMMON SHARES IN
THE OFFER AND TO SELL SUCH PREFERRED SHARES TO PURCHASER PURSUANT TO THE
PREFERRED STOCK PURCHASE AGREEMENT. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
TERMS AND CONDITIONS SET FORTH IN SECTION 15.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 8, 1999 (the "Merger Agreement"), among Tyco, Purchaser and the
Company. The Merger Agreement provides, among other things, that upon the terms
and subject to the conditions therein, as soon as practicable after the
consummation of the Offer, Purchaser will be merged with and into the Company
(the "Merger"), with the Company being the corporation surviving the Merger (the
"Surviving Corporation"). At the effective time of the Merger (the "Effective
Time"), each outstanding Common Share (other than Common Shares with respect to
which appraisal rights are properly exercised under the Delaware General
Corporation Law (the "DGCL") ("Dissenting Shares")) not held in the treasury of
the Company or owned by any subsidiary
1
<PAGE>
of the Company, Tyco, Purchaser or any other subsidiary of Tyco, will be
converted into and represent the right to receive $9.25 in cash or any higher
price that may be paid per Common Share in the Offer (the "Common Per Share
Amount"), without interest, and each issued and outstanding Preferred Share
(other than Preferred Shares that are held by stockholders properly exercising
dissenters' rights under the DGCL and Preferred Shares that are held in the
treasury of the Company or owned by any subsidiary of the Company, Tyco,
Purchaser or any other subsidiary of Tyco), if any, will be converted into and
represent the right to receive $1,400 together with accrued and unpaid dividends
to and including the date of purchase. See Section 13.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND
RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
COMMON SHARES PURSUANT TO THE OFFER.
Donaldson, Lufkin & Jenrette Securities Corporation, the Company's financial
advisor ("DLJ"), has delivered to the Company's Board of Directors its written
opinion that the aggregate consideration to be received by the stockholders of
the Company pursuant to the Merger Agreement and the Preferred Stock Purchase
Agreement is fair to such stockholders from a financial point of view. A copy of
such opinion is contained in the Company's Solicitation/Recommendation Statement
on Schedule 14D-9 which is being distributed to the Company's stockholders
herewith.
The Merger Agreement provides that, promptly upon the purchase of Common
Shares pursuant to the Offer, Tyco will be entitled to designate such number of
Directors, rounded up to the next whole number, on the Board of Directors of the
Company as will give Tyco, subject to compliance with Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), representation
on the Board of Directors equal to the product of (a) the total number of
directors on the Board of Directors and (b) the percentage that (i) the number
of Common Shares and Preferred Shares beneficially owned by Tyco or any of its
affiliates following consummation of the Offer bears to (ii) the total number of
Common Shares and Preferred Shares outstanding. For this purpose, each Common
Share will be counted as one share, and each Preferred Share will be counted as
the number of Common Shares into which such Preferred Share is convertible. The
Company shall, upon request by Tyco, promptly increase the size of the Board of
Directors and/or exercise its reasonable best efforts to secure the resignations
of such number of directors as is necessary to enable Tyco's designees to be
elected to the Board of Directors and shall cause Tyco's designees to be so
elected. See Section 13.
The Company has informed Purchaser that as of December 23, 1998, (i)
5,569,983 shares of Common Stock were issued and outstanding, (ii) 35,700 shares
of Series A Preferred Stock were issued and outstanding, (iii) 5,000 shares of
Series B Preferred Stock were issued and outstanding, (iv) no shares of Common
Stock or shares of Preferred Stock were issued and held in the treasury of the
Company, (vi) no shares of Common Stock or Preferred Stock were held by
subsidiaries of the Company, (vii) 4,972,434 shares of Common Stock were
reserved for future issuance upon conversion of the outstanding shares of
Preferred Stock, (viii) 849,083 shares of Common Stock were reserved for future
issuance pursuant to outstanding options, and (ix) 345,939 shares of Common
Stock were reserved for future issuance upon exercise of outstanding warrants.
In accordance with the Preferred Stock Purchase Agreement, stockholders owning
964,195 Common Shares (constituting 17.3% of the outstanding Common Shares) and
all 40,700 outstanding Preferred Shares (which, together with the aforesaid
Common Shares, constitute 50.6% of the total voting power of the Company on a
fully diluted basis) have agreed to tender such Common Shares in the Offer and
to sell such Preferred Shares to Purchaser pursuant to the Preferred Stock
Purchase Agreement. Each share of Series A Preferred Stock is convertible into,
and has the voting power equal to, 121.21 shares of Common Stock. Each share of
Series B Preferred Stock is convertible into, and has the voting power equal to,
129.03 shares of Common Stock.
2
<PAGE>
If the Minimum Condition is satisfied, such that Purchaser acquires at least
51% of the Common Shares, it will have sufficient voting power, when taken
together with the voting power of the Preferred Shares that it will acquire
pursuant to the Preferred Stock Purchase Agreement, to approve the Merger, even
if no other stockholder votes in favor of the Merger. Under the DGCL, if a
parent corporation owns at least 90% of the shares of each class of shares of a
subsidiary corporation, the parent can merge with the subsidiary in a "short
form" merger without a vote of stockholders. Assuming that Purchaser acquires
the Preferred Shares in accordance with the terms of the Preferred Stock
Purchase Agreement and that Purchaser acquires 90% or more of the Common Shares,
Purchaser would be able to effect the Merger pursuant to the short form merger
provisions of the DGCL, without the action of any other stockholder of the
Company.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
3
<PAGE>
THE TENDER OFFER
1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMINATION;
AMENDMENTS. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of any
such extension or amendment), Purchaser will accept for payment and pay for all
Common Shares which are validly tendered on or prior to the Expiration Date (as
hereinafter defined) and not theretofore withdrawn as permitted by Section 3.
The term "Expiration Date" means 12:00 Midnight, New York City time, on Friday,
February 12, 1999, unless and until Purchaser (subject to the terms and
conditions of the Merger Agreement) shall have extended the period of time for
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Purchaser, shall
expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition. Subject to the provisions of the Merger Agreement, Purchaser
reserves the right (but shall not be obligated) to waive or reduce the Minimum
Condition or to waive any or all of the other conditions of the Offer. If, by
12:00 Midnight, New York City time, on Friday, February 12, 1999, or any
subsequent Expiration Date, any or all of such conditions have not been
satisfied or waived, subject to the provisions of the Merger Agreement,
Purchaser may elect to (i) terminate the Offer and return all tendered Common
Shares to tendering stockholders, (ii) waive all of the unsatisfied conditions
and, subject to any required extension, purchase all Common Shares validly
tendered by the Expiration Date and not withdrawn, (iii) extend the Offer and,
subject to the right of stockholders to withdraw Common Shares until the
adjusted Expiration Date, retain the Common Shares that have been tendered until
the expiration of the Offer as extended or (iv) delay acceptance for payment of,
or payment for, the Common Shares, subject to complying with applicable law,
until the satisfaction or waiver of the conditions of the Offer. Purchaser
acknowledges that its reservation of the right to delay payment for Common
Shares that it has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires Purchaser to pay the consideration offered or
return the Common Shares tendered promptly after the termination or withdrawal
of the Offer. See Section 15. Under the terms of the Merger Agreement, Purchaser
may not, without the prior written consent of the Company, (i) impose conditions
to the Offer in addition to the Offer Conditions (as defined below), (ii) modify
or amend the Offer Conditions or any other term of the Offer in a manner adverse
to the holders of Common Shares, (iii) waive or amend the Minimum Condition,
(iv) reduce the number of Common Shares subject to the Offer, (v) reduce the
Common Per Share Amount, (vi) except as provided in the following sentence,
extend the Offer, if all of the Offer Conditions are satisfied or waived, or
(vii) change the form of consideration payable in the Offer. Notwithstanding the
foregoing, Purchaser may, without the consent of the Company, extend the Offer
at any time, and from time to time, (i) if at the then scheduled expiration date
of the Offer any of the conditions to Purchaser's obligation to accept for
payment and pay for Common Shares (the "Offer Conditions") shall not have been
satisfied or waived, until such time as such conditions are satisfied or waived;
(ii) for any period required by any rule, regulation, interpretation or position
of the Securities and Exchange Commission (the "Commission") or its staff
applicable to the Offer; or (iii) if all Offer Conditions are satisfied or
waived but the number of Common Shares tendered is less than 90% of the then
outstanding number of Common Shares, for an aggregate period of not more than 10
business days (for all such extensions) beyond the latest expiration date that
would be permitted under clause (i) or (ii) of this sentence.
Subject to the applicable regulations of the Commission and the provisions
of the Merger Agreement, Purchaser also expressly reserves the rights, in its
sole discretion, at any time or from time to time, (i) to extend the Offer and
adjust the Expiration Date, (ii) to terminate the Offer if any of the conditions
referred to in Section 15 have not been satisfied or upon the occurrence of any
of the events specified in Section 15 and (iii) to waive any condition or
otherwise amend the Offer in any respect, in each case by giving oral or written
notice of such extension, termination, waiver or amendment to the Depositary and
by making a public announcement thereof. If Purchaser accepts for payment any
Common Shares pursuant to
4
<PAGE>
the terms of the Offer, it will accept for payment all Common Shares validly
tendered prior to the Expiration Date and not withdrawn and, subject to clause
(i) above, will promptly pay for all Common Shares so accepted for payment.
Purchaser acknowledges that notwithstanding anything to the contrary contained
in the Offer, Purchaser shall not be required to pay for the Common Shares and
may terminate or amend the Offer only if, prior to the Expiration Date, any of
the conditions referred to in Section 15 have not been satisfied or waived, or
if any of the events specified in Section 15 have occurred.
The rights reserved by Purchaser in the preceding paragraph are in addition
to Purchaser's rights pursuant to Section 15. Any extension, delay, termination
or amendment of the Offer will be followed as promptly as practicable by public
announcement thereof, such announcement in the case of an extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which Purchaser may choose to make
any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer (including, subject to the Merger Agreement, the Minimum Condition),
Purchaser will disseminate additional tender offer materials (including by
public announcement as set forth above) and extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The
minimum period during which an offer must remain open following material changes
in the terms of the Offer, other than a change in price, percentage of
securities sought or inclusion of or change to a dealer's soliciting fee, will
depend upon the facts and circumstances, including the materiality, of the
changes. In the Commission's view, an offer should remain open for a minimum of
five business days from the date the material change is first published, sent or
given to stockholders, and, if material changes are made with respect to
information that approaches the significance of price and share levels, a
minimum of ten business days may be required to allow for adequate dissemination
and investor response. With respect to a change in price or, subject to certain
limitations, a change in the percentage of securities sought or inclusion of or
change to a dealer's soliciting fee, a minimum ten business day period from the
date of such change is generally required to allow for adequate dissemination to
stockholders. Accordingly, if, prior to the Expiration Date, Purchaser decreases
the number of Common Shares being sought or increases or decreases the
consideration offered pursuant to the Offer, and if the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day from
the date that notice of such increase or decrease is first published, sent or
given to holders of Common Shares, the Offer will be extended at least until the
expiration of such ten business day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
In connection with the Offer, the Company has provided or will provide
Purchaser with the names and addresses of all record holders of Common Shares
and security position listings of Common Shares held in stock depositories. This
Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to registered holders of Common Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Common Shares.
5
<PAGE>
2. PROCEDURE FOR TENDERING COMMON SHARES. Except as set forth below, in
order for Common Shares to be validly tendered pursuant to the Offer, the Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message (as
hereinafter defined) in connection with a book-entry transfer of Common Shares,
and any other documents required by the Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date, and either (i)
certificates representing tendered Common Shares must be received by the
Depositary, or such Common Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below (and confirmation of receipt of such
delivery must be received by the Depositary), in each case on or prior to the
Expiration Date, or (ii) the guaranteed delivery procedures set forth below must
be complied with. No alternative, conditional or contingent tenders will be
accepted.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (i) if such Letter of Transmittal is signed by the registered holder
of the Common Shares tendered therewith, unless such holder has completed either
the box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" in the Letter of Transmittal, or (ii) if Common Shares are
tendered for the account of a firm that is a member in good standing of the
Security Transfer Agent's Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program (each being
hereinafter referred to as an "Eligible Institution"). See Instruction 1 of the
Letter of Transmittal.
If a certificate representing Common Shares is registered in the name of a
person other than the signatory of the Letter of Transmittal (or a facsimile
thereof), or if payment is to be made, or Common Shares not accepted for payment
or not tendered are to be returned to a person other than the registered holder,
the certificate must be endorsed or accompanied by an appropriate stock power,
in either case signed exactly as the name(s) of the registered holder(s) appears
on the certificate, with the signature(s) on the certificate or stock power
guaranteed by an Eligible Institution. If the Letter of Transmittal or stock
powers are signed or any certificate is endorsed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing and, unless waived by Purchaser, proper evidence
satisfactory to Purchaser of their authority so to act must be submitted. See
Instruction 5 of the Letter of Transmittal.
BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect to
the Common Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase, and any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of the
Common Shares by causing the Book-Entry Transfer Facility to transfer such
Common Shares into the Depositary's account in accordance with the Book-Entry
Transfer Facility's procedure for such transfer. However, although delivery of
Common Shares may be effected through book-entry transfer at the Book-Entry
Transfer Facility, a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or an Agent's
Message and any other required documents, must, in any case, be transmitted to
and received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the guaranteed
delivery procedures described below must be complied with. The term "Agent's
Message" means a message transmitted through electronic means by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
book-entry confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Common Shares that such participant has
received, and agrees to be bound by, the terms of the Letter of Transmittal.
Delivery of documents to the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures does not constitute delivery to the
Depositary.
6
<PAGE>
GUARANTEED DELIVERY. If a stockholder desires to tender Common Shares
pursuant to the Offer and such stockholder's certificates representing Common
Shares are not immediately available (or the procedures for book-entry transfer
cannot be completed on a timely basis) or time will not permit all required
documents to reach the Depositary prior to the Expiration Date, such Common
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives, prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by Purchaser; and
(c) the certificates representing all tendered Common Shares in proper
form for transfer (or confirmation of a book-entry transfer of such Common
Shares into the Depositary's account at the Book-Entry Transfer Facility),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) with any required signature guarantees (or, in
connection with a book-entry transfer, an Agent's Message) and any other
documents required by the Letter of Transmittal are received by the
Depositary within three trading days after the date of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the American Stock
Exchange (the "AMEX") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, telex, facsimile transmission or mail, to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
In all cases, payment for Common Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates representing such Common Shares (or timely confirmation of a
book-entry transfer of such Common Shares into the Depositary's account at the
Book-Entry Transfer Facility), (ii) properly completed and duly executed
Letter(s) of Transmittal (or facsimile(s) thereof), together with any required
signature guarantees (or, in connection with a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates representing Common Shares or confirmations of book-entry
transfers of such Common Shares are actually received by the Depositary.
The method of delivery of all documents, including certificates for Common
Shares, is at the option and risk of the tendering stockholder, and the delivery
will be deemed made only when actually received by the Depositary. If delivery
is by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tendered Common Shares will be determined by Purchaser in its sole
discretion, and its determination shall be final and binding on all parties.
Purchaser reserves the absolute right to reject any or all tenders of any Common
Shares that it determines are not in appropriate form or the acceptance for
payment of or payment for which may, in the opinion of Purchaser's counsel, be
unlawful. Purchaser also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in any tender with respect
to any particular Common Shares or any particular stockholder, and Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the Instructions thereto) will be final and binding on all
parties. No tender of Common Shares will be deemed to have been validly made
until all defects or irregularities relating thereto have been expressly waived
or cured to the satisfaction of Purchaser. None of Purchaser, Tyco, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders, nor shall any of
them incur any liability for failure to give any such notification.
OTHER REQUIREMENTS. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of Purchaser as such stockholder's
proxies, in the manner set forth in the Letter of
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<PAGE>
Transmittal, each with full power of substitution, to the full extent of such
stockholder's rights with respect to the Common Shares tendered by such
stockholder and accepted for payment by Purchaser (and any and all other Common
Shares or other securities or rights issued or issuable in respect of such
Common Shares on or after January 15, 1999), effective if, when and to the
extent that Purchaser accepts such Common Shares for payment pursuant to the
Offer. Upon such acceptance for payment, all prior proxies given by such
stockholder with respect to such Common Shares or other securities accepted for
payment will, without further action, be revoked, and no subsequent proxies may
be given by such stockholder nor any subsequent written consents executed (and,
if given or executed, will not be deemed effective). Such designees of Purchaser
will, with respect to such Common Shares and other securities or rights issuable
in respect thereof, be empowered to exercise all voting and other rights of such
stockholder as they, in their sole discretion, may deem proper in respect of any
annual, special or adjourned meeting of the Company's stockholders, action by
written consent in lieu of any such meeting or otherwise. Purchaser reserves the
right to require that, in order for Common Shares to be deemed validly tendered,
immediately upon Purchaser's acceptance for payment of such Common Shares
Purchaser must be able to exercise full voting rights with respect to such
Common Shares.
Purchaser's acceptance for payment of Common Shares tendered pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering stockholder and Purchaser upon the terms and subject to the
conditions of the Offer.
To prevent backup withholding of federal income tax on payments made to
stockholders with respect to Common Shares purchased pursuant to the Offer, each
stockholder must provide the Depositary with his correct taxpayer identification
number ("TIN") and certify that he is not subject to backup withholding of
federal income tax by completing the Substitute Form W-9 included in the Letter
of Transmittal. Non-United States holders must submit a completed Form W-8 to
avoid backup withholding. This form may be obtained from the Depositary. See
Instructions 10 and 11 of the Letter of Transmittal.
3. WITHDRAWAL RIGHTS. Tenders of Common Shares made pursuant to the Offer
will be irrevocable, except that Common Shares tendered may be withdrawn at any
time prior to the Expiration Date, and, unless theretofore accepted for payment
by Purchaser as provided herein, may also be withdrawn on or after March 16,
1999.
For a withdrawal of Common Shares tendered to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase. Any notice of withdrawal must specify the name of the
person who tendered the Common Shares to be withdrawn, the number of Common
Shares to be withdrawn and the name(s) in which the certificate(s) representing
such Common Shares are registered, if different from that of the person who
tendered such Common Shares. If certificates for Common Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, the name of the
registered holder and the serial numbers shown on the particular certificates
evidencing such Common Shares to be withdrawn must also be furnished to the
Depositary prior to the physical release of the Common Shares to be withdrawn.
The signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (except in the case of Common Shares tendered by an Eligible
Institution). If Common Shares have been tendered pursuant to the procedures for
book-entry transfer set forth in Section 2, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with such withdrawn Common Shares and must otherwise comply with
the Book-Entry Transfer Facility's procedures.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
any Common Shares tendered, or is unable to accept for payment or pay for Common
Shares tendered pursuant to the Offer, for any reason whatsoever, then, without
prejudice to Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Common Shares, and such
Common Shares may not be withdrawn except to the extent that the tendering
stockholder is entitled to and duly exercises withdrawal rights as described in
this Section and as otherwise required by Rule 14e-1(c) under the
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<PAGE>
Exchange Act. Any such delay will be accompanied by an extension of the Offer to
the extent required by law.
Withdrawals of tenders of Common Shares may not be rescinded and Common
Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Common Shares may be retendered by
again following the procedures described in Section 2 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
and its determination will be final and binding on all parties. None of
Purchaser, Tyco, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal, nor shall any of them incur any liability for failure to
give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT OF OFFER PRICE. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any extension or amendment), Purchaser will
accept for payment and will pay for all Common Shares validly tendered prior to
the Expiration Date (and not properly withdrawn in accordance with Section 3
above) as soon as practicable after the latest to occur of (a) the expiration or
termination of the waiting period applicable to the acquisition of the Common
Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (b) the Expiration Date, and (c)
subject to compliance with Rule 14e-1(c) under the Exchange Act, the
satisfaction or waiver of the conditions of the Offer set forth in Section 15.
Any determination concerning the satisfaction of such terms and conditions shall
be within the sole discretion of Purchaser, and such determination shall be
final and binding on all tendering stockholders. See Section 15.
Purchaser expressly reserves the right to delay acceptance for payment of,
or payment for, Common Shares in order to comply in whole or in part with any
applicable law. If Purchaser desires to delay payment for Common Shares accepted
for payment pursuant to the Offer, and such delay would otherwise be in
contravention of Rule 14e-1(c) of the Exchange Act, Purchaser will formally
extend the Offer. See Section 15. In all cases, payment for Common Shares
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates representing such Common Shares
(or a timely confirmation of a book-entry transfer of such Common Shares into
the Depositary's account at the Book-Entry Transfer Facility, as described in
Section 2), (ii) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) with any required signature guarantees (or, in connection
with a book-entry transfer, an Agent's Message), and (iii) any other documents
required by the Letter of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Common Shares when, as and if Purchaser
gives oral or written notice to the Depositary, as agent for the tendering
stockholders, of Purchaser's acceptance for payment of such Common Shares.
Payment for Common Shares so accepted for payment will be made by the deposit of
the purchase price therefor with the Depositary, which will act as agent for the
tendering stockholders for the purpose of receiving such payment from Purchaser
and transmitting such payment to tendering stockholders. If, for any reason
whatsoever, acceptance for payment of any Common Shares tendered pursuant to the
Offer is delayed, or Purchaser is unable to accept for payment Common Shares
tendered pursuant to the Offer, then, without prejudice to Purchaser's rights
under Section 1, the Depositary may, nevertheless, on behalf of Purchaser,
retain tendered Common Shares, and such Common Shares may not be withdrawn,
except to the extent that the tendering stockholders are entitled to withdrawal
rights as described in Section 3 and as otherwise required by Rule 14e-1(c)
under the Exchange Act. Under no circumstances will interest be paid on the
purchase price by reason of any delay in making such payments.
If any tendered Common Shares are not accepted for payment and paid for,
certificates representing such Common Shares will be returned (or, in the case
of Common Shares delivered by book-entry transfer with the Book-Entry Transfer
Facility as permitted by Section 2, such Common Shares will be credited to
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<PAGE>
an account maintained with the Book-Entry Transfer Facility) without expense to
the tendering stockholder as promptly as practicable following the expiration or
termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid for Common Shares pursuant to the Offer, Purchaser will pay such
increased consideration for all Common Shares accepted for payment pursuant to
the Offer, whether or not such Common Shares have been tendered or accepted for
payment prior to such increase in the consideration.
Purchaser reserves the right to transfer or assign in whole or in part to
one or more affiliates of Purchaser or Tyco the right to purchase all or any
portion of the Common Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Purchaser of its obligations under the
Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Common Shares validly tendered and accepted for payment
pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Common
Shares pursuant to the Offer (or in the Merger) will be a taxable transaction
for United States federal income tax purposes (and may also be a taxable
transaction under applicable state, local or other tax laws). In general, a
stockholder will recognize gain or loss for such purposes equal to the
difference between such stockholder's adjusted tax basis for the Common Shares
such stockholder sells in such transaction and the amount of cash received
therefor. Gain or loss must be determined separately for each block of Common
Shares (i.e., Common Shares acquired at the same cost in a single transaction)
sold pursuant to the Offer or converted to cash in the Merger. Such gain or loss
will be capital gain or loss if the Common Shares are a capital asset in the
hands of the stockholder and will be long term capital gain or loss if the
Common Shares were held for more than one year on the date of sale (in the case
of the Offer) or the effective time of the Merger (in the case of the Merger).
The receipt of cash for Common Shares pursuant to the exercise of dissenters'
rights, if any, will generally be taxed in the same manner as described above.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%. Backup withholding generally applies if
the stockholder (a) fails to furnish such stockholder's social security number
or TIN, (b) furnishes an incorrect TIN, or (c) under certain circumstances,
fails to provide a certified statement, signed under penalties of perjury, that
the TIN provided is such stockholder's correct number and that such stockholder
is not subject to backup withholding. Backup withholding is not an additional
tax but merely an advance payment, which may be refunded to the extent it
results in an overpayment of tax. Certain persons generally are entitled to
exemption from backup withholding, including corporations, non-United States
persons and financial institutions. Certain penalties apply for failure to
furnish correct information and for failure to include reportable payments in
income. Each stockholder should consult with his own tax advisor as to such
stockholder's qualification for exemption from backup withholding and the
procedure for obtaining such exemption. Tendering stockholders may be able to
prevent backup withholding by completing the Substitute Form W-9 included in the
Letter of Transmittal.
The foregoing discussion may not be applicable to a stockholder who acquired
Common Shares pursuant to the exercise of employee stock options or otherwise as
compensation, or to a stockholder who is not a United States person for United
States federal income tax purposes (including a stockholder who is not a citizen
or resident of the United States) or who is otherwise subject to special tax
treatment under the Internal Revenue Code. In addition, the foregoing discussion
does not address the tax treatment of holders of options or warrants to acquire
Common Shares or of securities convertible into Common Shares.
The federal income tax discussion set forth above is included for general
information only and is based upon present law. Stockholders are urged to
consult their tax advisors with respect to the specific tax consequences of the
Offer and the Merger to them, including the application and effect of the
alternative minimum tax, and state, local or non-United States income and other
tax laws.
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6. PRICE RANGE OF COMMON SHARES; DIVIDENDS. Since April 16, 1997, the
Common Shares have traded on the AMEX under the symbol "AGD." The following
table sets forth, for the periods indicated, the high and low per Common Share
sales prices on the AMEX as reported by published financial sources. The Company
has not declared or paid any cash dividends with respect to the Common Shares
for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1997:
First Quarter................................................................................... 10 6 7/8
Second Quarter.................................................................................. 9 7/16 5 13/16
Third Quarter................................................................................... 10 8 1/4
Fourth Quarter.................................................................................. 11 7 3/4
FISCAL YEAR ENDED DECEMBER 31, 1998:
First Quarter................................................................................... 10 5/8 9 3/8
Second Quarter.................................................................................. 11 1/2 9 1/8
Third Quarter................................................................................... 10 5/8 6 1/8
Fourth Quarter.................................................................................. 8 13/16 6 7/16
FISCAL YEAR ENDING DECEMBER 31, 1999
First Quarter (through January 14, 1999)........................................................ 10 5/8 8
</TABLE>
On January 8, 1999, the last trading day prior to the public announcement of
the terms of the Offer and the Merger, the closing per Common Share sales price
on AMEX was $9 3/4. On January 14, 1999, the last trading day prior to
commencement of the Offer, the closing per Common Share sales price on the AMEX
was $9 3/16. Stockholders are urged to obtain a current market quotation for the
Common Shares.
7. EFFECTS OF THE OFFER ON THE MARKET FOR COMMON SHARES; STOCK QUOTATIONS;
REGISTRATION UNDER THE EXCHANGE ACT. The purchase of Common Shares pursuant to
the Offer will reduce the number of holders of Common Shares and the number of
Common Shares that might otherwise trade publicly. Consequently, depending upon
the number of Common Shares purchased and the number of remaining holders of
Common Shares, the purchase of Common Shares pursuant to the Offer may adversely
affect the liquidity and market value of the remaining Common Shares held by the
public. Purchaser cannot predict whether the reduction in the number of Common
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for, or marketability of, the Common Shares or
whether it would cause future market prices to be greater or less than the Offer
price.
The Common Shares are currently listed and traded on the AMEX, which
constitutes the principal trading market for the Common Shares. Depending upon
the number of Common Shares purchased pursuant to the Offer, the Common Shares
may no longer meet the requirements of the AMEX for continued listing and may,
therefore, be delisted from such exchange. According to the AMEX's published
guidelines, the AMEX could consider delisting the Common Shares if, among other
things, the number of publicly-held Common Shares (excluding Common Shares held
by officers, directors, their immediate families and concentrated holdings of 5%
or more) were fewer than 200,000, there were fewer than 300 public holders of at
least 100 Common Shares each or the aggregate market value of the publicly-held
Common Shares were less than $1 million. If, as a result of the purchase of
Common Shares pursuant to the Offer, the Common Shares no longer meet the
requirements of the AMEX for continued listing and the listing of Common Shares
on such exchange is discontinued, the market for the Common Shares could be
adversely affected.
In the event that the AMEX delists the Common Shares, it is possible that
the Common Shares would continue to trade in the over-the-counter market and
that price quotations would be reported by other sources. The extent of the
public market for the Common Shares and the availability of such quotations
would, however, depend upon the number of holders of Common Shares remaining at
such time, the
11
<PAGE>
interests in maintaining a market in Common Shares on the part of securities
firms, the possible termination of registration of the Common Shares under the
Exchange Act, as described below, and other factors.
The Common Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the Commission
if such Common Shares are not listed on a national securities exchange and there
are fewer than 300 holders of record of the Common Shares. The termination of
the registration of the Common Shares under the Exchange Act would substantially
reduce the information required to be furnished by the Company to its
stockholders and to the Commission, and would make certain of the provisions of
the Exchange Act, such as the short-swing profit recovery provisions of Section
16(b) and the requirement of furnishing a proxy statement in connection with
stockholders' meetings and the related requirement of an annual report to
stockholders, and the requirements of Rule 13e-3 with respect to going private
transactions, no longer applicable with respect to the Common Shares or to the
Company. Furthermore, if registration of the Common Shares under the Exchange
Act were terminated, the ability of "affiliates" of the Company and persons
holding "restricted securities" of the Company to dispose of such securities
pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended,
may be impaired or, with respect to certain persons, eliminated. According to
the Company, as of January 14, 1999, there were 332 holders of record of the
Common Shares and another 823 holders of record of shares of Triton Group, Ltd.
that have not yet been exchanged for Common Shares.
The Common Shares are currently "margin securities" under the regulations of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to extend
credit on such Common Shares as collateral. Depending on factors similar to
those described above regarding listing and market quotations, it is possible
the Common Shares would no longer constitute "margin securities" for purposes of
the Federal Reserve Board's margin regulations and therefore could no longer be
used as collateral for loans made by brokers. If registration of the Common
Shares under the Exchange Act were terminated, the Common Shares would no longer
be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set
forth herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Although neither Purchaser
nor Tyco has any knowledge that would indicate that the statements contained
herein based on such information are untrue, neither Purchaser nor Tyco takes
any responsibility for the accuracy or completeness of the information
concerning the Company furnished by the Company or contained in such documents
and records or for any failure by the Company to disclose events or information
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to Purchaser or Tyco.
The Company was incorporated in the State of Delaware in December 1991 under
the name Security Systems Holdings Inc. The Company's principal executive
offices are located at 125 Frontage Road, Orange, Connecticut 06477 and its
telephone number is (203) 795-9000. The following description of the Company's
business has been taken from the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
"[The Company] sells and installs burglar and fire systems and provides
security monitoring, repair and maintenance services for residential and
business subscribers located primarily in the Northeast and Mid-Atlantic regions
of the United States. [The Company] provides such security alarm systems and
services primarily under its trademark "Alarmguard." [The Company] also sells,
installs and services Sonitrol audio-based security systems in New Haven County,
Connecticut as a Sonitrol franchisee."
12
<PAGE>
Set forth below is a summary of certain consolidated financial information
with respect to the Company and its consolidated subsidiaries, excerpted or
derived from the information contained in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997 and its Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998. More comprehensive financial
information is included in such reports and other documents filed by the Company
with the Commission. The financial information summary set forth below is
qualified in its entirety by reference to such reports and other documents filed
with the Commission and all of the financial information and related notes
contained therein. Such reports and other documents may be inspected and copies
may be obtained from the offices of the Commission in the manner set forth
below.
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS FISCAL YEAR
ENDED ENDED
SEPTEMBER 30 DECEMBER 31
---------------------- ----------------------
<S> <C> <C> <C> <C>
1998 1997 1997 1996
---------- ---------- ---------- ----------
(UNAUDITED)
STATEMENT OF OPERATIONS:
Total revenues........................................... $ 37,561 $ 24,611 $ 34,260 $ 24,152
Operating loss........................................... (8,278) (5,806) (7,795) (5,937)
Net loss................................................. (12,613) (9,857) (13,149) (8,988)
Loss applicable to common shares......................... (23,098) (10,057) (13,349) (9,673)
Loss per common share.................................... (4.13) (2.23 (1) (2.78 (1) (3.12)(1)
BALANCE SHEET DATA:
Working capital deficit.................................. $ (5,411) (9,741) $ (9,493) $ (7,052)
Total assets............................................. 116,956 74,164 69,850 39,131
Long term liabilities.................................... 70,577 52,842 51,959 34,403
Preferred Stock.......................................... 38,793 0 0 16,273
Stockholders' deficiency................................. (17,694) (1,244) (3,197) (24,898)
</TABLE>
- ------------------------
(1) The loss per Common Share for the years ended December 31, 1996 and 1997 as
well as the nine months ended September 30, 1997 give effect to the
conversion of all common and preferred stock of Security Systems Holdings,
Inc. (the predecessor company) to Common Shares of the Company, as if such
conversion occurred on January 1, 1996.
OTHER INFORMATION. The Common Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational filing requirements of
the Exchange Act and, in accordance therewith, is obligated to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Information, as of
particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company is required to be disclosed in such proxy statements and
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities at the Commission's principal
office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and
at the regional offices of the Commission located at 7 World Trade Center, Suite
1300, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The Commission maintains a site on the World Wide Web, and the
reports, proxy statements and other information filed by the Company with the
Commission may be accessed electronically on the Web at http://www.sec.gov.
Copies of such material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549.
13
<PAGE>
9. CERTAIN INFORMATION CONCERNING TYCO AND THE PURCHASER. Purchaser is a
newly formed Delaware corporation and an indirect wholly-owned subsidiary of
Tyco. To date, Purchaser has not conducted any business other than incident to
its formation, the execution and delivery of the Merger Agreement and the
commencement of the Offer.
Until immediately prior to the time that Purchaser purchases Common Shares
pursuant to the Offer and Preferred Shares pursuant to the Preferred Stock
Purchase Agreement, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer, the Preferred Stock Purchase Agreement and the Merger. Since
Purchaser is newly formed and has minimal assets and capitalization, no
meaningful financial information is available. The address of the principal
office of Purchaser is One Tyco Park, Exeter, New Hampshire 03833.
Tyco is a diversified manufacturing and service company that, through its
subsidiaries, operates in four segments: (i) the design, manufacture,
installation and service of fire detection and suppression systems, and the
installation, monitoring and maintenance of electronic security systems; (ii)
the design, manufacture and distribution of disposable medical supplies and
other specialty products, and the conduct of vehicle auctions and related
services; (iii) the design, manufacture and distribution of flow control
products; and (iv) the design, manufacture and distribution of electrical and
electronic components, and the design, manufacture, installation and service of
undersea cable communication systems. On November 22, 1998, a subsidiary of Tyco
entered into a definitive merger agreement for the acquisition of AMP
Incorporated, which designs, manufactures, and markets electronic, electrical,
and electro-optic connection devices and associated application tools and
machines. The AMP acquisition is subject to various conditions.
On July 2, 1997, a wholly-owned subsidiary of what was formerly called ADT
Limited ("ADT") merged with Tyco International Ltd., a Massachusetts corporation
("Former Tyco"). Upon consummation of the merger, ADT (the continuing public
company) changed its name to Tyco International Ltd., and Former Tyco changed
its name to Tyco International (US) Inc.
Tyco is a Bermuda company. Its registered and principal executive offices
are located at The Gibbons Building, 10 Queen Street, Suite 301, Hamilton HM11
Bermuda, and its telephone number is (441) 292-8674. The executive offices of
Tyco's principal United States subsidiary, Tyco International (US) Inc., are
located at One Tyco Park, Exeter, New Hampshire 03833, and its telephone number
is (603) 778-9700.
The following table has been derived from Tyco's audited supplemental
consolidated financial statements for the year ended September 30, 1998, the
nine months ended September 30, 1997 and the year ended December 31, 1996. The
following financial information reflects the combined results of operations and
financial position of Tyco and United States Surgical Corporation ("US
Surgical"), which was acquired by Tyco on October 1, 1998, restated for all
periods presented pursuant to the pooling of interests method of accounting.
More comprehensive financial information is included in Tyco's Annual Report on
Form 10-K for the fiscal year ended September 30, 1998, its Current Reports on
Forms 8-K and 8-K/A filed December 10, and December 11, 1998, respectively, and
other documents filed by Tyco with the Commission. The following summary is
qualified in its entirety by reference to such reports and other documents and
the financial information (including any related notes) contained therein. Such
reports and other documents should be available for inspection and copies
thereof should be obtainable in the manner set forth in Section 8. Such reports
and other documents should also be available for inspection at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005, where
the common shares of Tyco are listed for trading.
14
<PAGE>
SELECTED SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA OF TYCO
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
1998 (1) 1997(1) 1996 (2)
------------- ------------------ ------------
<S> <C> <C> <C>
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Net sales....................................................... $ 13,537.2 $8,457.8 $ 9,216.4
Operating income (loss)(3)(4)(5)................................ 1,625.2 (376.0 ) 131.9
Income (loss) from continuing operations........................ 965.1 (697.7 ) (187.6 )
Income (loss) from continuing operations per common share(6):
Basic......................................................... 1.54 (1.23 ) (0.40 )
Diluted....................................................... 1.50 (1.23 ) (0.40 )
Cash dividends per common share(6)(7)........................... 0.10 See (7) below.
CONSOLIDATED BALANCE SHEET DATA:
Total assets.................................................... $ 18,722.6 $12,141.6 $ 9,986.1
Long-term debt.................................................. 5,254.3 2,613.2 2,020.8
Shareholders' equity............................................ 7,199.6 4,659.3 4,342.4
</TABLE>
- ------------------------
(1) In September 1997, Tyco changed its fiscal year end from December 31 to
September 30. Accordingly, the nine-month transition period ended September
30, 1997 and the year ended September 30, 1998 is presented.
(2) On July 2, 1997, Tyco (formerly ADT) merged with Former Tyco. On August 27,
1997, August 29, 1997, and October 1, 1998, Tyco merged with INBRAND
Corporation ("INBRAND"), Keystone International, Inc. ("Keystone"), and US
Surgical, respectively. These four combinations are more fully described in
Notes 1 and 2 to the Supplemental Consolidated Financial Statements
contained in Tyco's Current Report on Form 8-K filed on December 10, 1998.
Prior to their respective mergers, ADT, Keystone and US Surgical had a
December 31 fiscal year end and Former Tyco had a June 30 fiscal year end.
The historical results have been combined using a December 31 fiscal year
end for ADT, Keystone, Former Tyco and US Surgical for the year ended
December 31, 1996.
(3) Operating income in the fiscal year ended September 30, 1998 includes
certain charges of $80.5 million, including $9.6 million of merger costs and
$70.9 million of costs to exit certain businesses in US Surgical's
operations, and restructuring charges of $12.0 million related to severance
costs, facility disposals and asset write-downs as part of US Surgical's
cost cutting objectives. See Note 15 to the Supplemental Consolidated
Financial Statements contained in Tyco's Form 8-K filed on December 10,
1998.
(4) Operating loss in the nine months ended September 30, 1997 includes charges
related to merger, restructuring and other non-recurring costs of $917.8
million and impairment of long-lived assets of $148.4 million primarily
related to the mergers and integration of ADT, Former Tyco, Keystone and
INBRAND and charges of $24.3 million for litigation and other related costs
and $5.8 million for restructuring charges in US Surgical's operations. See
Notes 11 and 15 to the Supplemental Consolidated Financial Statements
contained in Tyco's Form 8-K filed on December 10, 1998. The results for the
nine months ended September 30, 1997 also include a charge of $361.0 million
for the write-off of purchased in-process research and development related
to the acquisition of the submarine systems business of AT&T Corp.
(5) Operating loss in 1996 includes non-recurring charges of $744.7 million
related to the adoption of Statement of Financial Accounting Standards No.
121, $237.3 million related principally to the restructuring of ADT's
electronic security services business in the United States and United
Kingdom and $8.8 million of fees and expenses related to ADT's acquisition
of Automated Security (Holdings)
15
<PAGE>
plc, a United Kingdom company. See Notes 11 and 15 to the Supplemental
Consolidated Financial Statements contained in Tyco's Form 8-K filed on
December 10, 1998.
(6) Per share amounts for all periods presented have been restated to give
effect to the mergers with Former Tyco, Keystone, INBRAND and US Surgical, a
0.48133 reverse stock split effected on July 2, 1997, and two-for-one stock
split distributed on October 22, 1997, effected in the form of a stock
dividend.
(7) Tyco has paid a quarterly dividend of $0.025 per common share since July 2,
1997, the date of the Former Tyco/ADT merger. ADT had not paid any dividends
on its common shares since 1992. Prior to the merger with ADT, Former Tyco
paid a quarterly cash dividend of $0.025 per share of common stock since
January 1992. Prior to its merger with Tyco, Keystone paid quarterly
dividends of $0.19 per share since January 1994. US Surgical paid quarterly
dividends of $0.04 per share in the year ended September 30, 1998 and the
nine months ended September 30, 1997 and aggregate dividends of $0.08 per
share in 1996. The payment of dividends by Tyco in the future will be
determined by Tyco's Board of Directors and will depend on business
conditions, Tyco's financial condition and earnings and other factors.
Except as set forth in this Offer to Purchase, none of Tyco, Purchaser or,
to the best of their knowledge, any of the persons listed in Annex I or Annex II
hereto, (a) has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including, but
not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss, or the giving or withholding of proxies, (b) has
engaged in contacts, negotiations or transactions with the Company or its
affiliates concerning a merger, consolidation, acquisition, tender offer or
other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets or (c) has had any other transaction
with the Company or any of its executive officers, directors or affiliates that
would require disclosure under the rules and regulations of the Commission
applicable to the Offer.
10. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by Tyco
and Purchaser to purchase all Common Shares pursuant to the Offer and the
Merger, (including amounts payable upon exercise to optionholders and
warrantholders), to purchase the Preferred Shares pursuant to the Preferred
Stock Purchase Agreement and to pay related fees and expenses, is estimated to
be approximately $114.5 million.
Purchaser will obtain all such funds from Tyco or its affiliates. Tyco has
sufficient financial resources to satisfy its and Purchaser's obligations under
the Offer, the Preferred Stock Purchase Agreement and the Merger Agreement. This
Offer is not conditioned upon any financing arrangements.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER.
Certain information in this Section on the background of the Offer regarding
the deliberations of the Company's Board and the actions of the Company's
management and financial advisor is based upon information furnished by the
Company to Purchaser.
In October 1998, DLJ, the Company's financial advisors, contacted Tyco
concerning a possible acquisition of the Company. On November 3, 1998,
representatives of the Company, including its Chief Executive Officer and
President, Mr. Russell MacDonnell, and DLJ met with representatives of Tyco,
including Mr. Dennis Kozlowski, Chairman and Chief Executive Officer of Tyco, to
discuss the matter further. The Tyco representatives expressed a preliminary
interest in such an acquisition, subject to the opportunity to perform a due
diligence investigation of the Company. On November 5, 1998, Tyco International
(US) Inc. executed a confidentiality letter in favor of the Company.
Beginning on December 1, 1998 and continuing through the end of December,
Tyco conducted an extensive due diligence investigation of the Company. In the
course of this investigation, Tyco personnel reviewed documentation and
conducted discussions with the Company's management and other Company
16
<PAGE>
representatives concerning the Company's financial condition, monitoring
facility, operations, environmental compliance, corporate history and other
business and legal matters. Tyco operating personnel also visited the Company's
monitoring facility during this period.
Based upon Tyco's valuation analysis, on December 8, 1998, Mr. Kozlowski
orally delivered to Mr. MacDonnell an offer to acquire all the outstanding
common and preferred equity of the Company, including amounts payable to
optionholders and warrantholders, for aggregate consideration of approximately
$114 million. Later that day, Tyco made a written proposal embodying this
aggregate consideration pursuant to which Tyco would acquire the Common Shares
at a price of $10 per share and the Preferred Shares at a price of $1,300 per
share. The proposal stated that it was subject to completion of Tyco's diligence
investigation and contingent upon consummation of the transaction not later than
January 30, 1999. The January 30, 1999 date was selected because of Tyco's
understanding that holders of the Preferred Shares would be entitled to receive
a redemption price of $1,300 per share if a change of control transaction, such
as Tyco's acquisition proposal, occurred on or before February 1, 1999, but the
holders would be entitled to $1,500 per share if such a transaction were to
occur thereafter.
Following meetings of the Company's Board of Directors on December 8, and
December 9, 1998, Mr. MacDonnell indicated to representatives of Tyco that the
Company was interested in pursuing Tyco's proposal, without specifying, however,
the per share prices for the Common Shares and Preferred Shares that the
Company's Board would approve. Tyco advised that the aggregate consideration
that it was prepared to pay in an acquisition transaction was limited as
previously discussed, but that it was agreeable to offsetting changes in the per
share prices for the respective classes of Company stock within this limitation.
Tyco also indicated that, so long as the limitation on aggregate consideration
were observed, Tyco would not require that the transaction be consummated by
January 30, 1999. The Company informed Tyco that it would be seeking to execute
confidentiality agreements with certain holders of the Preferred Shares, so that
it could discuss with them a possible transaction with Tyco. Thereafter, Tyco's
counsel circulated a first draft of the Merger Agreement.
At a regular meeting of the Tyco Board of Directors on December 14, 1998,
the Tyco Board considered the proposed acquisition of the Company.
Representatives of Tyco's management made a presentation concerning the progress
of Tyco's diligence investigation, a review of the Company's operating results
and anticipated synergies with Tyco's existing security service operations. The
Tyco Board then approved the acquisition of the Company based upon the aggregate
transactional value communicated to the Company by Mr. Kozlowski.
The Company's Board of Directors held special meetings on December 16, and
December 17, 1998 at which Tyco's proposal and the terms of the draft Merger
Agreement, as well as possible other strategic alternatives available to the
Company, were discussed. DLJ and management of the Company also conducted
discussions about this time with holders of the Preferred Stock that had
executed confidentiality agreements. Following these meetings and discussions,
management of the Company indicated to Tyco its belief that a transaction at a
price of $9.34 per share for the Common Shares and $1,400 per share for the
Preferred Shares would be acceptable to the Company's Board and the holders of
the Preferred Shares.
On December 21, 1998, Tyco's counsel circulated a first draft of the
Preferred Stock Purchase Agreement. Over the next several days, counsel for Tyco
and the Company negotiated the terms of the Merger Agreement, and counsel for
Tyco and certain holders of the Preferred Shares negotiated the terms of the
Preferred Stock Purchase Agreement. At this time, holders of the Series A
Preferred Stock indicated to Tyco and the Company that they were unwilling to
forego the payment of accrued dividends through the date of the purchase of
their shares, to which they were entitled under the terms of the Preferred
Shares. Tyco indicated to the Company and such holders that payment of the
dividends would effectively increase Tyco's purchase price for the Company and
that, based upon Tyco's valuation analysis, it was not in a position to increase
its total offer price for the Company.
On December 23, 1998, the Company's Board again met to consider the Tyco
acquisition. The Board was advised, among other things, of the proposed payment
in the acquisition of $9.34 per Common Share
17
<PAGE>
and $1,400 per Preferred Share and of the unresolved issue of the dividend
payments on the Series A Preferred Stock. At this meeting, DLJ indicated that it
believed that it would be in a position to opine that the aggregate
consideration offered under the Tyco proposal was fair to the Company's
stockholders from a financial point of view, assuming no significant change in
the proposed terms. Although no formal action was taken, members of the
Company's Board indicated that they would support a transaction with Tyco on the
proposed terms.
On January 5, 1999, the Company's Board held a special meeting to receive a
report on the status of the transaction. Management reported that the
disagreement between Tyco and the holders of the Series A Preferred Stock
regarding the payment of dividends persisted. Management also stated that if the
per share price payable to the holders of Common Shares were $9.25, Tyco should
not object to the payment of dividends on the Series A Preferred Stock, since
the aggregate cost of the transaction would not exceed the aggregate purchase
price that Tyco was prepared to pay. Although no formal action was taken at the
meeting, members of the Company's Board indicated that they would be prepared to
approve a transaction on this basis and instructed management to so inform Tyco.
Thereafter, Mr. MacDonnell called Mr. Kozlowski to propose a purchase price
of $9.25 per Common Share and $1,400 per Preferred Share, provided Tyco agreed
that accrued dividends would be paid on the Series A Preferred Stock. Mr.
Kozlowski agreed to this proposal. Tyco also agreed to make certain changes to
the Preferred Stock Purchase Agreement at the request of the holders of
Preferred Shares.
Between January 5, and January 8, 1999, counsel for Tyco and the Company
finalized the terms of the Merger Agreement and counsel for Tyco and the holders
of the Preferred Shares finalized the terms of the Preferred Stock Purchase
Agreement.
On January 8, 1999, the Company's Board met to consider the revised
acquisition proposal. At the meeting, the Company's Board reviewed the
transaction with management, outside legal counsel and representatives of DLJ.
DLJ then delivered its oral opinion, subsequently confirmed in writing, that as
of such date, the aggregate consideration to be received by the Company's
stockholders pursuant to the Merger Agreement and the Preferred Stock Purchase
Agreement was fair to such stockholders from a financial point of view. After
discussion, the Company's Board unanimously approved the Merger Agreement, the
Preferred Stock Purchase Agreement and the transactions contemplated by each of
them, including the Offer and the Merger, and determined to recommend that the
holders of the Common Shares tender their shares pursuant to the Offer.
Also on January 8, 1999, the holders of more than 75% of the Preferred Stock
delivered the certificates representing their shares to the escrow agent under
the Preferred Stock Purchase Agreement and delivered to Tyco's counsel their
signature pages to the Preferred Stock Purchase Agreement. Following approval of
the Merger Agreement by the Company's Board, Tyco and the Company entered into
the Merger Agreement. The Merger Agreement was publicly announced by joint press
release made prior to the opening of the U.S. financial markets on January 11,
1999.
12. PURPOSE OF THE OFFER; SHORT FORM MERGER; PLANS FOR THE COMPANY;
DISSENTERS' RIGHTS; GOING PRIVATE TRANSACTIONS.
PURPOSE OF THE OFFER. The purpose of the Offer and the purchase of the
Preferred Shares pursuant to the Preferred Stock Purchase Agreement is for
Purchaser to acquire control of, and a majority equity interest in, the Company.
The purpose of the Merger is to acquire the remaining equity interest. The
acquisition of the entire common equity interest in the Company has been
structured as a cash tender offer followed by a cash merger in order to provide
a prompt and orderly transfer of ownership of the common equity of the Company
from the public stockholders to Tyco and to provide public stockholders with
cash for all of their Common Shares. Pursuant to the Preferred Stock Purchase
Agreement, Purchaser will pay for and acquire all of the outstanding preferred
equity promptly following the purchase of Common Shares in the Offer.
Accordingly, upon consummation of the transactions contemplated by the Merger
Agreement and the Preferred Stock Purchase Agreement, Tyco will own the entire
equity interest in the Company.
18
<PAGE>
Under the DGCL and the Company's Certificate of Incorporation, the approval
of the Board of Directors of the Company and the affirmative vote of a majority
of the holders of outstanding Common Shares and Preferred Shares, voting as a
single class, are required to approve and adopt the Merger Agreement and the
Merger. The Board of Directors of the Company has approved the Offer, the Merger
and the Merger Agreement and the transactions contemplated thereby, and, unless
the Merger is consummated pursuant to the short-form merger provisions under the
DGCL described below, the only remaining required corporate action of the
Company is the approval and adoption of the Merger Agreement and the Merger by
the affirmative vote of the holders of a majority of the outstanding voting
power of the Company. If the Minimum Condition is satisfied, Purchaser will have
sufficient voting power to cause the approval and adoption of the Merger
Agreement and the Merger without the affirmative vote of any other stockholder.
The Merger Agreement provides that, if approval of the Merger by the
stockholders of the Company is required by law, the Company will, as soon as
possible following payment for Common Shares in the Offer, duly call and hold a
meeting of stockholders for the purpose of obtaining stockholder approval of the
Merger, and the Company, through its Board of Directors, will recommend to
stockholders that such approval be given.
SHORT FORM MERGER. Under the DGCL, if Purchaser acquires at least 90% of
the outstanding Shares of each class, Purchaser will be able to approve the
Merger without a vote of the Company's other stockholders. The Merger Agreement
provides that if Purchaser, or any other direct or indirect subsidiary of Tyco,
acquires at least 90% of each outstanding class of Shares, Tyco, Purchaser and
the Company will take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after the expiration of the Offer
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL. Pursuant to the Preferred Stock Purchase Agreement, Purchaser
should acquire all of the outstanding Preferred Shares. If Purchaser acquires at
least 90% of the Common Shares in the Offer, it will be able to effect the
Merger under Section 253 of the DGCL. In the event that all of the conditions to
Purchaser's obligation to purchase Common Shares in the Offer are satisfied or
waived and the number of Common Shares tendered is less than 90% of the
outstanding Common Shares, Purchaser may, subject to the limitations set forth
in the Merger Agreement, extend the Offer for an aggregate period of not more
than 10 business days (for all such extensions) without the consent of the
Company. See Section 1. If Purchaser does not acquire at least 90% of the
outstanding Common Shares, a significantly longer period of time may be required
to effect the Merger, because a vote of the Company's stockholders would be
required under the DGCL.
PLANS FOR THE COMPANY. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Surviving Corporation
substantially as they are currently being conducted, but within Tyco's ADT
security services unit. The directors of Purchaser will be the initial directors
of the Surviving Corporation, and the officers of the Company and such other
persons as are designated by Tyco will be the initial officers of the Surviving
Corporation. Upon completion of the Offer, Tyco intends to conduct a detailed
review of the Company and its assets, corporate structure, capitalization,
operations, policies, management and personnel. After such review, Tyco will
determine what actions or changes, if any, would be desirable in light of the
circumstances which then exist, and reserves the right to effect such actions or
changes.
Except as described in this Offer to Purchase, neither Tyco nor Purchaser
has any present plans or proposals that would relate to or result in (i) any
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries, (ii) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, (iii) any change in the Company's Board of Directors or
management, (iv) any material change in the Company's capitalization or dividend
policy, (v) any other material change in the Company's corporate structure or
business, (vi) a class of securities of the Company being delisted from a
national securities exchange or ceasing to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association,
or (vii) a class
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of equity securities of the Company becoming eligible for termination of
registration pursuant to Section 12(g) of the Exchange Act.
DISSENTERS' RIGHTS. No dissenters' rights are available in connection with
the Offer. However, if the Merger is consummated, stockholders of the Company
may have certain rights under the DGCL to dissent, and demand appraisal of, and
to obtain payment for the fair value of their Common Shares. Such rights, if the
statutory procedures were complied with, could lead to a judicial determination
of the fair value of the Common Shares (excluding any element of value arising
from the accomplishment or expectation of the Merger) to be required to be paid
in cash to such dissenting holders for their Common Shares. In addition, such
dissenting stockholders would be entitled to receive payment of a fair rate of
interest from the date of consummation of the Merger on the amount determined to
be the fair value of their Common Shares. In determining the fair value of the
Common Shares, a Delaware court would be required to take into account all
relevant factors. Accordingly, such determination could be based upon
considerations other than, or in addition to, the market value of the Common
Shares, including, among other things, asset value and earning capacity. In
WEINBERGER V. UOP, INC., the Delaware Supreme Court stated, among other things,
that "proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in an appraisal proceeding. Therefore, the value so determined in
any appraisal proceeding could be different from the price being paid in the
Offer.
GOING PRIVATE TRANSACTIONS. The Merger would have to comply with any
applicable Federal law operative at the time. The Commission has adopted Rule
13e-3 under the Exchange Act which is applicable to certain "going private"
transactions and which may under certain circumstances be applicable to the
Merger or another business combination following the purchase of Common Shares
pursuant to the Offer in which Purchaser or Tyco seeks to acquire the remaining
Common Shares not held by it. Purchaser believes, however, that Rule 13e-3 will
not be applicable to the Merger. If applicable, Rule 13e-3 requires, among other
things, that certain financial information concerning the Company and certain
information relating to the fairness of such transaction and the consideration
offered to minority stockholders in such transaction be filed with the
Commission and disclosed to stockholders prior to the consummation of such
transaction.
13. THE MERGER AGREEMENT; PREFERRED STOCK PURCHASE AGREEMENT.
THE MERGER AGREEMENT
The following summary of certain provisions of the Merger Agreement, a copy
of which is filed as an exhibit to the Schedule 14D-1 referred to in Section 18,
is qualified in its entirety by reference to the text of the Merger Agreement.
Capitalized terms used in the following summary and not otherwise defined in
this Offer to Purchase shall have the meanings set forth in the Merger
Agreement.
THE OFFER. The Merger Agreement provides that Purchaser will commence the
Offer and that, upon the terms and subject to the prior satisfaction or waiver
of the conditions of the Offer, Purchaser will purchase all Common Shares (which
is defined as the shares of common stock together with the associated Rights)
validly tendered pursuant to the Offer. The Merger Agreement provides that,
without the written consent of the Company, Purchaser will not (i) decrease the
Common Per Share Amount or change the form of consideration payable in the
Offer, (ii) decrease the number of Common Shares sought in the Offer, (iii)
amend or waive satisfaction of the Minimum Condition or (iv) impose additional
conditions to the Offer or amend any other term of the Offer in any manner
adverse to the holders of Common Shares, except that if on the initially
scheduled Expiration Date all conditions to the Offer shall not have been
satisfied or waived, Purchaser may, from time to time, in its sole discretion,
extend the Expiration Date. The Merger Agreement provides that if, immediately
prior to the Expiration Date, as it may be extended, the Common Shares tendered
and not withdrawn pursuant to the Offer equal less than 90% of the outstanding
Common Shares, Purchaser may extend the Offer for a period not to exceed 10
business days.
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THE MERGER. The Merger Agreement provides that, following the consummation
of the Offer and subject to the terms and conditions thereof, at the effective
time of the Merger (the "Effective Time") Purchaser shall be merged with and
into the Company and, as a result of the Merger, the separate corporate
existence of Purchaser shall cease, and the Company shall continue as the
Surviving Corporation and an indirect subsidiary of Tyco.
The respective obligations of Tyco and Purchaser, on the one hand, and the
Company, on the other hand, to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of each of the following conditions; (i) Tyco
or Purchaser or their affiliates shall have consummated the Offer, unless such
failure to purchase is a result of a breach of Tyco's or Purchaser's obligations
under the Merger Agreement, (ii) the Merger, the Merger Agreement and the
transactions contemplated thereby shall have been approved by the requisite vote
of the stockholders, if required by applicable law, in order to consummate the
Merger, (iii) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered, promulgated or
enforced by any court or other governmental authority which prohibits or
prevents the consummation of the Merger which has not been vacated, dismissed or
withdrawn prior to the Effective Time, and (iv) all consents of any governmental
authority required for the consummation of the Merger and the transactions
contemplated by the Merger Agreement shall have been obtained other than those
consents the failure to obtain which is not reasonably likely to have a material
adverse effect on the business, assets, condition (financial or other),
liabilities or results of operations of the Surviving Corporation and its
subsidiaries taken as a whole.
At the Effective Time of the Merger, (i) each issued and outstanding Common
Share (other than Common Shares that are held by stockholders properly
exercising dissenters' rights under the DGCL and Common Shares to be cancelled
pursuant to clause (iii) below) will be canceled and extinguished and be
converted into the right to receive the Common Per Share Amount in cash payable
to the holder thereof, without interest, (ii) each issued and outstanding
Preferred Share (other than Preferred Shares that are held by stockholders
properly exercising dissenters' rights under the DGCL and Preferred Shares to be
cancelled as provided in clause (iii) below) will be cancelled and extinguished
and converted into the right to receive $1,400 per Preferred Share plus accrued
and unpaid dividends to and including the date of purchase (the "Preferred Per
Share Amount"), (iii) each Share held in the treasury of the Company and each
Share owned by Tyco or any direct or indirect wholly owned subsidiary of Tyco
immediately before the Effective Time shall be canceled and extinguished, and no
payment or other consideration shall be made with respect thereto and (iv) the
shares of Purchaser common stock outstanding immediately prior to the Merger
will be converted into 1,000 shares of the common stock of the Surviving
Corporation, which shares will constitute all of the issued and outstanding
capital stock of the Surviving Corporation.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that
promptly upon the purchase by Tyco of Common Shares pursuant to the Offer (and
provided that the Minimum Condition has been satisfied), Tyco shall be entitled
to designate such number of directors, rounded up to the next whole number, on
the Board of Directors of the Company as will give Tyco, subject to compliance
with Section 14(f) of the Exchange Act, representation on the Board of Directors
of the Company equal to at least that number of directors which equals the
product of the total number of directors on the Board of Directors of the
Company (giving effect to the directors appointed or elected pursuant to this
sentence and including current directors serving as officers of the Company)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Tyco or any affiliate of Tyco (including such Common Shares as are
accepted for payment pursuant to the Offer, but excluding Common Shares held by
the Company) bears to the number of Shares outstanding. For this purpose, each
Common Share shall be counted as one Share, and each Preferred Share shall be
counted as the number of Common Shares into which such Preferred Share is
convertible. At such time, if requested by Tyco, the Company will also cause
each committee of the Board of Directors of the Company to include persons
designated by Tyco constituting the same percentage of each such committee as
Tyco's designees are of the Board of Directors of the Company. The Company
shall, upon request by Tyco, promptly increase the size of the Board of
Directors of the Company or exercise reasonable best efforts to secure the
resignations of such number of
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directors as is necessary to enable Tyco's designees to be elected to the Board
of Directors of the Company in accordance with terms of this section and to
cause Tyco's designees so to be elected. Notwithstanding the foregoing
provisions, until the Effective Time the Board of Directors of the Company shall
have at least two directors who are directors on the date of the Merger
Agreement and each of whom is neither an officer of the Company nor a designee,
shareholder, affiliate or associate (within the meaning of the federal
securities laws) of Tyco (such directors, the "Independent Directors"). Each
Independent Director shall be designated by the Company, unless (i) the Company
is then required to comply with Section VIII.2(j) of the Preferred Stock
Purchase Agreement dated as of February 2, 1998 between the Company and the
holders on January 8, 1999 of the Preferred Stock (the "Current Preferred
Holders") (which section permits Advance Capital Offshore Partners, L.P.
("Advance") to designate one director (the "Advance Director") so long as
Advance owns any Preferred Shares and at least 20% of the Preferred Shares
remain outstanding), in which case one Independent Director shall be an Advance
Director and the other Independent Director shall be designated by the Company,
or (ii) the Company is not then required to comply with the aforementioned
Section VIII.2(j) but the Current Preferred Holders continue to own at least 10%
of the outstanding Preferred Shares (the "Current Preferred Director
Condition"), in which case one Independent Director shall be designated by
Current Preferred Holders holding a majority of the outstanding Preferred Shares
at such time excluding any Preferred Shares then held by Tyco or Purchaser (the
"Majority of Current Preferred") and the other Independent Director shall be
designated by the Company. If no Independent Directors remain, persons shall be
designated to fill the vacancies by the Company or, if the Current Preferred
Director Condition is satisfied, one such person shall be designated by the
Company and one by the Majority of Current Preferred. In any event, each person
so designated shall be neither an officer of the Company nor a designee,
shareholder, affiliate or associate of Tyco, and each such person shall be
deemed to be an Independent Director for purposes of the Merger Agreement.
Notwithstanding anything in the Merger Agreement to the contrary, prior to the
Effective Time, the unanimous vote of the Independent Directors shall be
required to (i) amend or terminate the Merger Agreement on behalf of the
Company, (ii) exercise or waive any of the Company's rights or remedies
thereunder, (iii) extend the time for performance of Tyco's obligations
thereunder, (iv) take any other action by the Company in connection with the
Merger Agreement required to be taken by the Board of Directors of the Company
or (v) amend the Company's Certificate of Incorporation or the Company's Bylaws,
each as in effect on January 8, 1999.
STOCKHOLDERS' MEETING. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call, give
notice of, convene and hold a special meeting of its stockholders as promptly as
practicable following the consummation of the Offer for the purpose of voting
upon the Merger and related transactions. The Merger Agreement provides that the
Company will, if required by applicable law in order to consummate the Merger,
prepare and file with the Commission and, when cleared by the Commission, will
mail to stockholders a proxy statement in connection with a meeting of the
Company's stockholders to vote upon the Merger and related transactions, or an
information statement, as appropriate, satisfying all requirements of the
Exchange Act.
If Purchaser acquires at least a majority of the Common Shares, it will have
sufficient voting power, when taken together with the voting power of the
Preferred Shares that it will acquire pursuant to the Preferred Stock Purchase
Agreement, to approve the Merger, even if no other stockholder votes in favor of
the Merger.
The Merger Agreement provides that in the event that Tyco or Purchaser
acquires at least 90% of each class of Shares, pursuant to the Offer, the
Preferred Stock Purchase Agreement or otherwise, Tyco, Purchaser and the Company
will take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES. The Merger Agreement provides
that each of the Company and Tyco shall take all reasonable actions necessary to
provide that all then outstanding options to purchase Common Shares, whether or
not then exercisable or vested ("Company Options"), shall
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become fully exercisable and vested upon the consummation of the Offer. Holders
of Company Options that have become fully exercisable and vested upon the
consummation of the Offer in accordance with the provisions of the preceding
sentence will have a period of sixty days following the consummation of the
Offer to surrender their options to the Company in exchange for cash equal to
the excess of (A) the aggregate value of the Common Shares underlying such
options, based on the Common Per Share Amount, over (B) the aggregate exercise
price for the Common Shares underlying such options. Each of the Company and
Tyco shall take all reasonable actions necessary to provide that, upon
consummation of the Merger, all then outstanding Company Options shall be
converted into the right to receive cash equal to the excess of (i) the
aggregate value of the Common Shares underlying such options, based on the
Common Per Share Amount, over (ii) the aggregate exercise price for the Common
Shares underlying such options.
The Merger Agreement provides that each of the Company and Tyco shall take
all reasonable actions necessary so that each of the warrants to purchase 50,000
Common Shares at a price of $5.00 per share, subject to adjustment, the warrants
to purchase 80,000 Common Shares at a price of $8.66 per share, subject to
adjustment, and the warrants to purchase 215,939 Common Shares at a price of
$11.11 per share, subject to adjustment (collectively, the "Company Warrants"),
shall be exercisable, from and after the Effective Time, for an amount of cash
equal in the aggregate to the Common Per Share Amount multiplied by the number
of Common Shares for which such warrant was exercisable immediately prior to the
Effective Time. Otherwise, the exercise of any Company Warrant shall remain
subject to all terms and conditions provided in the applicable Company Warrant
and/or the applicable warrant agreement.
INTERIM OPERATIONS; COVENANTS. Pursuant to the Merger Agreement, the
Company has agreed that, except as expressly contemplated or provided by the
Merger Agreement or in the Company Disclosure Letter delivered by the Company to
Tyco and Purchaser in connection with the Merger Agreement or consented to in
writing by Tyco (which consent shall not be unreasonably denied), after January
8, 1999, and prior to the Effective Time, (i) the Company shall conduct, and it
shall cause its subsidiaries to conduct, its or their businesses in the ordinary
course and consistent with past practice, and the Company shall, and it shall
cause its subsidiaries to, use its or their reasonable best efforts to preserve
substantially intact its business organization, to keep available the services
of its present officers and employees and to preserve the present commercial
relationships of the Company and its subsidiaries with persons with whom the
Company or its subsidiaries do significant business and (ii) without limiting
the generality of the foregoing, neither the Company nor any of its subsidiaries
will:
(A) amend or propose to amend its Certificate of Incorporation or Bylaws
in any material respect;
(B) authorize for issuance, issue, grant, sell, pledge, dispose of or
propose to issue, grant, sell, pledge or dispose of any shares of, or any
options, warrants, commitments, subscriptions or rights of any kind to
acquire or sell any shares of, the capital stock or other securities of the
Company or any of its subsidiaries, including, but not limited to, any
securities convertible into or exchangeable for shares of stock of any class
of the Company or any of its subsidiaries, except for (a) the issuance of
shares pursuant to the exercise of Company Options outstanding on the date
of the Merger Agreement in accordance with their present terms, (b) the
issuance of shares upon the exercise of Company Warrants outstanding on the
date of the Merger Agreement in accordance with their present terms and (c)
the issuance of shares upon the conversion of Preferred Shares outstanding
on January 8, 1999 in accordance with the present terms of the Preferred
Stock;
(C) split, combine or reclassify any shares of its capital stock or
declare, pay or set aside any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, other than dividends to the holders of Preferred Shares in
accordance with the present terms of the Preferred Stock and dividends or
distributions to the Company or one of its subsidiaries, or directly or
indirectly redeem, purchase or otherwise acquire or offer to acquire any
shares of its capital stock or other securities;
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(D) create, incur or assume any indebtedness for borrowed money or issue
any debt securities, except pursuant to the Company's bank credit agreement,
or make any loans (except as provided in clause (b) of paragraph (E) below);
(E) other than in the ordinary course of business consistent with past
practice, (a) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, indirectly, contingently or otherwise) for
the obligations of any person (other than the Company or one of its
subsidiaries); (b) make any capital expenditures or make any advances or
capital contributions to, or investments in, any other person (other than to
a subsidiary of the Company); (c) voluntarily incur any material liability
or obligation (absolute, accrued, contingent or otherwise); or (d) sell,
transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to
sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any
assets or properties, real, personal or mixed, material to the Company and
its subsidiaries taken as a whole other than to secure debt permitted under
paragraph (D);
(F) increase in any manner the compensation of any of its officers or
employees (other than, except with respect to employees who are executive
officers or directors, in the ordinary course of business reasonably
consistent with past practice) or enter into, establish, amend or terminate
any employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing, health or
other welfare, stock option or other equity, pension, retirement, vacation,
severance, deferred compensation or other compensation or benefit plan,
policy, agreement, trust, fund or arrangement with, for or in respect of,
any stockholder, officer, director, employee, consultant or affiliate other
than, in any such case referred to above, as may be required by law or as
required pursuant to the terms of agreements in effect on the date of the
Merger Agreement or in the ordinary course of business reasonably consistent
with past practice and other than arrangements with new employees (other
than employees who will be officers of the Company) hired in the ordinary
course of business reasonably consistent with past practice and providing
for compensation (other than equity-based compensation) and other benefits
consistent with those provided for similarly situated employees of the
Company as of the date of the Merger Agreement;
(G) alter through merger, liquidation, reorganization, restructuring or
in any other fashion the corporate structure or ownership of any subsidiary
or the Company;
(H) except as may be required as a result of a change in law or as
required by the Commission, change any of the accounting principles or
practices used by it;
(I) make any tax election or settle or compromise any material income
tax liability;
(J) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), 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, or contemplated by, the financial
statements (or the notes thereto) of the Company or incurred in the ordinary
course of business consistent with past practice;
(K) except to the extent necessary for the exercise of its fiduciary
duties by the Board of Directors of the Company as set forth in, and
consistent with the provisions of the Merger Agreement described below under
"No Solicitation," waive, amend or allow to lapse any term or condition of
any confidentiality or "standstill" agreement to which the Company or any
subsidiary is a party; or
(L) take, or agree in writing or otherwise to take, any of the foregoing
actions or any action which would make any of the representations or
warranties of the Company contained in the Merger Agreement untrue or
incorrect in any material respect at or prior to the Effective Time.
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NO SOLICITATION. The Merger Agreement provides that 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 of its subsidiaries that if consummated would
constitute an Alternative Transaction (as defined below) (any of the foregoing
inquiries or proposals being referred to herein as a "Company Takeover
Proposal"). Nothing contained in the Merger Agreement shall prevent the Board of
Directors of the Company from (i) furnishing information to a third party which
has made a BONA FIDE Company Takeover Proposal that is a Superior Proposal (as
defined below) not solicited in violation of the Merger 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, considering and
negotiating a BONA FIDE Company Takeover Proposal that is a Superior Proposal
not solicited in violation of the Merger Agreement; PROVIDED that, as to each of
clauses (i) and (ii), the Board of Directors of the Company reasonably
determines in good faith (after due consultation with independent counsel, which
may be Latham & Watkins) that it is or is reasonably likely to be required to do
so in order to discharge properly its fiduciary duties. For purposes of the
Merger 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 (after consultation with a financial advisor of nationally recognized
reputation) to be more favorable from a financial point of view to its
stockholders than the Offer and the Merger taking into account at the time of
determination all factors relating to such proposed transaction deemed relevant
by the Board of Directors of the Company, including, without limitation, the
financing thereof, the proposed timing thereof and all other conditions thereto
and any changes to the financial terms of the Merger Agreement proposed by Tyco
and Purchaser. "Alternative Transaction" means any of (i) a transaction pursuant
to which any person (or group of persons) other than Tyco 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 subsidiaries of the Company) 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 its subsidiaries, other than the transactions
contemplated by the Merger 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.
Notwithstanding anything to the contrary contained in the Merger Agreement,
prior to the Effective Time, the Company may, in connection with a possible
Company Takeover Proposal, refer any third party to the provisions of the Merger
Agreement described in this section and, below, under the caption "Termination;
Fees" and make a copy of such provisions available to a third party.
The Company shall immediately notify Tyco and Purchaser after receipt of any
Company Takeover Proposal, or any modification of or amendment to any Company
Takeover Proposal, or any request for nonpublic information relating to the
Company or any of its subsidiaries in connection with a Company Takeover
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
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considering making, or has made, a Company Takeover Proposal. Such notice to
Tyco and Purchaser shall be made orally and in writing, and shall indicate the
identity of the person making the Company Takeover Proposal or intending to make
the Company Takeover Proposal or requesting non-public information or access to
the books and records of the Company, the terms of any such Company Takeover
Proposal or modification or amendment to a Company Takeover Proposal, and
whether the Company is providing or intends to provide the person making the
Company Takeover Proposal with access to information concerning the Company as
provided in the preceding paragraph. The Company shall also immediately notify
Tyco and Purchaser, orally and in writing, if it enters into negotiations
concerning any Company Takeover Proposal.
Except as set forth in this section, neither the Board of Directors of the
Company nor any committee thereof shall (i) withdraw or modify, or indicate
publicly its intention to withdraw or modify, in a manner adverse to Tyco, the
approval or recommendation by such Board of Directors or such committee of the
Offer or the Merger and related transactions, (ii) approve or recommend, or
indicate publicly its intention to approve or recommend, any Company Takeover
Proposal or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
a "Company Acquisition Agreement") related to any Company Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the Effective Time the
Board of Directors of the Company determines in good faith, with the advice of
outside counsel, that the failure to do so could reasonably be determined to be
a breach of its fiduciary duties to the Company's stockholders under applicable
law, the Board of Directors of the Company may (subject to this and the
following sentences) approve or recommend a Superior Proposal and, in connection
therewith, withdraw or modify its approval or recommendation of the Offer or the
Merger and related transactions and/or terminate the Merger Agreement (and
concurrently with or after such termination, if it so chooses, cause the Company
to enter into any Company Acquisition Agreement with respect to any Superior
Proposal), but only at a time that is after the third business day following
Tyco's receipt of written notice advising Tyco that the Board of Directors of
the Company has received a Superior Proposal and, in the case of any previously
received Superior Proposal that has been materially modified or amended, such
modification or amendment and specifying the material terms and conditions of
such Superior Proposal, modification or amendment.
Nothing in the foregoing provisions shall prohibit the Company from taking
and disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Board of Directors
of the Company, with the advice of outside counsel, failure so to disclose could
be determined to be a breach of its fiduciary duties to the Company's
stockholders under applicable law; PROVIDED, HOWEVER, that neither the Company
nor its Board of Directors nor any committee thereof shall, except as permitted
by the immediately preceding paragraph, withdraw or modify or indicate publicly
its intention to withdraw or modify, its position with respect to the Offer or
the Merger and related transactions or approve or recommend, or indicate
publicly its intention to approve or recommend, a Company Takeover Proposal.
For so long as the Merger Agreement shall not have been terminated in
accordance with its terms, the Board of Directors of the Company shall not
redeem the Rights or waive or amend any provision of the Rights Agreement, in
any such case to permit or facilitate the consummation of any Company Takeover
Proposal or Alternative Transaction.
RIGHTS AGREEMENT. The Merger Agreement provides that the Board of Directors
of the Company shall take all further action, if any, necessary to render the
Rights inapplicable to the Offer, the Merger and the other transactions
contemplated by the Merger Agreement, in addition to having previously
authorized and approved an amendment to the Rights Agreement to the effect that
none of Purchaser and its affiliates shall become an "Acquiring Person" (as
defined in the Rights Agreement), and no Distribution Date, Share Acquisition
Date or Triggering Event (each as defined in the Rights Agreement) shall occur,
by reason of the approval, execution, or delivery of the Merger Agreement, the
transactions contemplated thereby or any announcement of same.
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INDEMNIFICATION AND INSURANCE. From and after the Effective Time, the
Surviving Corporation shall indemnify and hold harmless all past and present
officers and directors (the "Indemnified Parties") of the Company and of the
subsidiaries of the Company to the full extent such persons may be indemnified
by the Company pursuant to Delaware law, the Company's Certificate of
Incorporation and Bylaws, as each is in effect on January 8, 1999, for acts and
omissions (x) arising out of or pertaining to the transactions contemplated by
the Merger Agreement or arising out of the documents related to the Offer or (y)
otherwise with respect to any acts or omissions occurring or arising at or prior
to the Effective Time and shall advance reasonable litigation expenses incurred
by such persons in connection with defending any action arising out of such acts
or omissions, PROVIDED that such persons provide the requisite affirmations and
undertaking, as set forth in applicable provisions of the DGCL.
In addition, Tyco 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 or arising 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 Tyco and the Surviving
Corporation shall not be required to pay an annual premium for the D&O Insurance
in excess of 300% 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.
The Merger Agreement provides that the foregoing provisions are intended to
benefit the Indemnified Parties and shall be binding on all successors and
assigns of Tyco, Purchaser, the Company and the Surviving Corporation. In the
Merger Agreement, Tyco has agreed to guarantee the performance by the Surviving
Corporation of the indemnified obligations set forth above, which guaranty is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the bankruptcy or insolvency of the Surviving Corporation
or any person. The Indemnified Parties shall be intended third-party
beneficiaries of the foregoing provisions on indemnification and insurance.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Tyco and Purchaser
with respect to, among other things, its organization, capitalization,
subsidiaries, authority relative to the Merger Agreement, governmental approvals
with respect to the Merger Agreement, the absence of contractual or legal
violations resulting from the Merger Agreement, public filings, financial
statements, the absence of material adverse effects on the Company and certain
other events since December 31, 1997, the absence of undisclosed liabilities,
compliance with laws, governmental permits, litigation, material contracts,
employee benefit plans, taxes, intellectual property, labor matters, the absence
of limitations on conduct of business, title to property, leased premises,
environmental matters, insurance, customers, interested party transactions,
alarm contracts, brokers and finders, year 2000 readiness, the Company's alarm
service contracts, and the Company's central monitoring station.
REASONABLE BEST EFFORTS. Under the Merger Agreement, each of the Company,
Tyco and Purchaser has agreed to use reasonable best efforts to take all actions
and to do all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by the Merger
Agreement, including, but not limited to, (i) obtaining all consents from
governmental authorities and other third parties required for the consummation
of the Offer and the Merger and the transactions contemplated thereby and (ii)
timely making all necessary filings under the HSR Act. The Company, Tyco and
Purchaser have also agreed to use reasonable best efforts to take all actions
and to do all things necessary to satisfy the other conditions of the closing of
the Merger.
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PUBLIC ANNOUNCEMENTS. So long as the Merger Agreement is in effect, the
Company, on the one hand, and Tyco and Purchaser, on the other, have agreed not
to issue or cause the publication of any press release or any other announcement
with respect to the Offer or the Merger or the transactions contemplated thereby
without the consent of the other party (such consent not to be unreasonably
withheld or delayed), except where such release or announcement is required by
applicable law or pursuant to any applicable listing agreement with, or rules or
regulations of, any stock exchange on which shares of the capital stock of the
Company or Tyco, as the case may be, are listed or the NASD, or other applicable
securities exchange, in which case the parties will consult prior to making the
announcement.
TERMINATION; FEES. The Merger Agreement provides that it may be terminated
at any time prior to the Effective Time, whether before or after approval of the
stockholders of the Company described therein:
(a) by mutual written consent of Tyco and the Company;
(b) by either Tyco or the Company if any governmental authority shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the consummation of the
transactions contemplated by the Merger Agreement and such order, decree or
ruling or other action shall have become final and nonappealable;
(c) by Tyco if
(i) the Company shall have breached or failed to perform in any
material respect any of its covenants or other agreements contained in
the Merger Agreement, which breach or failure to perform is incapable of
being cured or has not been cured within five days after the giving of
written notice thereof to the Company (but not later than the expiration
of the 20 business day period for which the Offer will be initially
open);
(ii) any representation or warranty of the Company shall not have
been true and correct in all material respects when made;
(iii) any representation or warranty of the Company shall cease to be
true and correct in all material respects at any later date as if made on
such date (other than representations and warranties made as of a
specified date) other than as a result of a breach or failure to perform
by the Company of any of its covenants or agreements under the Merger
Agreement; PROVIDED, HOWEVER, that such representation or warranty is
incapable of being cured or has not been cured within five days after the
giving of written notice thereof to the Company (but not later than the
expiration of the 20 business day period for which the Offer will be
initially open);
PROVIDED, HOWEVER, that the right to terminate the Merger Agreement pursuant
to the provisions described in this clause (c) shall not be available to
Tyco if Purchaser or any other affiliate of Tyco shall acquire shares of
Company Common Stock pursuant to the Offer;
(d) by Tyco if, whether or not permitted to do so by the Merger
Agreement, (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Tyco or
Purchaser its approval or recommendation of the Offer, the Merger or of any
related transactions; (ii) the Board of Directors of the Company or any
committee thereof shall have approved or recommended to the stockholders of
the Company any Company Takeover Proposal or Alternative Transaction; (iii)
the Board of Directors of the Company or any committee thereof shall have
approved or recommended that the stockholders of the Company tender their
Shares in any tender or exchange offer that is an Alternative Transaction;
(iv) the Board of Directors of the Company or any committee thereof shall
have taken any position or make any disclosures to the Company's
stockholders permitted by the Merger Agreement which has the effect of any
of the foregoing; (v) the Board of Directors of the Company or any committee
thereof shall have resolved to take any of the foregoing actions; or (vi)
the Board of Directors of the Company or any committee
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thereof shall have redeemed the Rights, or waived or amended any provision
of the Rights Agreement, in any such case to permit or facilitate the
consummation of any Company Takeover Proposal or Alternative Transaction;
(e) by either Tyco or the Company if, as the result of the failure of
the Minimum Condition or any of the other conditions set forth in Annex I to
the Merger Agreement, the Offer shall have terminated or expired in
accordance with its terms without Purchaser having purchased any Common
Shares pursuant to the Offer, PROVIDED that if the failure to satisfy any
conditions set forth in Annex I shall be a basis for termination of the
Merger Agreement under any other clause (a) through (h) of this section
"Termination; Fees," a termination pursuant to this clause (e) shall be
deemed a termination under such other clause;
(f) by either Tyco or the Company if the Offer shall not have been
consummated on or before March 31, 1999, PROVIDED that the right to
terminate the Merger Agreement pursuant to the provisions described in this
clause (f) shall not be available to any party whose failure to perform any
of its obligations under the Merger Agreement results in the failure of the
Offer to be consummated by such time;
(g) by the Company if Tyco or Purchaser shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in the Merger Agreement, which
breach or failure to perform is incapable of being cured or has not been
cured within five days after the giving of written notice thereof to Tyco;
or
(h) by the Company in accordance with the provisions of the Merger
Agreement described above under "No Solicitation"; PROVIDED, HOWEVER, that
the right to terminate the Merger Agreement pursuant to the provisions
described in this clause (h) shall not be available (x) if the Company has
breached in any material respect its obligations under the provisions
described above under "No Solicitation," or (y) if the Company shall fail to
pay when due the fees and expenses provided for in the Merger Agreement.
The Company agrees that if the Merger Agreement is terminated pursuant to
(i) the provisions described in clause (d) above;
(ii) the provisions described in clause (h) above; or
(iii) the provisions described in clauses (e) or (f) above, and, with
respect to this clause (iii), at the time of such termination any person,
entity or group (as defined in Section 13(d)(3) of the Exchange Act) (other
than Tyco or any of its affiliates or any person identified in the Company's
Proxy Statement dated April 30, 1998 and who has executed the Preferred
Stock Purchase Agreement, PROVIDED that such person has not breached the
terms of such Preferred Stock Purchase Agreement) shall have become the
beneficial owner of more than 15% of the Shares and such person, entity or
group (or any affiliate of such person, entity or group) thereafter (x)
shall make a Company Takeover Proposal and, in the case of a consensual
transaction with the Company, shall substantially have negotiated the terms
thereof, at any time on or prior to the date which is six months after such
termination of the Merger Agreement, and (y) shall consummate such Company
Takeover Proposal at any time on or prior to the date which is one year
after termination of the Merger Agreement, in the case of a consensual
transaction, or six months after termination of the Merger Agreement, in the
case of a non-consensual transaction, in each case with a value per share of
Common Stock of at least $9.25 (with appropriate adjustments for
reclassifications of capital stock, stock dividends, stock splits, reverse
stock splits and similar events);
then the Company shall pay to Tyco the sum of (a) $4.5 million, as promptly as
practicable but in no event later than two business days following termination
of the Merger Agreement pursuant to the provisions
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described in clause (d) or (h) above, or, in the case of clause (iii) of this
paragraph, upon consummation of such Company Takeover Proposal.
The Company further agrees that if the Merger Agreement is terminated
pursuant to the provisions described in clause (c)(i) above,
(A) the Company will pay to Tyco, as promptly as practicable but in no
event later than two business days following termination of the Merger
Agreement, the amount of all documented and reasonable costs and expenses
incurred by Tyco, Purchaser and their affiliates (including but not limited
to fees and expenses of counsel and accountants and out-of-pocket expenses
(but not fees) of financial advisors) in an aggregate amount not to exceed
$450,000 in connection with the Merger Agreement or the transactions
contemplated thereby ("Tyco Expenses"); and
(B) in the event that the company consummates a Company Takeover
Proposal (whether or not solicited in violation of the Merger Agreement)
which is publicly announced within one year from the date of termination of
the Merger Agreement, the sum of $4.5 million, less the amount of any
payment made pursuant to the preceding clause (A), which payment shall be
made not later than two business days following consummation of such Company
Takeover Proposal.
The Company further agrees that if the Merger Agreement is terminated pursuant
to the provisions described in clause (c)(ii) above, the Company will pay to
Tyco, as promptly as practicable but in no event later than two business days
following termination of the Merger Agreement, the Tyco Expenses.
The Company shall not be obligated to make any payments to Tyco pursuant to
clause (iii) of the second preceding paragraph or clause (B) of the immediately
preceding paragraph if the Company Takeover Proposal referenced therein is a
transaction (a "Permitted Financing") in which the Company sells equity
securities for gross proceeds not in excess of $25,000,000; PROVIDED that the
securities issued, or issuable upon exercise, conversion or exchange of the
securities issued, in such Permitted Financing constitute or upon issuance would
constitute less than forty (40%) percent of the outstanding voting power of the
Company after such issuance, exercise, conversion or exchange.
GUARANTEE. Tyco has guaranteed the payment by Purchaser of the Common Per
Share Amount, the Preferred Per Share Amount and any other amounts payable by
Purchaser pursuant to the Merger Agreement and has agreed to cause Purchaser to
perform all of its other obligations under the Merger Agreement in accordance
with its terms.
PREFERRED STOCK PURCHASE AGREEMENT
In connection with the Merger, Purchaser has entered into the Preferred
Stock Purchase Agreement, dated as of January 8, 1999 (the "Preferred Stock
Purchase Agreement"), with the holders of an aggregate of all 35,700 shares of
Series A Preferred Stock and all 5,000 shares of Series B Preferred Stock of the
Company ("Sellers"), American Stock Transfer & Trust Company, as escrow agent
(the "Agent") and, for the limited purpose of participating in certain payment
and indemnification obligations to the Agent, the Company. Pursuant to the
Preferred Stock Purchase Agreement, upon consummation of the Offer, Purchaser
will purchase from each Seller all right, title and interest of such Seller in
and to such Seller's Preferred Stock. Tyco has guaranteed the obligations of
Purchaser under the Preferred Stock Purchase Agreement.
The following summary of certain provisions of the Preferred Stock Purchase
Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1, is
qualified in its entirety by reference to the text of the Preferred Stock
Purchase Agreement. Capitalized terms used in the following summary and not
otherwise defined in this Offer to Purchase shall have the meanings set forth in
the Preferred Stock Purchase Agreement.
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DELIVERY, SALE AND PURCHASE OF PREFERRED STOCK. Pursuant to the Preferred
Stock Purchase Agreement, each Seller has delivered to the Agent, with copies to
Purchaser, the original certificates evidencing such Seller's Preferred Stock,
together with certain transfer documentation (all such certificates and
additional documentation, the "Preferred Stock Documentation"), to be held by
the Agent in escrow in accordance with the terms of the Preferred Stock Purchase
Agreement.
The Preferred Stock Purchase Agreement provides that within one business day
following the date on which Purchaser first makes payment for Common Shares that
Purchaser has accepted for payment pursuant to the Offer, Purchaser will pay to
each Seller the purchase price of $1,400 per share of Preferred Stock owned by
the Seller, together with accrued and unpaid dividends to and including the date
of purchase. Upon payment of the purchase price to a Seller, such Seller will
irrevocably transfer to Purchaser the Seller's Preferred Stock and related
rights, and upon delivery by Purchaser to the Agent of written evidence of
payment to the Seller of the Preferred Stock purchase price, the Agent will
deliver to Purchaser the Preferred Stock Documentation of the Seller.
The Preferred Stock Purchase Agreement further provides that if (v)
Purchaser or its affiliate do not publicly announce the commencement of the
Offer within seven business days from the date of the Preferred Stock Purchase
Agreement, or (w) Purchaser or its affiliate or the Company publicly announces
that the Merger Agreement has been terminated in accordance with its terms, or
(x) Purchaser or its affiliate publicly announces that the Offer has expired
without Purchaser having purchased any Common Shares thereunder or (y) Purchaser
publicly announces that it has increased the per share price payable to the
holders of Common Shares in the Offer and the Merger to an amount in excess of
$9.25 and such announcement does not state that the holders of at least 75% of
the outstanding shares of Preferred Stock have consented to such increase or (z)
Purchaser does not furnish to the Agent evidence of payment of the Purchase
Price to any Seller or Sellers on or before March 31, 1999, then, in the case of
clauses (v), (w), (x) and (y), the Agent will promptly thereafter return the
Preferred Stock Documentation to all Sellers or, in the case of clause (z), the
Agent will promptly thereafter return such documentation to the affected
sellers.
NO SOLICITATION AND LOCK-UP. Pursuant to the Preferred Stock Purchase
Agreement, each Seller, severally and not jointly, has agreed that unless an
event has occurred requiring the return of such Seller's Preferred Stock
Documentation, as set forth in the preceding paragraph:
(a) At every meeting of the stockholders or of the holders of any class or
series of stock of the Company called with respect to any of the
following, and at every adjournment thereof, and on every action or
approval by written consent of the stockholders or of the holders of any
class or series of stock of the Company with respect to any of the
following, such Seller will cast any votes that it may have at the time
against (x) approval of any Company Takeover Proposal (as defined in the
Merger Agreement), (y) any merger (including, without limitation, an
Alternative Transaction (as defined in the Merger Agreement)),
consolidation, sale of assets requiring stockholder approval or the
approval of the holders of any class or series of stock, reorganization
or recapitalization of the Company, with any other person other than
Purchaser or its affiliates, and (z) any liquidation or winding up of the
Company (each of the foregoing is referred to as an "Opposing Proposal");
(b) Such Seller will not, and will not permit any entity under its control
to: (1) solicit proxies or become a "participant" in a "solicitation" (as
such terms are defined in Regulation 14A under the Exchange Act) with
respect to an Opposing Proposal or otherwise encourage or assist any
person in taking or planning any action that would constitute an Opposing
Proposal; or (2) initiate a vote or action by written consent of the
Company's stockholders or of the holders of any class or series of stock
with respect to an Opposing Proposal;
(c) Such Seller shall not effect a transfer or any pledge or other
encumbrance of any of its Preferred Stock to or in favor of any person,
other than to an affiliate of such Seller who shall have agreed
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in a writing, in form and substance acceptable to Purchaser in its sole
discretion, for the benefit of and delivered to Purchaser, to be bound by
all provisions of the Preferred Stock Purchase Agreement applicable to
such Seller; and
(d) Such Seller agrees to tender in the Offer all Common Shares that such
Seller owned on the date of the Preferred Stock Purchase Agreement or
later acquired.
CONSENT UNDER INITIAL PURCHASE AGREEMENT. Pursuant to the Preferred Stock
Purchase Agreement, each Seller irrevocably consents to any necessary amendment,
modification and/or waiver of (x) Section 8.1 of the Preferred Stock Purchase
Agreement, dated as of February 2, 1998 (the "Initial Purchase Agreement"), to
provide that neither the Preferred Stock Purchase Agreement or the Merger
Agreement, nor the transactions contemplated thereby, will be deemed to violate
or impair the ability of the Company to perform its obligations under any
provision of the Initial Purchase Agreement and (y) Section 4H of the
Certificate of Designations of the Preferred Stock that forms a part of the
Company's Charter to provide that in no event shall the amount payable to the
holder of any share of Preferred Stock as a result of the consummation of the
Offer or the Merger contemplated by the Merger Agreement be other than $1,400
per share of Preferred Stock together with accrued and unpaid dividends to and
including the date of purchase. Such consent shall be effective immediately
prior to the time of purchase of a Seller's Preferred Stock under the Preferred
Stock Purchase Agreement. A Seller's consent contained in this paragraph will be
void if an event has occurred requiring the return of the Seller's Preferred
Stock Documentation as set forth above in the third paragraph under the caption
"Delivery, Sale and Purchase of Preferred Stock."
REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Seller and the Company have
made certain representations and warranties in the Preferred Stock Purchase
Agreement. In addition, Purchaser has agreed that Purchaser or its affiliate
shall make a prompt public announcement if: (x) the Merger Agreement is
terminated in accordance with its terms; or (y) the Offer expires without
Purchaser having purchased any Common Shares thereunder; or (z) the
consideration payable to the holders of Common Shares in the Offer and the
Merger has been increased to an amount in excess of $9.25.
14. DIVIDENDS AND DISTRIBUTIONS. As discussed in Section 13, the Merger
Agreement provides that the Company will not take certain actions such as paying
dividends on, or making any other distributions in respect of, any of its
capital stock, splitting, combining, or reclassifying any of its capital stock
or purchasing, redeeming, or otherwise acquiring any shares of capital stock of
the Company.
If on or after the date of the Merger Agreement and notwithstanding the
provisions thereof, the Company should (i) split, combine or otherwise change
the Common Shares or its capitalization, (ii) acquire presently outstanding
Common Shares or otherwise cause a reduction in the number of outstanding Common
Shares or (iii) issue or sell any shares of any class or any securities
convertible into any such shares, or any rights, warrants or options to acquire
any such shares or convertible securities (other than Common Shares issued
pursuant to, and in accordance with the terms in effect on the date of the
Merger Agreement of, stock options, warrants or convertible preferred shares
issued prior to such date), then, without prejudice to Purchaser's rights under
the Merger Agreement, Purchaser (subject to the Merger Agreement), in its sole
discretion, may make such adjustments in the Offer price and other terms of the
Offer as it deems appropriate to reflect such action.
If, on or after the date of the Merger Agreement and notwithstanding the
provisions thereof, the Company should declare or pay any cash, non-cash or
stock dividend or other distribution on, or issue any rights with respect to,
the Common Shares, payable or distributable to stockholders of record on a date
prior to the transfer to the name of Purchaser or its nominees or transferees on
the Company's stock transfer records of the Common Shares purchased pursuant to
the Offer, then, without prejudice to Purchaser's rights under the Merger
Agreement, (i) the price per Common Share payable by Purchaser pursuant to the
Offer may, subject to the provisions of the Merger Agreement, in the sole
discretion of Purchaser, be reduced by the amount of any such cash dividend or
distribution and (ii) any non-cash
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dividend, distribution or right to be received by the tendering stockholders
will (a) be received and held by the tendering stockholders for the account of
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of Purchaser,
accompanied by appropriate documentation of transfer or (b) at the direction of
Purchaser, be exercised for the benefit of Purchaser, in which case the proceeds
of such exercise will promptly be remitted to Purchaser. Pending such
remittance, Purchaser will be entitled, subject to applicable law, to all rights
and privileges as owner of any such non-cash dividend, distribution or right or
such proceeds and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by Purchaser in its
sole discretion.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer or the Merger Agreement, provided that no Common Shares have theretofore
been accepted for payment or paid for, Purchaser shall not be required to accept
for payment or pay for, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) of the Exchange Act, any Common Shares and
may terminate or amend the Offer, if (i) the conditions that (1) there shall be
validly tendered and not withdrawn prior to the expiration of the Offer a number
of Common Shares which represents at least 51% of the total number of issued and
outstanding Common Shares and (2) the number of Common Shares tendered pursuant
to the Offer together with the Preferred Shares subject to the Preferred Stock
Purchase Agreement constitute at least 51% of the total voting power of the
Company on a fully diluted basis, shall not each have been satisfied (the
"Minimum Condition") or (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer
or (iii) at any time after the date of the Preferred Stock Purchase Agreement
and before the time of payment for any such Common Shares (whether or not any
Common Shares have theretofore been accepted for payment or paid for pursuant to
the Offer), any of the following conditions exists:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a Governmental Authority (as defined in the Merger
Agreement) of competent jurisdiction or a Law (as defined in the Merger
Agreement) shall have been promulgated, or enacted by a Governmental
Authority of competent jurisdiction which in any such case (i) restrains or
prohibits the making or consummation of the Offer or the consummation of the
Merger or the consummation of the purchase of the Preferred Shares pursuant
to the Preferred Stock Purchase Agreement, (ii) prohibits or restricts the
ownership or operation by Tyco (or any of its affiliates or subsidiaries) of
any portion of the Company's business or assets, or Tyco's business or
assets relating to the security services business, which is material to the
security services business of all such entities taken as a whole or which
would substantially deprive Tyco and/or its affiliates or subsidiaries of
the benefit of ownership of the Company's business or assets, or compels
Tyco (or any of its affiliates or subsidiaries) to dispose of or hold
separate any portion of the Company's business or assets, or Tyco's business
or assets relating to the security services business, which is material to
the security services business of all such entities taken as a whole or
which would substantially deprive Tyco and/or its affiliates or subsidiaries
of the benefit of ownership of the Company's business or assets, (iii)
imposes material limitations on the ability of Purchaser effectively to
acquire or to hold or to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote Shares purchased by
Purchaser pursuant to the Offer, the Merger or the Preferred Stock Purchase
Agreement on all matters properly presented to the stockholders of the
Company, or (iv) imposes any material limitations on the ability of Tyco
and/or its affiliates or subsidiaries effectively to control in any material
respect the business and operations of the Company, or (v) seeks to restrict
any future business activity by Tyco (or any of its affiliates) relating to
the security services business, including, without limitation, by requiring
the prior consent of any person or entity (including any Governmental
Authority) to future transactions by Tyco (or any of its affiliates); or
(b) there shall have been instituted, pending or threatened an action by
a Governmental Authority seeking to restrain or prohibit the making or
consummation of the Offer, the consummation
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of the Merger or the purchase of Preferred Shares pursuant to the Preferred
Stock Purchase Agreement or to impose any other restriction, prohibition or
limitation referred to in the foregoing paragraph (a); or
(c) the Merger Agreement shall have been terminated by the Company or
Tyco in accordance with its terms; or
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in the Common Shares on the AMEX, (ii) a
declaration of a banking moratorium or any general suspension of payments in
respect of banks in the United States or (iii) in the case of any of the
foregoing existing at the time of the execution of the Merger Agreement, a
material acceleration or worsening thereof; or
(e) Tyco and the Company shall have agreed that Purchaser shall amend
the Offer to terminate the Offer or postpone the payment for Common Shares
pursuant thereto; or
(f) any of the representations and warranties made by the Company in the
Merger Agreement shall not have been true and correct in all material
respects when made, or shall thereafter have ceased to be true and correct
in all material respects as if made as of such later date (other than
representations and warranties made as of a specified date), or the Company
shall not in all material respects have performed each obligation and
agreement and complied with each covenant to be performed and complied with
by it under the Merger Agreement, PROVIDED, HOWEVER, that such breach or
failure to perform is incapable of being cured or has not been cured within
5 days after the giving of written notice thereof to the Company, PROVIDED,
HOWEVER, that no such 5-day cure period shall require extension of the Offer
beyond the initial 20 business days provided in the Merger Agreement; or
(g) the Company's Board of Directors shall have modified or amended its
recommendation of the Offer in any manner adverse to Tyco or shall have
withdrawn its recommendation of the Offer, or shall have recommended
acceptance of any Company Takeover Proposal or shall have resolved to do any
of the foregoing; or
(h) (i) any corporation, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) ("person/group"), other than Tyco and
Purchaser and any person/group identified in the Company's Proxy Statement
dated April 30, 1998 and who has executed the Preferred Stock Purchase
Agreement, provided that such person/group has not breached the terms of
such Preferred Stock Purchase Agreement, shall have acquired beneficial
ownership of more than 15% of the outstanding Shares, or shall have been
granted any options or rights, conditional or otherwise, to acquire a total
of more than 15% of the outstanding Shares and which, in each case, does not
tender the Common Shares beneficially owned by it in the Offer; (ii) any new
group shall have been formed which beneficially owns more than 15% of the
outstanding Shares and which does not tender the Common Shares beneficially
owned by it in the Offer; or (iii) any person/group (other than Tyco or one
or more of its affiliates) shall have entered into an agreement in principle
or definitive agreement with the Company with respect to a tender or
exchange offer for any Shares or a merger, consolidation or other business
combination with or involving the Company; or
(i) any change, development, effect or circumstance shall have occurred
or be threatened that 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, taken as a
whole; or
(j) the Company shall commence a case under any chapter of Title XI of
the United States Code or any similar law or regulation; or a petition under
any chapter of Title XI of the United States Code or any similar law or
regulation is filed against the Company which is not dismissed within 2
business days; or
34
<PAGE>
(k) a Distribution Date (as defined in the Rights Agreement) shall have
occurred under the Rights Agreement.
The foregoing conditions are for the sole benefit of Tyco and Purchaser and
may be asserted by Tyco or Purchaser regardless of the circumstances giving rise
to any such condition and may be waived by Tyco or Purchaser, in whole or in
part, at any time and from time to time, in the sole discretion of Tyco. The
failure by Tyco or Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any right, the waiver of such right with respect
to any particular facts or circumstances shall not be deemed a waiver with
respect to any other facts or circumstances, and each right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Common Shares not theretofore accepted for payment shall forthwith be
returned to the tendering stockholders.
16. CERTAIN LEGAL MATTERS.
GENERAL. Except as described in this Section 16, based on a review of
publicly available filings by the Company with the Commission and other publicly
available information concerning the Company, neither Tyco nor Purchaser is
aware of any license or regulatory permit that appears to be material to the
business of the Company and that might be adversely affected by Purchaser's
acquisition of Common Shares pursuant to the Offer, or of any approval or other
action by any governmental, administrative or regulatory agency or authority,
domestic or foreign, that would be required for the acquisition or ownership of
Common Shares by Purchaser pursuant to the Offer. Should any such approval or
other action be required, it is presently contemplated that such approval or
action would be sought, except as described below under "State Takeover Laws."
While Purchaser does not currently intend to delay acceptance for payment of
Common Shares tendered pursuant to the Offer pending the outcome of any such
matter, there can be no assurance that any such approval or other action, if
required, would be obtained without substantial conditions or that adverse
consequences would not result to the Company's business or that certain parts of
the Company's business would not have to be disposed of in the event that such
approvals were not obtained or such other actions were not taken or in order to
obtain any such approval or other action. If certain types of adverse action are
taken with respect to the matters discussed below, Purchaser may decline to
accept for payment or pay for any Common Shares tendered. See Section 15.
STATE TAKEOVER LAWS. The Company and certain of its subsidiaries conduct
business in a number of states throughout the United States, some of which have
adopted laws and regulations applicable to offers to acquire shares of
corporations that are incorporated or have substantial assets, stockholders
and/or a principal place of business in such states. In EDGAR V. MITE CORP., the
Supreme Court of the United States held that the Illinois Business Takeover
Statute, which involved state securities laws that made the takeover of certain
corporations more difficult, imposed a substantial burden on interstate commerce
and was therefore unconstitutional. In CTS CORP. V. DYNAMICS CORP. OF AMERICA,
however, the Supreme Court of the United States held that a state may, as a
matter of corporate law and, in particular, those laws concerning corporate
governance, constitutionally disqualify a potential acquiror from voting on the
affairs of a target corporation without prior approval of the remaining
stockholders, provided that such laws were applicable only under certain
conditions, in particular, that the corporation has a substantial number of
stockholders in and is incorporated under the laws of such state.
The Company is incorporated under the laws of the State of Delaware. In
general, Section 203 of the DGCL ("Section 203") prevents an "interested
stockholder" (including a person who owns or has the right to acquire 15% or
more of the corporation's outstanding voting stock) from engaging in a "business
combination" (defined to include mergers and certain other actions) with a
Delaware corporation for a period of three years following the date such person
became an interested stockholder. The Board of Directors of the Company has
taken all appropriate action so that neither Tyco nor Purchaser is an
"interested stockholder" pursuant to Section 203.
35
<PAGE>
Neither Tyco nor Purchaser has determined whether any other state takeover
laws and regulations will by their terms apply to the Offer, and, except as set
forth above, neither Tyco nor Purchaser has presently sought to comply with any
state takeover statute or regulation. Tyco and Purchaser reserve the right to
challenge the applicability or validity of any state law or regulation
purporting to apply to the Offer or the Merger, and neither anything in this
Offer nor any action taken in connection herewith is intended as a waiver of
such right. In the event it is asserted that one or more state takeover statutes
is applicable to the Offer or the Merger and an appropriate court does not
determine that such statute is inapplicable or invalid as applied to the Offer
or the Merger, Tyco or Purchaser might be required to file certain information
with, or to receive approval from, the relevant state authorities, and Purchaser
might be unable to accept for payment or pay for Common Shares tendered pursuant
to the Offer, or be delayed in consummating the Offer.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Common Shares by Purchaser pursuant to the Offer
is subject to such requirements. See Section 15.
Under the provisions of the HSR Act applicable to the purchase of Common
Shares pursuant to the Offer, purchases may not be consummated until the
expiration of a 15-calendar day waiting period after the filing of certain
required information and documentary material with the Antitrust Division and
the FTC with respect to the Offer (unless earlier terminated pursuant to a
request therefor, which Tyco will make). If, within such 15-day waiting period,
either the Antitrust Division or the FTC requests additional information or
documentary material relevant to the Offer from Tyco, the waiting period will be
extended for an additional period of 10 calendar days following the date of
substantial compliance with such request. Only one extension of the waiting
period pursuant to a request for additional information is authorized by the
rules promulgated under the HSR Act. Thereafter, such waiting period may be
extended only by court order or by agreement of Tyco. A request for additional
information issued to the Company cannot extend the waiting period. Tyco expects
to file, or cause to be filed, a Notification and Report Form with respect to
the Offer under the HSR Act on Tuesday, January 19, 1999, and, in such event,
the required waiting period with respect to the Offer will expire at 11:59 p.m.,
New York City time, on Tuesday, February 2, 1999, unless Tyco receives a request
for additional information or documentary material or the Antitrust Division or
the FTC terminates the waiting period prior thereto.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed purchase of Common
Shares by Purchaser pursuant to the Offer. At any time before or after such
purchase, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the transaction or seeking divestiture of the Common
Shares so acquired or divestiture of substantial assets of Tyco or its
subsidiaries. Litigation seeking similar relief could also be brought by private
persons and the state attorneys general.
Based upon an examination of publicly available information relating to the
businesses in which Tyco and the Company are engaged, Tyco and Purchaser do not
believe that consummation of the Offer will result in violation of any
applicable antitrust laws. However, there can be no assurance that a challenge
to the Offer on antitrust grounds will not be made, or, if such a challenge is
made, what the result would be. See Section 15 for certain conditions to the
Offer, including conditions with respect to certain judicial or governmental
actions.
17. FEES AND EXPENSES. Purchaser has retained Morrow & Co., Inc. to act as
the Information Agent and American Stock Transfer & Trust Company to act as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Common Shares by mail, telephone, telex, telecopy and personal
interview and may request brokers, dealers and other nominee stockholders to
forward the Offer
36
<PAGE>
materials to beneficial owners. The Information Agent and the Depositary will
receive reasonable and customary compensation for services relating to the Offer
and will be reimbursed for certain out-of-pocket expenses. Purchaser and Tyco
have also agreed to indemnify the Information Agent and the Depositary against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.
Neither Tyco nor Purchaser will pay any fees or commissions to any broker or
dealer or any other person (other than to the Information Agent) for soliciting
tenders of Common Shares pursuant to the Offer. Brokers, dealers, commercial
banks and trust companies will, upon request, be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding offering
materials to their customers.
18. MISCELLANEOUS. The Offer is being made to all holders of Common Shares.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Common Shares pursuant thereto,
Purchaser will make a good faith effort to comply with any such state statute or
seek to have such statute declared inapplicable to the Offer. If, after such
good faith effort, Purchaser cannot comply with any such state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Common Shares in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Tyco, Purchaser or the Company not contained in this
Offer to Purchase or in the related Letter of Transmittal and, if given or made,
such information or representation must not be relied upon as having been
authorized.
Tyco and Purchaser have filed with the Commission a Tender Offer Statement
on Schedule 14D-1, together with all exhibits thereto, pursuant to Rule 14d-3 of
the General Rules and Regulations under the Exchange Act, furnishing certain
additional information with respect to the Offer. Such Tender Offer Statement
and any amendments thereto, including exhibits, may be inspected and copies may
be obtained from the offices of the Commission in the manner set forth in
Section 8 (except that they will not be available at the regional offices of the
Commission).
T16 ACQUISITION CORP.
January 15, 1999
37
<PAGE>
ANNEX I
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF TYCO INTERNATIONAL LTD.
The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions, offices
or employment for the past five years of each director of Tyco, each executive
officer of Tyco and the executive officers of certain of Tyco's subsidiaries.
Unless otherwise indicated, positions held shown in the following table are
positions with Tyco. Except as set forth below, each such person is a citizen of
the United States of America. None of the listed persons, during the past five
years, has been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- ----------------------------------------- ---------------------------- -----------------------------------------
<S> <C> <C>
L. Dennis Kozlowski,..................... One Tyco Park Mr. Kozlowski has been Chairman of the
Chairman of the Board, President and Exeter, NH 03833 Board of Directors, Chief Executive
Chief Executive Officer Officer and President of Tyco since July
1997. He was Chairman of the Board of
Directors of Former Tyco from 1993 to
July 1997. He has been Chief Executive
Officer of Former Tyco since 1992 and
President of Former Tyco since 1989. He
was Chief Operating Officer of Former
Tyco from 1989 to 1995. From 1984 to
February 1997, he was President of
Grinnell Corporation, a subsidiary of
Tyco.
Michael A. Ashcroft,..................... P.O. Box 1598 Mr. Ashcroft has been non-executive
Director Belize City, Belize Chairman of BHI Corporation (services
company) since 1987 and has been Chairman
of Carlisle Holdings (services company)
since 1988. He was Chairman of the Board
of Directors and Chief Executive Officer
of ADT Limited (now Tyco International
Ltd.) from 1984 to 1997. Mr. Ashcroft is
a citizen of Belize.
Joshua M. Berman,........................ 919 Third Avenue Mr. Berman has been counsel to the law
Director and Vice President New York, NY 10022 firm of Kramer Levin Naftalis & Frankel
LLP (counselors at law) since 1985. He
has also been Vice President of Tyco
since July 1997.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- ----------------------------------------- ---------------------------- -----------------------------------------
<S> <C> <C>
Richard S. Bodman,....................... 2 Wisconsin Circle Mr. Bodman has been Managing General
Director Suite 610 Partner of AT&T Ventures LLC (venture
Chevy Chase, MD 20815 captial) since May 1996. Previously,
since 1990, he had been Senior Vice
President, Corporate Strategy and
Development, of AT&T Corporation
(communications).
John F. Fort, III,....................... 2003 Milford Street Mr. Fort was Chairman of the Board and
Director Houston, TX 77098 Chief Executive Officer of Former Tyco
from 1982 to 1992.
Stephen W. Foss,......................... 380 Lafayette Road Mr. Foss has been President and Chief
Director Hampton, NH 03842 Executive Officer of Foss Manufacturing
Company, Inc. (manufacturer of synthetic
fibers and non-woven fabrics) since 1969.
Richard A. Gilleland,.................... 15 Hampshire Street Mr. Gilleland has been President of Tyco
Director and President of Tyco Healthcare Mansfield, MA 02048 Healthcare Group since October 1998. He
Group was Chairman, President and Chief
Executive Officer of Physician's Resource
Group, Inc. from December 1997 to
September 1998. He was President and
Chief Executive Officer of AMSCO
International, Inc., (healthcare) from
July 1995 to July 1996 and Senior Vice
President of Tyco (US) from October 1994
to July 1995. From July 1990 to July
1995, he was President and Chief
Executive Officer of The Kendall Company
(medical products).
Philip M. Hampton,....................... 152 West 57th Street Mr. Hampton has been Co- Managing
Director 44th Floor Director of R.H. Arnold & Co. (investment
New York, NY 10022 bank) since April 1997. He was Chairman
of Metzler Corporation (investment bank)
from 1989 to March 1997.
James S. Pasman, Jr.,.................... 29 The Trillium Mr. Pasman was President and Chief
Director Pittsburgh, PA 15238 Operating Officer of National Intergroup,
Inc. (industrial holding company) from
1989 to 1991 and was Chairman and Chief
Executive Officer of Kaiser Aluminum and
Chemical Corp. from 1987 to 1989.
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- ----------------------------------------- ---------------------------- -----------------------------------------
<S> <C> <C>
W. Peter Slusser,........................ One Citicorp Center Mr. Slusser has been the President of
Director Suite 5100 Slusser Associates, Inc. (investment
153 East 53rd Street firm) since 1988.
New York, NY 10022
Frank E. Walsh, Jr.,..................... 330 South Street Mr. Walsh has been Chairman of the
Director Morristown, NJ Sandyhill Foundation (charitable
07962-1975 organization) since August 1996.
Previously, from 1989 to 1996, he was
Chairman of Wesray Capital Corporation
(investment firm).
Mark A. Belnick,......................... One Tyco Park Mr. Belnick has been Executive Vice
Executive Vice President and Chief Exeter, NH 03833 President and Chief Corporate Counsel of
Corporate Counsel Tyco since September 1998. Previously, he
had been a senior partner with the
international law firm of Paul, Weiss,
Rifkind, Wharton & Garrison since 1987.
Jerry R. Boggess,........................ Three Tyco Park Mr. Boggess has been President of the
President of the Tyco Fire and Security Exeter, NH 03833 Tyco Fire and Security Services group
Services group since 1993 and Vice President of Former
Tyco since 1996.
Robert P. Mead,.......................... Three Tyco Park Mr. Mead has been President of the Tyco
President of the Tyco Flow Control Exeter, NH 03833 Flow Control Products group since May
Products group 1993 and Vice President of Former Tyco
since August 1993.
Neil R. Garvey,.......................... One Tyco Park Mr. Garvey has been President of Tyco
President of Tyco Submarine Systems Ltd. Exeter, NH 03833 Submarine Systems Ltd. since July 1997.
He was President of Simplex Technologies,
which is part of the Tyco Electrical and
Electronic Components group, from July
1995 to June 1997. From 1992 to June
1995, he was Vice President of Sales and
Marketing of Simplex Technologies.
Mark H. Swartz,.......................... One Tyco Park Mr. Swartz has been Executive Vice
Executive Vice President and Chief Exeter, NH 03833 President and Chief Financial Officer of
Financial Officer Tyco since July 1997. He has been Vice
President and Chief Financial Officer of
Former Tyco since 1995. From 1993 to
1995, he was Former Tyco's Director of
Mergers and Acquisitions.
</TABLE>
40
<PAGE>
ANNEX II
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions, offices
or employment for the past five years of each director and executive officer of
Purchaser. Each such person is a citizen of the United States of America. None
of the listed persons, during the past five years, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
CURRENT BUSINESS OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------------- --------------------- --------------------------------------------
<S> <C> <C>
Mark A. Belnick,............................ One Tyco Park *
Director and President Exeter, NH 03833
Mark H. Swartz,............................. One Tyco Park *
Director and Vice President Exeter, NH 03833
M. Brian Moroze,............................ One Tyco Park Mr. Moroze has been General Counsel of
Director and Vice President Exeter, NH 03833 Former Tyco since 1994 and served as
Associate General Counsel from 1986 to 1994.
Michael A. Robinson,........................ One Tyco Park Mr.Robinson has been Senior Vice President
Treasurer Exeter, NH 03833 and Treasurer of Former Tyco since March
1998. Previously, he had been a Vice
President with the investment banking firm
of Merrill Lynch, Pierce Fenner & Smith
since 1993.
Byron S. Kalogerou,......................... One Tyco Park Mr. Kalogerou has been Vice President and
Secretary Exeter, NH 03833 Deputy Corporate Counsel of Former Tyco
since November 1998, and served as General
Counsel of International Operations since
1997. He had been Associate General Counsel
of Former Tyco from 1990 to 1997.
</TABLE>
- ------------------------
* Please see the information set forth in Annex I.
41
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Common Shares should be
sent or delivered by each stockholder of the Company or his broker, dealer,
commercial bank or trust company to the Depositary at one of its addresses set
forth below:
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND OR BY FACSIMILE:
40 Wall Street BY OVERNIGHT COURIER: (718) 234-5001
46th Floor 40 Wall Street (For Eligible Institutions
New York, NY 10005 46th Floor Only)
New York, NY 10005 Confirm by Telephone:
(800) 937-5449
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth below. Requests for
additional copies of this Offer to Purchase and the Letter of Transmittal may be
directed to the Information Agent or the Depositary. Stockholders may also
contact their brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
445 Park Avenue, 5th Floor
New York, New York 10022
Toll Free (800) 566-9061
Call Collect (212) 754-8000
Banks and Brokerage Firms Please Call:
(800) 662-5200
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ALARMGUARD HOLDINGS, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 15, 1999
OF
T16 ACQUISITION CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
TYCO INTERNATIONAL LTD.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, FEBRUARY 12, 1999, UNLESS THE OFFER IS EXTENDED
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY HAND OR
BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE:
40 Wall Street 40 Wall Street (718) 234-5001
46(th) Floor 46(th) Floor (For Eligible Iinstitutions
New York, N.Y. 10005 New York, N.Y. 10005 Only)
CONFIRM BY TELEPHONE:
(800) 937-5449
</TABLE>
------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE
APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates representing Common Shares (as defined below) are to be forwarded
herewith or, unless an Agent's Message (as defined in Instruction 2) is
utilized, if delivery is to be made by book-entry transfer to the account
maintained by the Depositary at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 2 of the
Offer to Purchase. Stockholders whose certificates are not immediately
available, or who cannot deliver their certificates or confirmation of the
book-entry transfer of their Common Shares into the Depositary's account at the
Book-Entry Transfer Facility ("Book-Entry Confirmation") and all other documents
required hereby to the Depositary on or prior to the Expiration Date (as defined
in Section 1 of the Offer to Purchase), must tender their Common Shares
according to the guaranteed delivery procedures set forth in Section 2 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
/ / CHECK HERE IF TENDERED COMMON SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED COMMON SHARES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution that Guaranteed Delivery: ______________________________
If Delivered by Book-Entry Transfer: _______________________________________
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
DESCRIPTION OF COMMON SHARES TENDERED
- ----------------------------------------------------------------------------------------------------
CERTIFICATE(S) TENDERED
(ATTACH ADDITIONAL LISTS IF NECESSARY)
- -----------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF
COMMON SHARES
REPRESENTED NUMBER OF
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE BY COMMON SHARES
(PLEASE FILL IN, IF BLANK) NUMBER(S)* CERTIFICATE(S) TENDERED**
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Total Common
Shares
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Common Shares
represented by any certificates delivered to the Depositary are being
tendered hereby. See Instruction 4.
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Common Shares tendered hereby. The certificates and number of Common Shares that
the undersigned wishes to tender should be indicated in the appropriate boxes.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to T16 Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly-owned subsidiary of Tyco
International Ltd., a Bermuda company ("Tyco"), the above-described shares of
common stock, par value $.0001 per share, including the associated preferred
stock purchase rights (the "Common Shares"), of Alarmguard Holdings, Inc., a
Delaware corporation (the "Company"), pursuant to Purchaser's offer to purchase
all of the outstanding Common Shares at a price of $9.25 per Common Share, net
to the tendering stockholder in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated January 15, 1999 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together constitute the "Offer"). Purchaser
reserves the right to transfer or assign, in whole or from time to time in part,
to Tyco or to one or more affiliates of Tyco, the right to purchase Common
Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of and payment for
the Common Shares tendered herewith in accordance with the terms and subject to
the conditions of the Offer, the undersigned hereby sells, assigns, and
transfers to, or upon the order of, Purchaser all right, title and interest in
and to all of the Common Shares that are being tendered hereby (and any and all
other Common Shares or other securities or rights issued or issuable in respect
thereof on or after January 15, 1999) and irrevocably appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Common Shares (and any such other Common Shares or securities or
rights), with full power of substitution (such power of attorney being deemed to
be an irrevocable power coupled with an interest), to (a) deliver certificates
representing such Common Shares (and any such other Common Shares or securities
or rights), or transfer ownership of such Common Shares (and any such other
Common Shares or securities or rights) on the account books maintained by the
Book-Entry Transfer Facility, together in either such case with all accompanying
evidences of transfer and authenticity, to or upon the order of Purchaser upon
receipt by the Depositary, as the undersigned's agent, of the purchase price
(adjusted, if appropriate, as provided in the Offer to Purchase), (b) present
such Common Shares (and any such other Common Shares or securities or rights)
for registration and transfer on the books of the Company, and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Common Shares (and any such other Common Shares or securities or rights), all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Mark H. Swartz and Mark A.
Belnick and each of them or any other designee of Purchaser, the attorneys and
proxies of the undersigned, each with full power of substitution, to vote in
such manner as each such attorney and proxy or his substitute shall, in his sole
discretion, deem proper, and otherwise act (including pursuant to written
consent) with respect to all the Common Shares tendered hereby which have been
accepted for payment by Purchaser prior to the time of such vote or action (and
any and all other Common Shares or securities or rights issued or issuable in
respect thereof on or after January 15, 1999), which the undersigned is entitled
to vote at any meeting of stockholders (whether annual or special and whether or
not an adjourned meeting) of the Company, or consent in lieu of any such
meeting, or otherwise. This proxy and power of attorney is coupled with an
interest in the Common Shares tendered hereby and is irrevocable and is granted
in consideration of, and is effective upon, the acceptance for payment of such
Common Shares (and any such other Common Shares or securities or rights) by
Purchaser in accordance with the terms of the Offer. Such acceptance for payment
shall revoke all prior proxies granted by the undersigned at any time with
respect to such Common Shares (and any such other Common Shares or securities or
rights) and no subsequent proxies will be given (and if given will be deemed not
to be effective) with respect thereto by the undersigned. The undersigned
acknowledges that in order for Common Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Common Shares, Purchaser or
Purchaser's designee must be able to exercise full voting and other rights of a
record and beneficial holder with respect to such Common Shares.
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Common Shares
tendered hereby (and any and all other Common Shares or securities or rights
issued or issuable in respect thereof on or after January 15, 1999), and that,
when the same are accepted for payment by Purchaser, Purchaser will acquire good
and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and the same will not be subject to any adverse claim.
The undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby (and any such
other Common Shares or securities or rights).
No authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall be affected by, and all such authority shall survive, the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Common Shares pursuant to any
one of the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Purchaser may not be required to accept for payment any
of the Common Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates
representing Common Shares not tendered or accepted for payment in the name(s)
of the registered holder(s) appearing under "Description of Common Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
certificates representing Common Shares not tendered or accepted for payment
(and accompanying documents, as appropriate) to the registered holder(s)
appearing under "Description of Common Shares Tendered" at the address shown
below such registered holder(s) name(s). In the event that either or both the
Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or return any
certificates representing Common Shares not tendered or accepted for payment in
the name(s) of, and deliver such check and/or return such certificates to, the
person or persons so indicated. Stockholders tendering Common Shares by book
entry transfer may request that any Common Shares not accepted for payment be
returned by crediting such account maintained at the Book-Entry Transfer
Facility such stockholder may designate by making an appropriate entry under
"Special Payment Instructions." The undersigned recognizes that Purchaser has no
obligation pursuant to the Special Payment Instructions to transfer any Common
Shares from the name of the registered holder(s) thereof if Purchaser does not
accept for payment any of the Common Shares so tendered hereby.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates representing Common Shares not tendered or
not purchased and/or the check for the purchase price of Common Shares purchased
are to be issued in the name of someone other than the undersigned, or if Common
Shares tendered by book-entry transfer which are not purchased are to be
returned by credit to an account maintained at the Book-Entry Transfer Facility
other than that account designated above.
Issue check and/or certificate(s) to:
Name: __________________________________________________________________________
(Please Print)
Address: _______________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Include Zip Code)
_______________________________________________________________________________
(Tax Identification or Social Security No.)
Credit unpurchased Common Shares tendered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
_______________________________________________________________________________
(Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates representing Common Shares not tendered or
not purchased and/or the check for the purchase price of Common Shares purchased
are to be sent to someone other than the undersigned, or to the undersigned at
an address other than that shown under "Description of Common Shares Tendered."
Issue check and/or certificate(s) to:
Name: __________________________________________________________________________
(Please Print)
Address: _______________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Include Zip Code)
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Signature(s) of Holder(s) of Common Shares ___________________________
______________________________________________________________________
______________________________________________________________________
Dated: ____________________________________ , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s)
on stock certificate(s) or on a security position listing or by
person(s) authorized to become registered holder(s) by certificates
and documents transmitted herewith. If signature is by trustees,
executors, administrators, guardians, attorneys-in-fact, agents,
officers of corporations or others acting in a fiduciary or
representative capacity, please set forth the full title and see
Instruction 5.)
Name(s) ______________________________________________________________
______________________________________________________________________
(Please Print)
Capacity (full title) ________________________________________________
Address ______________________________________________________________
______________________________________________________________________
(Including Zip Code)
(Area Code and Telephone No.) ________________________________________
(Tax Identification or Social Security No.) __________________________
<PAGE>
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY
PLACE MEDALLION GUARANTEE IN SPACE BELOW.
Authorized Signature(s) ______________________________________________________
Name _________________________________________________________________________
(Please Print)
Title ________________________________________________________________________
Name of Firm _________________________________________________________________
Address ______________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number _______________________________________________
Dated: ______________________________________________________________________,
1999
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) of the Common Shares (which term, for purposes of this
document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Common Shares)
tendered herewith, unless such holder has completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on this Letter of Transmittal, or (ii) if such Common Shares are
tendered for the account of a firm that is a member in good standing of the
Security Transfer Agent's Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program (each being
hereinafter referred to as an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates
representing Common Shares are to be forwarded herewith to the Depositary or,
unless an Agent's Message (as defined below) is utilized, if tenders of Common
Shares are to be made pursuant to the procedures for delivery by book-entry
transfer set forth in Section 2 of the Offer to Purchase. Certificates
representing all physically tendered Common Shares, or any book-entry
confirmation of Common Shares, as the case may be, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in connection with a book-entry transfer,
an Agent's Message, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein on or prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase). If a stockholder's certificate(s) representing Common Shares
are not immediately available (or the procedure for the book-entry transfer
cannot be completed on a timely basis) or time will not permit all required
documents to reach the Depositary on or prior to the Expiration Date, such
stockholder's Common Shares may nevertheless be tendered if the procedures for
guaranteed delivery set forth in Section 2 of the Offer to Purchase are
followed. Pursuant to such procedure, (i) such tender must be made by or through
an Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by Purchaser, must be
received by the Depositary on or prior to the Expiration Date, and (iii) the
certificates representing all tendered Common Shares, in proper form for
transfer, or Book-Entry Confirmation of Common Shares, as the case may be, in
each case together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees (or,
in connection with a book-entry transfer, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three American Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in Section 2 of
the Offer to Purchase. The term "Agent's Message" means a message transmitted
through electronic means by the Book-Entry Transfer Facility to, and received
by, the Depositary and forming a part of a Book-Entry Confirmation, which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from the Book-Entry Transfer Facility participant tendering the Common Shares
that such participant has received, and agrees to be bound by, this Letter of
Transmittal.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATE(S)
REPRESENTING COMMON SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY
THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE
TENDERING STOCKHOLDER. THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE DEPOSITARY. IF SUCH DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED, AND NO
FRACTIONAL COMMON SHARES WILL BE PURCHASED. ALL TENDERING STOCKHOLDERS, BY
EXECUTION OF THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF), WAIVE ANY RIGHT
TO RECEIVE ANY NOTICE OF THE ACCEPTANCE OF THEIR COMMON SHARES FOR PAYMENT.
<PAGE>
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Common Shares should be listed on a
separate signed schedule attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER COMMON SHARES
BY BOOK-ENTRY TRANSFER). If fewer than all the Common Shares represented by any
certificate submitted are to be tendered, fill in the number of Common Shares
that are to be tendered in the box entitled "Number of Common Shares Tendered."
In such case, new certificate(s) representing the remainder of the Common Shares
that were represented by the old certificate(s) will be sent to the registered
holder(s), unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Common Shares
represented by certificate(s) delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Common
Shares tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face(s) of the certificate(s) without alteration,
enlargement or any change whatsoever. If any of the Common Shares tendered
hereby are owned of record by two or more joint owners, all such owners must
sign this Letter of Transmittal. If any tendered Common Shares are registered in
different names on several certificates, it will be necessary to complete, sign
and submit as many separate Letters of Transmittal as there are different
registrations of certificates.
IF THIS LETTER OF TRANSMITTAL IS SIGNED BY THE REGISTERED HOLDER(S) OF THE
COMMON SHARES LISTED AND TENDERED HEREBY, NO ENDORSEMENTS OF CERTIFICATES OR
SEPARATE STOCK POWERS ARE REQUIRED, UNLESS PAYMENT OR CERTIFICATES FOR COMMON
SHARES NOT TENDERED OR ACCEPTED FOR PAYMENT ARE TO BE ISSUED TO A PERSON OTHER
THAN THE REGISTERED HOLDER(S). SIGNATURES ON SUCH CERTIFICATES OR STOCK POWERS
MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
IF THIS LETTER OF TRANSMITTAL OR ANY CERTIFICATES OR STOCK POWERS ARE SIGNED
BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A
CORPORATION OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY,
SUCH PERSON SHOULD SO INDICATE WHEN SIGNING, AND PROPER EVIDENCE SATISFACTORY TO
PURCHASER OF SUCH PERSON'S AUTHORITY SO TO ACT MUST BE SUBMITTED.
IF THIS LETTER OF TRANSMITTAL IS SIGNED BY A PERSON OTHER THAN THE
REGISTERED HOLDER(S) OF THE COMMON SHARES TENDERED HEREBY, THE CERTIFICATES MUST
BE ENDORSED OR ACCOMPANIED BY APPROPRIATE STOCK POWERS, IN EITHER CASE SIGNED
EXACTLY AS THE NAME(S) OF THE REGISTERED HOLDER(S) APPEAR ON THE CERTIFICATES.
SIGNATURES ON SUCH CERTIFICATES OR STOCK POWERS MUST BE GUARANTEED BY AN
ELIGIBLE INSTITUTION, UNLESS THE SIGNATURE IS THAT OF AN ELIGIBLE INSTITUTION.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Common Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates representing Common Shares not tendered or accepted for payment are
to be registered in the name of, any person other than the registered holder, or
if tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such other person) payable on
account of the transfer to such person will be deducted from the purchase price,
unless satisfactory evidence of the payment of such taxes or exemption therefrom
is submitted.
<PAGE>
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or
certificates representing Common Shares not tendered or accepted for payment are
to be issued in the name of a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to someone other than the signer of this Letter of Transmittal or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Stockholders tendering Common Shares by
book-entry transfer may request that Common Shares not accepted for payment be
credited to such account maintained at the Book-Entry Transfer Facility as such
stockholder may designate hereon. If no such instructions are given, such Common
Shares not accepted for payment will be returned by crediting the account at the
Book-Entry Transfer Facility designated above.
8. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Common Shares has been lost, destroyed or stolen, the stockholder
should promptly notify the Depositary. The stockholder will then be instructed
as to the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by
Purchaser, in whole or in part, at any time and from time to time in Purchaser's
sole discretion (subject to the provisions of the Merger Agreement referred to
in the Offer to Purchase), in the case of any Common Shares tendered hereby.
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"), generally
the stockholder's social security or federal employer identification number, on
Substitute Form W-9, which is provided below, and to certify whether the
stockholder is subject to backup withholding of United States federal income
tax. If a tendering stockholder is subject to backup withholding, the
stockholder must cross out item (2) of the Certification box of the Substitute
Form W-9. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to 31% Federal income tax withholding on the
payment of the purchase price. If the tendering stockholder has not been issued
a TIN and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% on all payments of the purchase price until a
TIN is provided to the Depositary.
11. NON-UNITED STATES HOLDERS. Non-United States holders must submit a
completed IRS Form W-8 to avoid backup withholding. IRS Form W-8 may be obtained
by contacting the Depositary at one of the addresses on the face of this Letter
of Transmittal.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent at the address set forth below.
Additional copies of the Offer to Purchase, this Letter of Transmittal, the
Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 may be obtained from the
Information Agent at the address set forth below or from your broker, dealer,
commercial bank or trust company.
IMPORTANT: This Letter of Transmittal (or a facsimile thereof), together
with certificates representing Common Shares or confirmation of book-entry
transfer and all other required documents, or the Notice of Guaranteed Delivery,
must be received by the Depositary on or prior to the Expiration Date.
<PAGE>
IMPORTANT TAX INFORMATION
Under United States federal income tax law, a stockholder whose tendered
Common Shares are accepted for payment is required to provide the Depositary (as
payer) with such stockholder's correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 below. If such stockholder is an individual, the TIN is such
person's social security number. The TIN of a resident alien who does not have
and is not eligible to obtain a social security number is such person's IRS
individual taxpayer identification number. If a tendering stockholder is subject
to backup withholding, the stockholder must cross out item (2) of the
Certification box on the Substitute Form W-9. If the Depositary is not provided
with the correct TIN, the stockholder may be subject to a $50 penalty imposed by
the Internal Revenue Service ("IRS"). In addition, payments that are made to
such stockholder with respect to Common Shares purchased pursuant to the Offer
may be subject to backup withholding.
CERTAIN STOCKHOLDERS (INCLUDING, AMONG OTHERS, ALL CORPORATIONS AND CERTAIN
NON-UNITED STATES INDIVIDUALS) ARE NOT SUBJECT TO BACKUP WITHHOLDING. IN ORDER
FOR A FOREIGN INDIVIDUAL TO QUALIFY AS AN EXEMPT RECIPIENT, THAT STOCKHOLDER
MUST SUBMIT TO THE DEPOSITARY A PROPERLY COMPLETED IRS FORM W-8, SIGNED UNDER
PENALTIES OF PERJURY, ATTESTING TO THAT INDIVIDUAL'S EXEMPT STATUS. SUCH FORMS
MAY BE OBTAINED FROM THE DEPOSITARY. EXEMPT STOCKHOLDERS, OTHER THAN NON-UNITED
STATES INDIVIDUALS, SHOULD FURNISH THEIR TIN, WRITE "EXEMPT" ON THE FACE OF THE
SUBSTITUTE FORM W-9 BELOW, AND SIGN, DATE AND RETURN THE SUBSTITUTE FORM W-9 TO
THE DEPOSITARY. SEE THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INSTRUCTIONS.
IF BACKUP WITHHOLDING APPLIES, THE DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF
ANY PAYMENTS MADE TO THE STOCKHOLDER. BACKUP WITHHOLDING IS NOT AN ADDITIONAL
TAX. RATHER, THE TAX LIABILITY OF PERSONS SUBJECT TO BACKUP WITHHOLDING WILL BE
REDUCED BY THE AMOUNT OF TAX WITHHELD. IF WITHHOLDING RESULTS IN AN OVERPAYMENT
OF TAXES, A REFUND MAY BE OBTAINED FROM THE IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Common Shares purchased pursuant to the Offer, the stockholder
is required to notify the Depositary of such stockholder's correct TIN by
completing the Substitute Form W-9 below certifying that the TIN provided on
such form is correct (or that such stockholder is awaiting a TIN) and that (i)
such holder is exempt from backup withholding, (ii) such holder has not been
notified by the IRS that such holder is subject to backup withholding as a
result of a failure to report all interest or dividends, or (iii) the IRS has
notified such holder that such holder is no longer subject to backup withholding
(see Part 2 of Substitute Form W-9).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number, individual taxpayer identification number, or employer identification
number of the record owner of the Common Shares. If the Common Shares are in
more than one name or are not in the name of the actual owner, consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional guidelines on which number to report. If the
tendering stockholder has not been issued a TIN and has applied for a number or
intends to apply for a number in the near future, such stockholder should write
"Applied For" in the space provided for in the TIN in Part 1, and sign and date
the Substitute Form W-9. If "Applied For" is written in Part 1 and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% on all payments of the purchase price until a TIN is provided to
the Depositary.
<PAGE>
PAYER'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX SOCIAL SECURITY NUMBER
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING OR Employer identification number
BELOW -----------------------------
(If awaiting TIN write "Applied
For")
</TABLE>
<TABLE>
<S> <C> <C>
PART 2--For Payees exempt from backup withholding,
see the enclosed Guidelines for Certification of
Taxpayer Identification Number (TIN) on Substitute
Form W-9 and complete as instructed therein.
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
DEPARTMENT OF THE TREASURY
(1) The number shown on this form is my correct Taxpayer Identification
INTERNAL REVENUE SERVICE Number (or a Taxpayer Identification Number has not been issued to me and
either (a) I have mailed or delivered an application to receive a
Taxpayer Identification Number to the appropriate Internal Revenue
Service ("IRS") or Social Security Administration office or (b) I intend
to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number within sixty (60)
days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number); and
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) (2) I am not subject to backup withholding because (a) I am exempt from
AND CERTIFICATION backup withholding, (b) I have not been notified by the IRS that I am subject
to backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding.
</TABLE>
<TABLE>
<S> <C>
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you
are currently subject to backup withholding because you have failed to report all interest and dividends on your
tax return. If after being notified by the IRS that you were subject to backup withholding, you received another
notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also
see instructions in the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9).
NAME:
(PLEASE PRINT)
ADDRESS:
(PLEASE PRINT)
SIGNATURE --------------------------------------------- DATE ------------, 1999
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
INFORMATION.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
445 Park Avenue, 5th Floor
New York, NY 10022
Toll Free (800) 566-9061
Call Collect (212) 754-8000
Banks and Brokerage Firms please call:
(800) 662-5200
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ALARMGUARD HOLDINGS, INC.
AT
$9.25 NET PER SHARE
BY
T16 ACQUISITION CORP.,
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
TYCO INTERNATIONAL LTD.
- ---------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, FEBRUARY 12, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
January 15, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been appointed by T16 Acquisition Corp. ("Purchaser"), a Delaware
corporation and an indirect wholly-owned subsidiary of Tyco International Ltd.
("Tyco"), a Bermuda company, to act as Information Agent in connection with
Purchaser's offer to purchase all of the outstanding shares of common stock, par
value $.0001 per share, including the associated preferred stock purchase rights
(the "Common Shares"), of Alarmguard Holdings, Inc., a Delaware corporation (the
"Company"), at a price of $9.25 per Common Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated January 15, 1999 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are
enclosed herewith. The Offer is being made in connection with the Agreement and
Plan of Merger, dated as of January 8, 1999, among Tyco, Purchaser and the
Company.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Common Shares registered in your name or in the name of
your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT
NUMBER OF COMMON SHARES WHICH (1) WOULD CONSTITUTE 51% OF THE OUTSTANDING COMMON
SHARES AND (2) TOGETHER WITH THE SHARES OF THE COMPANY'S SERIES A PREFERRED
STOCK AND SERIES B PREFERRED STOCK, EACH PAR VALUE $.0001 PER SHARE (THE
"PREFERRED SHARES") SUBJECT TO THE PREFERRED STOCK PURCHASE AGREEMENT, DATED
JANUARY 8, 1999 (THE "PREFERRED STOCK PURCHASE AGREEMENT"), AMONG PURCHASER AND
THE HOLDERS OF THE PREFERRED
<PAGE>
SHARES, WOULD CONSTITUTE AT LEAST 51% OF THE TOTAL VOTING POWER OF THE COMPANY
ON A FULLY DILUTED BASIS. STOCKHOLDERS OWNING 964,195 COMMON SHARES
(CONSTITUTING 17.3% OF THE OUTSTANDING COMMON SHARES) AND ALL 40,700 OUTSTANDING
PREFERRED SHARES (WHICH, TOGETHER WITH THE AFORESAID COMMON SHARES, CONSTITUTE
50.6% OF THE TOTAL VOTING POWER OF THE COMPANY ON A FULLY DILUTED BASIS) HAVE
AGREED TO TENDER SUCH COMMON SHARES IN THE OFFER AND TO SELL SUCH PREFERRED
SHARES TO PURCHASER PURSUANT TO THE PREFERRED STOCK PURCHASE AGREEMENT.
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. The Offer to Purchase.
2. The Letter of Transmittal to be used by stockholders of the Company
in accepting the Offer. Facsimile copies of the Letter of Transmittal (with
manual signatures) may be used to tender Common Shares.
3. A letter to stockholders of the Company from Russell R. MacDonnell,
Chairman, Chief Executive Officer and President of the Company, together
with a Solicitation/Recommendation Statement on Schedule 14D-9 filed by the
Company with the Securities and Exchange Commission and mailed to the
stockholders of the Company.
4. A printed form of letter which may be sent to your clients for whose
account you hold Common Shares in your name or in the name of your nominee
with space provided for obtaining such clients' instructions with regard to
the Offer.
5. The Notice of Guaranteed Delivery to be used to accept the Offer if
certificates representing Common Shares are not immediately available or if
time will not permit all required documents to reach the Depositary prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase) or if
the procedures for book-entry transfer cannot be completed on a timely
basis.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to American Stock Transfer & Trust
Company, as Depositary.
Your attention is directed to the following:
1. The tender price is $9.25 per Common Share, net to the seller in
cash.
2. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER
AND THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE HOLDERS OF
COMMON SHARES ACCEPT THE OFFER AND TENDER THEIR COMMON SHARES PURSUANT TO
THE OFFER.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, February, 12, 1999, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Common Shares.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer at least
that number of Common Shares which (1) would constitute 51% of the
outstanding Common Shares and (2) together with the Preferred Shares subject
to the Preferred Stock Purchase Agreement, would constitute at least 51% of
the total voting power of the Company on a fully diluted basis. Stockholders
owning 964,195 Common Shares (constituting 17.3% of the outstanding Common
Shares) and all 40,700 outstanding Preferred Shares (which, together with
the aforesaid Common Shares, constitute 50.6% of the outstanding voting
power of the Company on a fully diluted basis)
2
<PAGE>
have agreed to tender such Common Shares in the Offer and to sell such
Preferred Shares to Purchaser pursuant to the Preferred Stock Purchase
Agreement.
5. Stockholders who tender Common Shares will not be obligated to pay
brokerage fees, commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Common Shares by
Purchaser pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment and pay for all Common Shares
which are validly tendered on or prior to the Expiration Date and not
theretofore withdrawn pursuant to the Offer to Purchase. In all cases, payment
for Common Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates representing such
Common Shares (or a timely confirmation of a book-entry transfer of such Common
Shares into the Depositary's account at The Depository Trust Company, pursuant
to the procedures described in Section 2 of the Offer to Purchase), (ii) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees (or, in connection with a
book-entry transfer, an Agent's Message (as defined in Section 2 of the Offer to
Purchase)), and (iii) all other documents required by the Letter of Transmittal.
If holders of Common Shares wish to tender, but it is impracticable for them
to forward their certificates or other required documents prior to the
expiration of the Offer, a tender may be effected by following the guaranteed
delivery procedures specified under Section 2, "Procedure for Tendering Shares,"
in the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker or dealer or to
any other person (other than the Information Agent) in connection with the
solicitation of tenders of Common Shares pursuant to the Offer. Purchaser will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding the enclosed materials to your clients. Purchaser
will pay or cause to be paid any transfer taxes payable on the transfer of
Common Shares to it, except as otherwise provided in Instruction 6 of the
enclosed Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 12, 1999,
UNLESS THE OFFER IS EXTENDED.
Any inquiries you may have with respect to the Offer should be directed to,
and additional copies of the enclosed materials may be obtained by contacting,
the undersigned at (800) 566-9061 or (212) 754-8000 (call collect). Banks and
brokerage firms please call (800) 662-5200.
Very truly yours,
[LOGO]
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF PURCHASER, TYCO, THE DEPOSITARY OR THE INFORMATION
AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ALARMGUARD HOLDINGS, INC.
AT
$9.25 NET PER SHARE
BY
T16 ACQUISITION CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
TYCO INTERNATIONAL LTD.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, FEBRUARY 12, 1999 UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated January 15,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by T16 Acquisition Corp.,
a Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of
Tyco International Ltd., a Bermuda company ("Tyco"), to purchase all of the
outstanding shares of common stock, par value $.0001 per share, including the
associated stock purchase rights (the "Common Shares"), of Alarmguard Holdings,
Inc., a Delaware corporation (the "Company"), at a price of $9.25 per Common
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer. The Offer is being made in connection with the Agreement
and Plan of Merger, dated as of January 8, 1999, among Tyco, Purchaser and the
Company.
WE ARE THE HOLDER OF RECORD (DIRECTLY OR INDIRECTLY) OF COMMON SHARES FOR
YOUR ACCOUNT. A TENDER OF SUCH COMMON SHARES CAN BE MADE ONLY BY US OR OUR
NOMINEES AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER
OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED
BY YOU TO TENDER COMMON SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Common Shares held by us for your account, pursuant to
the terms and conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $9.25 per Common Share, net to you in cash.
2. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND
THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE HOLDERS OF COMMON
SHARES ACCEPT THE OFFER AND TENDER THEIR COMMON SHARES PURSUANT TO THE OFFER.
<PAGE>
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Friday, February 12, 1999, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Common Shares. The
Offer is conditioned upon, among other things, there being validly tendered and
not withdrawn prior to the expiration of the Offer at least that number of
Common Shares which (1) would constitute 51% of the outstanding Common Shares
and (2) together with shares of the Company's Series A preferred stock and
Series B preferred stock, each par value $.0001 per share (the "Preferred
Shares"), subject to the Preferred Stock Purchase Agreement, dated January 8,
1999 (the "Preferred Stock Purchase Agreement"), among Purchaser and the holders
of the Preferred Shares, would constitute at least 51% of the total voting power
of the Company on a fully diluted basis. Stockholders owning 964,195 Common
Shares (constituting 17.3% of the outstanding Common Shares) and all 40,700
outstanding Preferred Shares (which, together with the aforesaid Common Shares,
constitute 50.6% of the outstanding voting power of the Company on a fully
diluted basis) have agreed to tender such Common Shares in the Offer and to sell
such Preferred Shares to Purchaser pursuant to the Preferred Stock Purchase
Agreement.
5. Stockholders who tender Common Shares will not be obligated to pay
brokerage fees, commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Common Shares by
Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Common Shares, please
complete, sign and return the instruction form set forth below. An envelope to
return your instructions to us is enclosed. If you authorize the tender of your
Common Shares, all such Common Shares will be tendered unless otherwise
specified on the instruction form set forth below. PLEASE FORWARD YOUR
INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER YOUR
COMMON SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements and amendments thereto. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes aware
of any valid state statute prohibiting the making of the Offer or the acceptance
of Common Shares pursuant thereto, Purchaser will make a good faith effort to
comply with any such state statute or seek to have such statute declared
inapplicable to the Offer. If, after such good faith effort, Purchaser cannot
comply with any such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Common Shares in such
state. In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of Purchaser by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ALARMGUARD HOLDINGS, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated January 15, 1999, and the related Letter of Transmittal
(which together constitute the "Offer") relating to the offer by T16 Acquisition
Corp. ("Purchaser"), a Delaware corporation and an indirect wholly-owned
subsidiary of Tyco International Ltd., a Bermuda company, to purchase all of the
outstanding shares of common stock, par value $.0001 per share, including the
associated preferred stock purchase rights (the "Common Shares"), of Alarmguard
Holdings, Inc., a Delaware corporation, at a price of $9.25 per Common Share,
net to the seller in cash.
This will instruct you to tender to Purchaser the number of Common Shares
indicated below (or if no number is indicated below, all Common Shares) held by
you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
<TABLE>
<S> <C>
Number of Common Shares to be Tendered:*
Common Shares SIGN HERE
Signature(s)
Account Number:
Please print name(s) and address(es) here
Area Code and Telephone Number(s)
Dated , 1999
Tax Identification or Social Security Number
</TABLE>
- ------------------------
* Unless otherwise indicated, it will be assumed that all of your Common
Shares held by us for your account are to be tendered.
3
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
ALARMGUARD HOLDINGS, INC.
TO
T16 ACQUISITION CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
TYCO INTERNATIONAL LTD.
(Not to be used for Signature Guarantees)
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates representing shares of common
stock, par value $.0001 per share, including the associated preferred stock
purchase rights (the "Common Shares"), of Alarmguard Holdings, Inc., a Delaware
corporation, are not immediately available (or if the procedure for book-entry
transfer cannot be completed on a timely basis), or if time will not permit all
required documents to reach the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase). Such form may be delivered by
hand or transmitted by facsimile transmission or mail to the Depositary. See
Section 2 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<CAPTION>
BY HAND OR
BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE:
<S> <C> <C>
40 Wall Street 40 Wall Street (718) 234-5001
46(th) Floor 46(th) Floor (For Eligible Institutions
New York, N.Y. 10005 New York, N.Y. 10005 Only)
CONFIRM BY TELEPHONE:
(800) 937-5449
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message (as defined in Section 2 of the Offer to Purchase) and
certificates representing the Common Shares to the Depositary within the time
period specified herein. Failure to do so could result in a financial loss to
the Eligible Institution.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to T16 Acquisition Corp., a Delaware
corporation and an indirect wholly owned subsidiary of Tyco International Ltd.,
a Bermuda company, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated January 15, 1999, (the "Offer to Purchase") and the
related Letter of Transmittal (which together constitute the "Offer"), receipt
of which is hereby acknowledged, the number of Common Shares specified below
pursuant to the guaranteed delivery procedures set forth in Section 2 of the
Offer to Purchase.
<TABLE>
<S> <C>
Number of Common Shares Name(s) of Record Holder(s)
Certificate No(s). (if available)
(Please type or Print)
Address(es)
/ / CHECK BOX IF COMMON SHARES WILL BE
TENDERED BY BOOK-ENTRY TRANSFER.
(Zip Code)
Name of Tendering Institution: Area Code and Tel. No(s).
Account Number Signature(s)
</TABLE>
Dated , 1999
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member in good standing of the Security Transfer Agent's
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program (each, an "Eligible Institution"), (a)
represents that the above named person(s) own(s) the Common Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (b) represents that such
tender of Common Shares complies with Rule 14e-4 under the Exchange Act, and (c)
guarantees delivery to the Depositary, at one of its addresses set forth above,
of certificates representing the Common Shares tendered hereby in proper form
for transfer, or confirmation of book-entry transfer of such Common Shares into
the Depositary's accounts at The Depository Trust Company, in each case with
delivery of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees, or an Agent's Message
in the case of a book-entry transfer, and any other required documents, within
three American Stock Exchange trading days after the date hereof.
<TABLE>
<S> <C>
(Name of Firm) (Authorized signature)
(Address) (Title)
(Zip code) (Please Type or Print)
Date , 1999
(Area Code and Tel. No.)
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR COMMON SHARES WITH THIS NOTICE OF
GUARANTEED DELIVERY. CERTIFICATES REPRESENTING COMMON SHARES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
TYCO INTERNATIONAL'S ADT UNIT TO ACQUIRE
ALARMGUARD HOLDINGS, INC.
IMMEDIATELY ACCRETIVE ACQUISITION PROVIDES STRONG
HIGH-END RESIDENTIAL ALARM PRESENCE
Hamilton, Bermuda and Orange, CT, January 11, 1999 - Tyco International Ltd.
(NYSE-TYC, LSE-TYI, BSX-TYC) (Tyco), a diversified manufacturing and service
company, and Alarmguard Holdings, Inc. (AMEX-AGD) (Alarmguard), a provider of
electronic security services, announced today that they have entered into a
definitive Merger Agreement. Under the Agreement, a subsidiary of Tyco will
acquire all of the outstanding shares of Alarmguard stock. Tyco will shortly
commence a tender offer to purchase all of Alarmguard's common shares for
$9.25 per share in cash. The tender offer will be followed by a merger in
which each of the remaining common shares of Alarmguard will be exchanged for
$9.25 in cash. The Tyco subsidiary has also entered into an agreement to
purchase substantially all of Alarmguard's preferred stock. The purchase of
the preferred stock is contingent upon the purchase of the common shares in
the tender offer.
The offer will be made pursuant to definitive offering documents to be filed
with the Securities and Exchange Commission. The offer is conditioned on the
tender of a majority of the outstanding shares of common stock, as well as
certain other conditions, including the receipt of necessary government
approvals.
"Alarmguard is an excellent addition to our ADT Security business," said L.
Dennis Kozlowski, Tyco's Chairman and Chief Executive Officer. "In addition
to securing our position in the Northeast and Mid-Atlantic states, where
Alarmguard has built a very strong and loyal customer base, we expect to
create significant value by taking Alarmguard's local expertise in the
high-end residential market and applying it to our national franchise. The
transaction will have an immediate positive impact on earnings per share."
Tyco recently acquired Holmes Protection and Wells Fargo Alarm, and the
acquisition of the security operations of Entergy is pending. ADT Security is
the largest provider of electronic security services in the U. S.
Alarmguard sells and installs burglar and fire systems and provides security
monitoring services and security system repair and maintenance services to
homeowners and businesses.
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
<PAGE>
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;
changes in tax requirements (including tax rate changes, new tax laws and
revised tax law interpretations); interest rate fluctuations and other
capital market conditions, including foreign currency rate fluctuations;
economic and political conditions in international markets, including
governmental changes and restrictions on the ability to transfer capital
across borders; the ability to achieve anticipated synergies and other cost
savings in connection with acquisitions; the timing, impact and other
uncertainties of future acquisitions; and the Company's ability and its
customers' and suppliers' ability to replace, modify or upgrade computer
programs in order to adequately address the year 2000 issue.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell shares. The Offer is made solely by the Offer to Purchase, dated
January 15, 1999, and the related Letter of Transmittal and is not being made to
(nor will tenders be accepted from or on behalf of) holders of shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdiction the
securities laws of which require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed made on behalf of Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Alarmguard Holdings, Inc.
at
$9.25 Net Per Share
by
T16 Acquisition Corp.
a wholly owned subsidiary of
Tyco International Ltd.
T16 Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect
wholly owned subsidiary of Tyco International Ltd., a Bermuda corporation
("Tyco"), is offering to purchase all outstanding shares of common stock, par
value $.0001 per share, including the associated preferred stock purchase rights
(the "Common Shares"), of Alarmguard Holdings, Inc., a Delaware corporation (the
"Company"), at $9.25 per Common Share, net to the seller in cash (the "Offer
Price"), upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated January 15, 1999, and in the related Letter of Transmittal
(which together constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 12, 1999, UNLESS EXTENDED.
<PAGE>
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer at least that
number of Common Shares which (1) would constitute 51% of the outstanding Common
Shares and (2) together with the shares of the Company's Series A preferred
stock and Series B preferred stock, each par value $.0001 per share (the
"Preferred Shares" and, together with the Common Shares, the "Shares") subject
to the Preferred Stock Purchase Agreement, dated January 8, 1999 (the "Preferred
Stock Purchase Agreement"), among Purchaser and the holders of Preferred Shares,
would constitute at least 51% of the total voting power of the Company on a
fully diluted basis (the "Minimum Condition"). Stockholders owning 964,195
Common Shares (constituting 17.3% of the outstanding Common Shares) and all
40,700 outstanding Preferred Shares (which, together with the aforesaid Common
Shares, constitute 50.6% of the total voting power of the Company on a fully
diluted basis) have agreed to tender such Common Shares in the Offer and to sell
such Preferred Shares to Purchaser pursuant to the Preferred Stock Purchase
Agreement.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 8, 1999 (the "Merger Agreement"), among Tyco, Purchaser and the
Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, Purchaser will be merged with and
into the Company (the "Merger"). At the effective time of the Merger, each
outstanding Share (other than Shares held in the Company's treasury, or by any
wholly owned subsidiary of the Company, or owned by Tyco, Purchaser or any other
wholly owned subidiary of Tyco or held by stockholders, if any, who are entitled
to and who properly exercise dissenters' rights under Delaware law) will be
converted into the right to receive the Offer Price, in the case of the Common
Shares, and $1,400 plus accrued but unpaid dividends thereon, in the case of the
Preferred Shares, in each case without interest.
The Board of Directors of the Company has determined that the Offer and the
Merger are fair to, and in the best interests of, the Company and its
stockholders, has approved the Merger Agreement, the Offer and the Merger, and
recommends that the holders of the Common Shares accept the Offer and tender
their Common Shares pursuant to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Common Shares properly tendered to Purchaser and
not withdrawn as, if and when Purchaser gives oral or written notice to American
Stock Transfer & Trust Company (the "Depositary") of Purchaser's acceptance for
payment of such Common Shares. Upon the terms and subject to the conditions of
the Offer, payment for Common Shares purchased pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from Purchaser and transmitting payment to tendering stockholders. In all cases,
payment for Common Shares purchased pursuant to the Offer will be made only
after timely receipt by the Depositary of (a) certificates for such Common
Shares or timely confirmation of book-entry transfer of such Common Shares into
the Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase) pursuant to the procedures set forth in Section 2 of the
Offer to Purchase, (b) a properly completed and duly executed Letter of
<PAGE>
Transmittal (or facsimile thereof) with any required signature guarantees or, in
the case of a book-entry transfer, an Agent's Message (as defined in the Offer
to Purchase) and (c) any other documents required by the Letter of Transmittal.
Under no circumstances will interest be paid by Purchaser on the purchase price
of the Common Shares, regardless of any extension of the Offer or any delay in
making such payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, February 12, 1999, unless and until Purchaser, in its sole discretion
(but subject to the terms of the Merger Agreement), shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire. Purchaser expressly reserves the right, in
its sole discretion (but subject to the terms of the Merger Agreement), at any
time or from time to time, and regardless of whether or not any of the events
set forth in Section 15 of the Offer to Purchase shall have occurred or shall
have been determined by Purchaser to have occurred, to extend the period of time
during which the Offer is open and thereby delay acceptance for payment of, and
the payment for, any Common Shares, by giving oral or written notice of such
extension to the Depositary. Purchaser shall not have any obligation to pay
interest on the purchase price for tendered Common Shares in the event Purchaser
exercises its right to extend the period of time during which the Offer is open.
There can be no assurance that Purchaser will exercise its right to extend the
Offer. Any such extension will be followed by a public announcement thereof no
later than 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Common
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Common Shares.
Except as otherwise provided below, tenders of Common Shares are
irrevocable. Common Shares tendered pursuant to the Offer may be withdrawn at
any time prior to 12:00 Midnight, New York City time, on Friday, February 12,
1999 (or, if Purchaser shall have extended the period of time during which the
Offer is open, the latest time and date at which the Offer, as so extended by
Purchaser, shall expire) and, unless theretofore accepted for payment and paid
for by Purchaser pursuant to the Offer, may also be withdrawn at any time on or
after March 16, 1999. For a withdrawal to be effective, a written, telegraphic
or facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person having tendered the Common
Shares to be withdrawn, the number of Common Shares to be withdrawn and the name
of the registered holder of the Common Shares to be withdrawn, if different from
the name of the person who tendered the Common Shares. If certificates for
Common Shares have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such certificates, the serial numbers
shown on such certificates must be submitted to the Depositary and, unless such
Common Shares have been tendered by an Eligible Institution (as defined in
Section 2 of the Offer to Purchase), the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Common Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 2 of the Offer to Purchase, any notice of
<PAGE>
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Common Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals
of tenders of Common Shares may not be rescinded, and any Common Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Common Shares may be retendered by again following one
of the procedures described in Section 2 of the Offer to Purchase at any time
prior to the Expiration Date.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Common Shares and
furnished to brokers, dealers, banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the stockholder lists or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Common
Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal contain
important information and should be read in their entirety before any decision
is made with respect to the Offer.
Requests for copies of the Offer to Purchase and the Letter of Transmittal
may be directed to the Information Agent as set forth below, and copies will be
furnished promptly at Purchaser's expense.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Toll Free (800) 566-9061
Call Collect (212) 754-8000
Banks and Brokerage Firms Please Call:
(800) 662-5200
January 15, 1999
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.--
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
GIVE THE NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<S> <C> <C>
1. Individual The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust (grantor
is also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under state law
5. Sole proprietorship The owner(3)
- -----------------------------------------------------------
<CAPTION>
GIVE THE NAME AND
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<S> <C> <C>
- -----------------------------------------------------------
6. A valid trust, estate, The legal entity(4)
or pension trust
7. Corporate The corporation
8. Association, club, The organization
religious, charitable,
educational or other
tax-exempt organization
9. Partnership The partnership
10. A broker or registered The broker or nominee
nominee
11. Account with the The public entity
Department of
Agriculture in the name
of a public entity
(such as a state or
local government,
school district, or
prison) that receives
agricultural program
payments
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the identifying number of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number, or Form
SS-4, Application for an Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service and apply for
a number. United States resident aliens who cannot obtain a social security
number must apply for an ITIN (Individual Taxpayer Identification Number) on
Form W-7.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on payments of interest,
dividends and with respect to broker transactions include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
- A foreign government, or any political subdivision, agency or
instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947.
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Payments made to a middleman known in the investment community as a
nominee or who is listed in the most recent publication of the American
Society of Corporate Secretaries, Inc., Nominee List.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a middleman known in the investment community as a
nominee or who is listed in the most recent publication of the American
Society of Corporate Secretaries, Inc., Nominee List.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding.
FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE
PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE
FORM.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
November 2, 1998
Irving Gutin
Tyco International Ltd.
One Tyco Park
Exeter, NH 03833
Dear Mr. Gutin:
In connection with your consideration of a possible negotiated transaction
by you or one or more of your affiliates involving Alarmguard Holdings, Inc.
(the "Company") (a "Transaction"), the Company, Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), acting as the Company's exclusive financial
advisor in connection with the proposed Transaction, and their respective
advisors and agents are prepared to make available to you certain information
which is non-public, confidential or proprietary in nature ("Evaluation
Material").
1. By execution of this letter agreement (the "Agreement"), you agree to treat
all Evaluation Material confidentially and to observe the terms and
conditions set forth herein. For purposes of this Agreement, Evaluation
Material shall include all information, regardless of the form in which it
is communicated or maintained (whether prepared by the Company, DLJ or
otherwise) that contains or otherwise reflects information concerning the
Company that you or your Representatives (as defined below) may be provided
by or on behalf of the Company or DLJ in the course of your evaluation of a
possible Transaction. The term "Evaluation Material" shall also include all
reports, analyses, notes or other information that are based on, contain or
reflect any Evaluation Material ("Notes"). You shall not be required to
maintain the confidentiality of those portions of the Evaluation Material
that (i) become generally available to the public other than as result of a
disclosure by you or any of your Representatives, (ii) were available to you
on a non-confidential basis prior to the disclosure of such Evaluation
Material to you pursuant to this Agreement, provided that the source of such
information was not known by you or any of your Representatives to be bound
by a confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or any of its affiliates with
respect to such material or (iii) become available to you on a
non-confidential basis from a source other than the Company or its agents,
advisors or representatives provided that the source of such information was
not known by you or any of your Representatives to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or any of its affiliates with
respect to such material.
<PAGE>
November 2, 1998
Irving Gutin
Tyco International Ltd.
Page 2
2. You agree that you will not use the Evaluation Material for any purpose
other than determining whether you wish to enter into a Transaction. You
agree not to disclose or allow disclosure to others of any Evaluation
Material; except that, you may disclose Evaluation Material to your
directors, officers, employees, partners, affiliates, agents, financing
sources, advisors or representatives (hereinafter, "Representatives"), to
the extent necessary to permit such Representatives to assist you in making
the determination referred to in the prior sentence, provided, however, that
you shall require each such Representative to be bound by the terms of this
Agreement to the same extent as if they were parties hereto and you shall be
responsible for any breach of this Agreement by any of your Representatives.
3. You agree that you will not use the Evaluation Material in any way directly
or indirectly, detrimental to the Company. In particular, you agree that for
a period of two years from the date of the signing of this Agreement you
and your affiliates will not knowingly, as a result of knowledge or
information obtained from the Evaluation Material or otherwise in connection
with a possible Transaction: (i) divert or attempt to divert any business or
customer of the Company or any of its affiliates; nor (ii) solicit to employ
an employee of the Company or any of its affiliates.
4. In addition, you agree that you will not make any disclosure that you are
having or have had discussions concerning a Transaction, that you have
received Evaluation Material or that you are considering a possible
Transaction; provided that you may make such disclosure if you have received
the written opinion of your counsel that such disclosure must be made by you
in order that you not commit a violation of law and, prior to such
disclosure, you promptly advise and consult with the Company and its legal
counsel concerning the information you propose to disclose.
5. Although the Company and DLJ have endeavored to include in the Evaluation
Material information known to them which they believe to be relevant for the
purpose of your investigation, you understand and agree that none of the
Company, DLJ or any of their affiliates, agents, advisors or representatives
(i) have made or make any representation or warranty, expressed or implied,
as to the accuracy or completeness of the Evaluation Material or (ii) shall
have any liability whatsoever to you or your Representatives relating to or
resulting from the use of the Evaluation Material or any errors therein or
omissions therefrom.
6. In the event that you or anyone to whom you transmit any Evaluation Material
in accordance with this Agreement are requested or required (by deposition,
interrogatories, requests for information or documents in legal proceedings,
subpoenas, civil investigative demand or similar process), in connection
with any proceeding, to disclose any Evaluation Material, you will give the
Company prompt written notice of such request or requirement so that the
Company may seek an appropriate protective order or other remedy and/or
waive compliance with the provisions of this Agreement, and you will
cooperate with the Company to obtain such protective order. In the event
that such protective order or other remedy is not obtained or the Company
waives compliance with the relevant provisions of this Agreement, you (or
such other persons to whom such request is directed) will furnish only that
portion of the Evaluation Material which, in the written opinion of your
counsel, is legally required to be disclosed and, upon the Company's
request, use your best efforts to obtain assurances that confidential
treatment will be accorded to such information.
<PAGE>
November 2, 1998
Irving Gutin
Tyco International Ltd.
Page 3
7. If you decide that you do not wish to proceed with a Transaction, you will
promptly notify DLJ of that decision. In that case, or if the Company shall
elect at any time to terminate further access by you to the Evaluation
Material for any reason, you will within two business days redeliver to us
all copies of the Evaluation Material, destroy all Notes and deliver to DLJ
and the Company a certificate executed by one of your duly authorized
officers indicating that the requirements of this sentence have been
satisfied in full. Notwithstanding the return or destruction of Evaluation
Material and Notes, you and your Representatives will continue to be bound
by your obligations of confidentiality and other obligations hereunder.
8. You hereby acknowledge that you are aware that the securities laws of the
United States prohibit any person who has material, non-public information
concerning the Company or a possible Transaction involving the Company from
purchasing or selling securities in reliance upon such information or from
communicating such information to any other person or entity under
circumstances in which it is reasonably foreseeable that such person or
entity is likely to purchase or sell such securities in reliance upon such
information.
9. You agree that, for a period of three years from the date of this agreement,
unless such shall have been specifically invited in writing by the Board of
Directors of the Company, neither you nor any of your Representatives will
in any manner, directly or indirectly, (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in or in
any way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in, (i) any acquisition of
any securities (or beneficial ownership thereof) or assets of the Company or
any of its subsidiaries; (ii) any tender or exchange offer or merger or
other business combination involving the Company or any of its subsidiaries;
(iii) any recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction with respect to the Company or any of its
subsidiaries; or (iv) any "solicitation" of "proxies" (as such terms are
used in the proxy rules of the Securities and Exchange Commission) or
consents to vote any voting securities of the Company, (b) form, join or
in any way participate in a "group" (as defined under the Securities
Exchange Act of 1934, as amended), (c) otherwise act, alone or in concert
with others, to seek to control or influence the management, Board of
Directors or policies of the Company, (d) take any action which might
force the Company to make a public announcement regarding any of the
types of matters set forth in (a) above, or (e) enter into any
discussions or arrangements with any third party with respect to any of
the foregoing. You also agree during any such period not to request the
Company (or its directors, officers, employees or agents), directly or
indirectly, to amend or waive any provision of this paragraph (including
this sentence).
10. You understand that (i) the Company and DLJ shall conduct the process for a
possible Transaction as they in their sole discretion shall determine
(including, without limitation, negotiating with any prospective buyer and
entering into definitive agreements without prior notice to you or any other
person), (ii) any procedures relating to such a Transaction may be changed
at any time without notice to you or any other person, (iii) the Company
shall have the right to reject or accept any potential buyer, proposal or
offer, for any reason whatsoever, in its sole discretion, and (iv) neither
you nor any of your Representatives shall have any claims whatsoever against
the Company or DLJ or any of their respective directors, officers,
stockholders, owners, affiliates or agents arising out of or relating to the
Transaction (other than those against the parties to a definitive agreement
with you
<PAGE>
November 2, 1998
Irving Gutin
Tyco International Ltd.
Page 4
in accordance with the terms thereof). You agree that unless and until a
definitive agreement between the Company and you with respect to any
Transaction has been executed and delivered, neither the Company nor you
will be under any legal obligation of any kind whatsoever with respect to
such Transaction.
11. It is further understood and agreed that DLJ will arrange for appropriate
contacts for due diligence purposes. It is also understood and agreed that
all (i) communications regarding a possible Transaction, (ii) requests for
additional information, (iii) requests for facility tours or management
meetings and (iv) discussions or questions regarding procedures, will be
submitted or directed exclusively to DLJ, and that none of you or your
Representatives who are aware of the Evaluation Material and/or the
possibility of a Transaction will initiate or cause to be initiated any
communication with any director, officer or employee of the Company
concerning the Evaluation Material or a Transaction.
12. You agree that money damages would not be a sufficient remedy for any breach
of this Agreement by you or your Representatives, that in addition to all
other remedies the Company shall be entitled to specific performance and
injunctive or other equitable relief as a remedy for any such breach, and
you further agree to waive, and to use your best efforts to cause your
Representatives to waive, any requirement for the securing or posting of any
bond in connection with such remedy. In the event of litigation relating to
this letter agreement, if a court of competent jurisdiction determines that
you or any of your Representatives have breached this letter agreement, you
shall be liable and pay to the Company the reasonable legal fees incurred by
the Company in connection with such litigation, including any appeal
therefrom.
13. The Company reserves the right to assign its rights, powers and privileges
under this letter agreement (including, without limitation, the right to
enforce the terms of this letter agreement) to any person who enters into a
Transaction.
14. All modifications of, waivers of and amendments to this Agreement or any
part hereof must be in writing signed on behalf of you and the Company. You
acknowledge that the Company is intended to be benefited by this Agreement
and that the Company shall be entitled, either alone or together with DLJ,
to enforce this Agreement and to obtain for itself the benefit of any
remedies that may be available for the breach hereof.
15. It is further understood and agreed that no failure or delay by the Company
in exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise of any right, power or
privilege hereunder.
16. You hereby irrevocably and unconditionally submit to the exclusive
jurisdiction of any State or Federal court sitting in New York City over any
suit, action or proceeding arising out of or relating to this letter. You
hereby agree that service of any process, summons, notice or document by
U.S. registered mail addressed to you shall be effective service of process
for any action, suit or proceeding brought against you in any such
<PAGE>
November 2, 1998
Irving Gutin
Tyco International Ltd.
Page 5
court. You hereby irrevocably and unconditionally waive any objection to
the laying of venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum. You agree
that a final judgment in any such suit, action or proceeding brought in
any such court shall be conclusive and binding upon you and may be
enforced in any other courts to whose jurisdiction you are or may be
subject, by suit upon such judgment.
17. In the event that any provision or portion of this letter is determined to
be invalid or unenforceable for any reason, in whole or in part, the
remaining provisions of this letter shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by
applicable law.
18. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
19. If you are in agreement with the foregoing, please so indicate by signing,
dating and returning one copy of this Agreement, which will constitute our
agreement with respect to the matters set forth herein.
<TABLE>
<S> <C>
Very truly yours,
ALARMGUARD HOLDINGS, INC.
By: /s/ Martin C. Murrer
-----------------------------------------
Martin C. Murrer
MANAGING DIRECTOR
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
as Exclusive Agent
Agreed and Accepted:
TYCO INTERNATIONAL LTD.
By: /s/ Irving Gutin
-------------------------
Title: Senior Vice President
----------------------
Date: November 5, 1998
-----------------------
</TABLE>
<PAGE>
EXHIBIT 99(c)(2)
ALARMGUARD HOLDINGS, INC.,
TYCO INTERNATIONAL LTD.
and
T16 ACQUISITION CORP.
AGREEMENT AND PLAN OF MERGER
------------------------------
------------------------------
Dated as of January 8, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
TENDER OFFER AND MERGER
<S> <C>
1.1. The Offer ................................................................................................ 2
1.2. Company Action............................................................................................ 4
1.3. Directors ................................................................................................ 5
1.4. The Merger ............................................................................................... 7
1.5. Effective Time............................................................................................ 7
1.6. Conversion of Shares...................................................................................... 7
1.7. Dissenting Shares......................................................................................... 8
1.8. Surrender of Shares....................................................................................... 9
1.9. Options and Warrants...................................................................................... 10
1.10. Certificate of Incorporation and Bylaws................................................................... 11
1.11. Directors and Officers.................................................................................... 11
1.12. Other Effects of Merger................................................................................... 11
1.13. Proxy Statement........................................................................................... 11
1.14. Additional Actions........................................................................................ 12
1.15. Merger Without Meeting of Stockholders.................................................................... 13
1.16. Lost, Stolen or Destroyed Certificates.................................................................... 13
1.17. Material Adverse Effect................................................................................... 13
</TABLE>
<TABLE>
<CAPTION>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
<S> <C>
2.1. Organization and Good Standing............................................................................ 14
2.2. Capitalization............................................................................................ 14
2.3. Subsidiaries.............................................................................................. 15
2.4. Authorization; Binding Agreement.......................................................................... 15
2.5. Governmental Approvals.....................................................................................16
2.6. No Violations............................................................................................. 16
2.7. Securities Filings........................................................................................ 17
2.8. Company Financial Statements.............................................................................. 17
2.9. Absence of Certain Changes or Events...................................................................... 17
2.10. No Undisclosed Liabilities................................................................................ 18
2.11. Compliance with Laws...................................................................................... 18
2.12. Permits................................................................................................... 18
2.13. Litigation ............................................................................................... 18
2.14. Contracts ................................................................................................ 19
2.15. Employee Benefit Plans.................................................................................... 20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
2.16. Taxes and Returns......................................................................................... 22
2.17. Intellectual Property..................................................................................... 25
2.18. Disclosure Documents...................................................................................... 25
2.19. Labor Matters............................................................................................. 26
2.20. Limitation on Business Conduct............................................................................ 26
2.21. Title to Property......................................................................................... 26
2.22. Leased Premises........................................................................................... 27
2.23. Environmental Matters..................................................................................... 27
2.24. Insurance................................................................................................. 29
2.25. Customers................................................................................................. 29
2.26. Interested Party Transactions............................................................................. 29
2.27. Alarm Contracts........................................................................................... 29
2.28. Finders and Investment Bankers............................................................................ 29
2.29. Fairness Opinion.......................................................................................... 29
2.30. Takeover Statutes......................................................................................... 30
2.31. Full Disclosure........................................................................................... 30
2.32. Year 2000................................................................................................. 30
2.33. Rights Agreement.......................................................................................... 31
2.34. Standard Form Contracts................................................................................... 31
2.35. Central Station/Inspection................................................................................ 32
</TABLE>
<TABLE>
<CAPTION>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
<S> <C>
3.1. Organization and Good Standing............................................................................ 33
3.2. Authorization; Binding Agreement.......................................................................... 33
3.3. Governmental Approvals.................................................................................... 33
3.4. No Violations............................................................................................. 33
3.5. Disclosure Documents...................................................................................... 34
3.6. Finders and Investment Bankers............................................................................ 34
3.7. Financing Arrangements.................................................................................... 34
3.8. No Prior Activities....................................................................................... 35
</TABLE>
<TABLE>
<CAPTION>
ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
<S> <C>
4.1. Conduct of Business of the Company and the Company Subsidiaries .......................................... 35
4.2. Notification of Certain Matters........................................................................... 37
4.3. Access and Information.................................................................................... 38
4.4. Stockholder Approval...................................................................................... 38
4.5. Reasonable Best Efforts................................................................................... 38
4.6. Public Announcements...................................................................................... 39
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
4.7. Compliance ............................................................................................... 39
4.8. No Solicitation........................................................................................... 39
4.9. SEC and Stockholder Filings............................................................................... 42
4.10. Takeover Statutes......................................................................................... 42
4.11. Rights Agreement.......................................................................................... 42
</TABLE>
<TABLE>
<CAPTION>
ARTICLE V
ADDITIONAL COVENANTS OF PURCHASER AND PARENT
<S> <C>
5.1. Reasonable Best Efforts................................................................................... 42
5.2. Public Announcements...................................................................................... 43
5.3. Compliance ............................................................................................... 43
5.4. Employee Benefit Plans.................................................................................... 43
5.5. Indemnification........................................................................................... 44
5.6. Voting of Shares.......................................................................................... 45
5.7. Guarantee of Parent....................................................................................... 45
</TABLE>
<TABLE>
<CAPTION>
ARTICLE VI
MERGER CONDITIONS
<S> <C>
6.1. Offer..................................................................................................... 45
6.2. Stockholder Approval...................................................................................... 45
6.3. No Injunction or Action................................................................................... 45
6.4. Governmental Approvals.................................................................................... 46
</TABLE>
<TABLE>
<CAPTION>
ARTICLE VII
TERMINATION AND ABANDONMENT
<S> <C>
7.1. Termination .............................................................................................. 46
7.2. Effect of Termination and Abandonment..................................................................... 48
</TABLE>
<TABLE>
<CAPTION>
ARTICLE VIII
MISCELLANEOUS
<S> <C>
8.1. Confidentiality........................................................................................... 48
8.2. Amendment and Modification................................................................................ 49
8.3. Waiver of Compliance; Consents............................................................................ 49
8.4. Survival ................................................................................................. 50
8.5. Notices................................................................................................... 50
8.6. Binding Effect; Assignment................................................................................ 51
8.7. Expenses ................................................................................................. 51
8.8. Governing Law............................................................................................. 53
8.9. Counterparts.............................................................................................. 53
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
8.10. Interpretation............................................................................................ 53
8.11. Entire Agreement.......................................................................................... 54
8.12. Severability ............................................................................................. 54
8.13. Specific Performance...................................................................................... 54
8.14. Third Parties............................................................................................. 55
8.15. Disclosure Letter......................................................................................... 55
Annex I................................................................................................ A1
Glossary of Defined Terms.............................................................................. G1
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (THIS "AGREEMENT") is made
and entered into as of January 8, 1999, by and among ALARMGUARD HOLDINGS, INC.,
a Delaware corporation (the "COMPANY"), TYCO INTERNATIONAL LTD., a Bermuda
company ("PARENT"), and T16 ACQUISITION CORP., a Delaware corporation and an
indirect wholly owned subsidiary of Parent ("PURCHASER").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company,
Purchaser and Parent have approved the acquisition by Purchaser of the Company;
and
WHEREAS, in furtherance thereof, it is proposed that Purchaser
will make a cash tender offer (the "OFFER") to acquire all of the issued and
outstanding shares of common stock, par value $.0001 per share, of the Company
("COMPANY COMMON STOCK") together with the associated right to purchase shares
of Series C Junior Participating Preferred Stock of the Company, par value
$.0001 per share (the "RIGHTS"), issued pursuant to the Rights Agreement (the
"RIGHTS AGREEMENT"), dated as of April 10, 1998, between the Company and
American Stock Transfer & Trust Company, as Rights Agent (the shares of Company
Common Stock together with the associated Rights are referred to as the "COMMON
SHARES"), for $9.25 per share, or such higher price as may be paid in the Offer
(the "COMMON PER SHARE AMOUNT"), subject to any applicable withholding, net to
the seller in cash without interest; and
WHEREAS, Purchaser has entered into a Preferred Stock Purchase
Agreement (the "PREFERRED STOCK PURCHASE AGREEMENT") with the holders of at
least 75% of the issued and outstanding shares ("PREFERRED SHARES," and,
together with the Common Shares, the "SHARES") of the Series A and Series B
preferred stock of the Company ("COMPANY PREFERRED STOCK," and, together with
the Company Common Stock, the "COMPANY STOCK"), pursuant to which Purchaser will
acquire the Preferred Shares for $1,400 per share plus accrued but unpaid
dividends to and including the date of purchase (the "PREFERRED PER SHARE
AMOUNT," and together with the Common Per Share Amount, as applicable, the "PER
SHARE AMOUNT"), subject to any applicable withholding, net to the seller in cash
without interest; and
WHEREAS, also in furtherance of such acquisition, the
respective Boards of Directors of the Company, Purchaser and Parent have each
approved the merger (the "MERGER") of Purchaser with and into the Company
following the Offer in accordance with the laws of the State of Delaware; and
WHEREAS, the Board of Directors of the Company has approved
and resolved to recommend acceptance of the Offer and the Merger to the holders
of Shares and has determined that the consideration to be paid for each Share in
the Offer and the Merger is fair to and in the best interest of the holders of
Common Shares and to recommend that the holders
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of such Shares accept the Offer and that the holders of Common Shares and
Preferred Shares approve this Agreement and the transactions contemplated
hereby; and
WHEREAS, the Company, Purchaser and Parent desire to make
certain representations, warranties and agreements in connection with, and
establish various conditions precedent to, the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
TENDER OFFER AND MERGER
1.1 THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with SECTION 7.1 hereof and that none of the
events set forth in ANNEX I hereto shall have occurred and be existing,
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"SECURITIES EXCHANGE ACT")) the Offer as promptly as practicable, but in no
event later than five business days following the first public announcement of
the Offer, and shall use reasonable best efforts to consummate the Offer. The
obligation of Purchaser to accept for payment any Common Shares tendered shall
be subject to the satisfaction of only those conditions set forth in ANNEX I
hereto. The Common Per Share Amount payable in the Offer shall be net to each
seller in cash, subject to reduction only for any applicable federal back-up
withholding or stock transfer taxes payable by such seller. The Company agrees
that no Common Shares held by the Company or any Company Subsidiaries (as
defined below) will be tendered pursuant to the Offer.
(b) Without the prior written consent of the Company,
Purchaser shall not (i) decrease the Common Per Share Amount or change the form
of consideration payable in the Offer, (ii) decrease the number of Common Shares
sought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition
(as defined in ANNEX I hereto) or (iv) impose additional conditions to the Offer
or amend any other term of the Offer in any manner adverse to the holders of the
Common Shares. The Offer shall initially expire twenty (20) business days after
the date of its commencement, unless this Agreement is terminated in accordance
with ARTICLE VII hereof, in which case the Offer (whether or not previously
extended in accordance with the terms hereof) shall expire on such date of
termination. Purchaser agrees that it shall not terminate or withdraw the Offer
or extend the expiration date of the Offer unless at the expiration date of the
Offer the conditions to the Offer described in ANNEX I hereto shall not have
been satisfied or earlier waived. Notwithstanding the foregoing, Purchaser may,
without the consent of the Company, extend the Offer at any time, and from time
to time, (i) if at the then scheduled expiration date of the Offer any of the
conditions to Purchaser's obligation to accept for payment and pay for Common
Shares shall not have been satisfied or waived, until
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such time as such conditions are satisfied or waived; (ii) for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or its staff applicable to the Offer; or
(iii) if all conditions to Purchaser's obligation to accept for payment and pay
for Common Shares are satisfied or waived but the number of Common Shares
tendered is less than 90% of the then outstanding number of Common Shares, for
an aggregate period of not more than ten (10) business days (for all such
extensions) beyond the latest expiration date that would be permitted under
clause (i) or (ii) of this sentence.
(c) The Offer shall be made by means of an offer to purchase
(the "OFFER TO PURCHASE") having only the conditions set forth in ANNEX I
hereto. As soon as practicable on the date the Offer is commenced, Purchaser
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto, the "SCHEDULE 14D-1") with respect
to the Offer that will comply in all material respects with the provisions of,
and satisfy in all material respects the requirements of, such Schedule 14D-1
and all applicable federal securities laws and will contain (including as an
exhibit) or incorporate by reference the Offer to Purchase and forms of the
related letter of transmittal and summary advertisement (which documents,
together with any supplements or amendments thereto, and any other SEC schedule
or form which is filed in connection with the Offer and related transactions,
are referred to collectively herein as the "OFFER DOCUMENTS"). Each of Parent,
Purchaser and the Company agrees promptly to correct any information provided by
it for use in the Schedule 14D-1 or the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect and to supplement the information provided by it specifically for use in
the Schedule 14D-1 or the Offer Documents to include any information that shall
become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and Purchaser further
agrees to take all steps necessary to cause the Schedule 14D-1, as so corrected
or supplemented, to be filed with the SEC and the Offer Documents, as so
corrected or supplemented, to be disseminated to holders of Common Shares, in
each case as and to the extent required by applicable federal securities laws.
The Company and its counsel shall be given a reasonable opportunity to review
and comment on any Offer Documents before they are filed with the SEC, and
Parent and Purchaser shall consider any such comments in good faith.
(d) Upon the terms and subject to the conditions of the Offer,
Purchaser shall accept for payment and pay for Common Shares as soon as
permitted under the terms of the Offer and applicable law.
1.2 COMPANY ACTION. (a) The Company hereby approves and
consents to the Offer and represents and warrants that the Board of Directors of
the Company, at a meeting duly called and held on January 8, 1999, at which a
majority of the Directors was present, duly approved and adopted this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
recommended that stockholders of the Company accept the Offer, tender their
Common Shares pursuant to the Offer and approve this Agreement and the
transactions contemplated hereby, including the Merger, and determined that this
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Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interests of the stockholders of the
Company. The Company hereby consents to the inclusion in the Offer Documents of
such recommendation of the Board of Directors of the Company. The Company
represents that its Board of Directors has received the written opinion (the
"FAIRNESS OPINION") of Donaldson, Lufkin & Jenrette Securities Corporation (the
"FINANCIAL ADVISOR") that the proposed consideration to be received by the
holders of Common Shares pursuant to the Offer and the Merger is fair to such
holders from a financial point of view. The Company has been authorized by the
Financial Advisor to permit, subject to the prior review and consent by the
Financial Advisor (such consent not to be unreasonably withheld), the inclusion
of the Fairness Opinion (or a reference thereto) in the Offer Documents, the
Schedule 14D-9 (as hereinafter defined) and the Proxy Statement (as hereinafter
defined).
(b) The Company shall file with the SEC, as promptly as
practicable after the filing by Parent of the Schedule 14D-1 with respect to the
Offer, a Tender Offer Solicitation/ Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "SCHEDULE 14D-9") that
will comply in all material respects with the provisions of all applicable
federal securities laws. The Company shall mail such Schedule 14D-9 to the
stockholders of the Company as promptly as practicable after the commencement of
the Offer. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors of the Company described in SECTION
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and
to the extent that it shall become false or misleading in any material respect
(and each of Parent and Purchaser, with respect to written information supplied
by it specifically for use in the Schedule 14D-9, shall promptly notify the
Company of any required corrections of such information and cooperate with the
Company with respect to correcting such information) and to supplement the
information contained in the Schedule 14D-9 to include any information that
shall become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Company shall
take all steps necessary to cause the Schedule 14D-9 as so corrected or
supplemented to be filed with the SEC and disseminated to holders of Common
Shares to the extent required by applicable federal securities laws. Purchaser
and its counsel shall be given a reasonable opportunity to review and comment on
the Schedule 14D-9 before it is filed with the SEC, and the Company shall
consider any such comments in good faith.
(c) In connection with the Offer, the Company shall promptly
upon execution of this Agreement furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Common Shares and
security position listings of Common Shares held in stock depositories, each as
of a recent date, and shall promptly furnish Purchaser with such additional
information reasonably available to the Company, including updated lists of
stockholders, mailing labels and security position listings, and such other
information and assistance as Purchaser or its agents may reasonably request for
the purpose of communicating the Offer to the record and beneficial holders of
Common Shares. Subject
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to the requirements of applicable law and except as necessary to disseminate the
Offer Documents and otherwise for the purpose of effecting the transactions
contemplated hereby, Parent and Purchaser shall hold in confidence the materials
furnished pursuant to this SECTION 1.2(c), use such information only in
connection with the Offer, the Merger and the other transactions contemplated by
this Agreement and, if this Agreement is terminated, as promptly as practicable
return to the Company such materials and all copies thereof in the possession of
Parent and Purchaser.
1.3 DIRECTORS. Promptly upon the purchase by Parent of Common
Shares pursuant to the Offer (and provided that the Minimum Condition has been
satisfied), Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
will give Parent, subject to compliance with Section 14(f) of the Securities
Exchange Act, representation on the Board of Directors of the Company equal to
at least that number of directors which equals the product of the total number
of directors on the Board of Directors of the Company (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Parent or any affiliate of
Parent (including for purposes of this SECTION 1.3 such Shares as are accepted
for payment pursuant to the Offer, but excluding Shares held by the Company)
bears to the number of Shares outstanding. For this purpose, each Common Share
shall be counted as one Share, and each Preferred Share shall be counted as the
number of Common Shares into which such Preferred Share is convertible. At such
time, if requested by Parent, the Company will also cause each committee of the
Board of Directors of the Company to include persons designated by Parent
constituting the same percentage of each such committee as Parent's designees
are of the Board of Directors of the Company. The Company shall, upon request by
Parent, promptly increase the size of the Board of Directors of the Company or
exercise reasonable best efforts to secure the resignations of such number of
directors as is necessary to enable Parent's designees to be elected to the
Board of Directors of the Company in accordance with the terms of this SECTION
1.3 and to cause Parent's designees so to be elected; PROVIDED, HOWEVER, that,
in the event that Parent's designees are appointed or elected to the Board of
Directors of the Company, until the Effective Time (as hereinafter defined) the
Board of Directors of the Company shall have at least two directors who are
directors on the date hereof and each of whom is neither an officer of the
Company nor a designee, shareholder, affiliate or associate (within the meaning
of the federal securities laws) of Parent (such directors, the "INDEPENDENT
DIRECTORS"); PROVIDED, FURTHER, that each Independent Director shall be
designated by the Company, unless (i) the Company is then required to comply
with Section VIII.2(j) of the Preferred Stock Purchase Agreement dated as of
February 2, 1998 between the Company and the holders on the date of this
Agreement of the Company Preferred Stock (the "CURRENT PREFERRED HOLDERS")
(which section permits Advance Capital Offshore Partners, L.P. ("ADVANCE") to
designate one director (the "ADVANCE DIRECTOR") so long as Advance owns any
Preferred Shares and at least 20% of the Preferred Shares remain outstanding),
in which case one Independent Director shall be an Advance Director and the
other Independent Director shall be designated by the Company, or (ii) the
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Company is not then required to comply with the aforementioned Section VIII.2(j)
but the Current Preferred Holders continue to own at least 10% of the
outstanding Preferred Shares (the "CURRENT PREFERRED DIRECTOR CONDITION"), in
which case one Independent Director shall be designated by Current Preferred
Holders holding a majority of the outstanding Preferred Shares at such time
excluding any Preferred Shares then held by Parent or Purchaser (the "MAJORITY
OF CURRENT PREFERRED") and the other Independent Director shall be designated by
the Company; PROVIDED, FURTHER, that if no Independent Directors remain, persons
shall be designated to fill the vacancies by the Company or, if the Current
Preferred Director Condition is satisfied, one such person shall be designated
by the Company and one by the Majority of Current Preferred, in any event each
person so designated shall be neither an officer of the Company nor a designee,
shareholder, affiliate or associate of Parent, and each such person shall be
deemed to be an Independent Director for purposes of this Agreement. Subject to
applicable law, the Company shall promptly take all action necessary pursuant to
Section 14(f) of the Securities Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under this SECTION 1.3 and shall
include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer (or in an amendment thereof or an information
statement pursuant to Rule 14f-1 if Parent has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this SECTION 1.3. Parent will supply the Company and be
solely responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by such Section 14(f) and Rule
14f-1. Notwithstanding anything in this Agreement to the contrary, prior to the
Effective Time, the unanimous vote of the Independent Directors shall be
required to (i) amend or terminate this Agreement on behalf of the Company, (ii)
exercise or waive any of the Company's rights or remedies hereunder, (iii)
extend the time for performance of Parent's obligations hereunder, (iv) take any
other action by the Company in connection with this Agreement required to be
taken by the Board of Directors of the Company or (v) amend the Company's
Certificate of Incorporation or the Company's Bylaws, each as in effect on the
date of this Agreement.
1.4 THE MERGER. Upon the terms and subject to the conditions
of this Agreement, the Merger shall be consummated in accordance with the
Delaware General Corporation Law (the "DELAWARE CODE"). At the Effective Time
(as defined in SECTION 1.5 hereof), upon the terms and subject to the conditions
of this Agreement, Purchaser shall be merged with and into the Company in
accordance with the Delaware Code and the separate existence of Purchaser shall
thereupon cease, and the Company, as the surviving corporation in the Merger
(the "SURVIVING CORPORATION"), shall continue its corporate existence under the
laws of the State of Delaware as an indirect subsidiary of Parent. The parties
shall prepare and execute a certificate of merger (the "CERTIFICATE OF MERGER")
in order to comply in all respects with the requirements of the Delaware Code
and with the provisions of this Agreement.
1.5 EFFECTIVE TIME. The Merger shall become effective at the
time of the filing
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of the Certificate of Merger with the Secretary of State of Delaware in
accordance with the applicable provisions of the Delaware Code or at such later
time as may be specified in the Certificate of Merger. As soon as practicable
after all of the conditions set forth in ARTICLE VI of this Agreement have been
satisfied or waived by the party or parties entitled to the benefit of the same,
the parties hereto shall cause the Merger to become effective. Parent and the
Company shall mutually determine the time of such filing and the place where the
closing of the Merger (the "CLOSING") shall occur. The time when the Merger
shall become effective is herein referred to as the "EFFECTIVE TIME", and the
date on which the Effective Time occurs is herein referred to as the "CLOSING
DATE."
1.6 CONVERSION OF SHARES. At the Effective Time, by virtue of
the Merger and without any action on the part of Purchaser, the Company or the
holder of any of the securities specified below:
(a) Each Common Share issued and outstanding immediately
before the Effective Time (other than any Dissenting Shares (as hereinafter
defined) and Common Shares to be canceled pursuant to SECTION 1.6(c)) shall be
canceled and extinguished and be converted into the right to receive the Common
Per Share Amount in cash payable to the holder thereof, without interest, upon
surrender of the certificate representing such Common Share in accordance with
SECTION 1.8 hereof. From and after the Effective Time, the holders of
certificates evidencing ownership of Common Shares outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such Common
Shares except as otherwise provided for herein or by applicable Law.
(b) Each Preferred Share issued and outstanding immediately
before the Effective Time (other than any Dissenting Shares and Preferred Shares
to be canceled pursuant to SECTION 1.6(c)) shall be canceled and extinguished
and be converted into the right to receive the Preferred Per Share Amount in
cash payable to the holder thereof, without interest, upon surrender of the
certificate representing such Preferred Share in accordance with SECTION 1.8
hereof. From and after the Effective Time, the holders of certificates
evidencing ownership of Preferred Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Preferred
Shares except as otherwise provided for herein or by applicable Law.
(c) Each Share held in the treasury of the Company and each
Share owned by Parent or any direct or indirect wholly owned subsidiary of
Parent immediately before the Effective Time shall be canceled and extinguished,
and no payment or other consideration shall be made with respect thereto.
(d) The shares of Purchaser common stock outstanding
immediately prior to the Merger shall be converted into 1,000 shares of the
common stock of the Surviving Corporation (the "SURVIVING CORPORATION COMMON
STOCK"), which shares of the Surviving Corporation Common Stock shall constitute
all of the issued and outstanding capital stock of
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the Surviving Corporation and shall be owned by an indirect subsidiary of
Parent.
1.7 DISSENTING SHARES. (a) Notwithstanding any provision of
this Agreement to the contrary, any Shares issued and outstanding immediately
prior to the Effective Time and held by a holder who has demanded and perfected
his demand for appraisal of his Shares in accordance with the Delaware Code
(including but not limited to Section 262 thereof), and as of the Effective Time
has neither effectively withdrawn nor lost his right to such appraisal
("DISSENTING SHARES"), shall not be converted into or represent a right to
receive cash pursuant to SECTION 1.6 hereof, but the holder thereof shall be
entitled to only such rights as are granted by the Delaware Code.
(b) Notwithstanding the provisions of SECTION 1.7(a) hereof,
if any holder of Shares who demands appraisal of his Shares under the Delaware
Code shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever occurs later, such holder's Shares shall
automatically be converted into and represent only the right to receive cash as
provided in SECTION 1.6 hereof, without interest thereon, upon surrender of the
certificate or certificates representing such Shares.
(c) The Company shall give Purchaser (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands and any other instruments served pursuant to the
Delaware Code received by the Company after the date hereof and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the Delaware Code. The Company shall not voluntarily make
any payment with respect to any demands for appraisal and shall not, except with
the prior written consent of Purchaser, settle or offer to settle any such
demands.
1.8 SURRENDER OF SHARES. (a) Prior to the Effective Time,
Purchaser shall appoint American Stock Transfer & Trust Company or such other
commercial bank or trust company designated by Purchaser and reasonably
acceptable to the Company to act as exchange agent hereunder (the "EXCHANGE
AGENT") for the payment of the Per Share Amount upon surrender of certificates
representing the Shares. All of the fees and expenses of the Exchange Agent
shall be borne by Purchaser.
(b) Parent shall cause the Surviving Corporation to provide
the Exchange Agent with cash in amounts necessary to pay for all of the Shares
pursuant to SECTION 1.8(c) hereof when and as such amounts are needed by the
Exchange Agent.
(c) On the Closing Date, Purchaser shall instruct the Exchange
Agent to mail to each holder of record of a certificate representing any Shares
canceled upon the Merger pursuant to SECTIONS 1.6(a) AND (b) hereof, within five
business days of receiving from the Company a list of such holders of record,
(i) a letter of transmittal (which shall specify that
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delivery shall be effected, and risk of loss and title to the certificates shall
pass, only upon delivery of the certificates to the Exchange Agent and shall be
in such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the certificates.
Each holder of a certificate or certificates representing any Shares canceled
upon the Merger pursuant to SECTIONS 1.6(a) AND (b) hereof may thereafter
surrender such certificate or certificates to the Exchange Agent, as agent for
such holder, to effect the surrender of such certificate or certificates on such
holder's behalf for a period ending one year after the Effective Time. Upon the
surrender of certificates representing the Shares, Parent shall cause the
Exchange Agent to pay the holder of such certificates in exchange therefor cash
in an amount equal to the applicable Per Share Amount multiplied by the number
of Shares represented by such certificate. Until so surrendered, each such
certificate (other than certificates representing Dissenting Shares) shall
represent solely the right to receive the aggregate Per Share Amount relating
thereto.
(d) If payment of cash in respect of canceled Shares is to be
made to a person other than the person in whose name a surrendered certificate
or instrument is registered, it shall be a condition to such payment that the
certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the certificate or
instrument surrendered or shall have established to the satisfaction of Parent
or the Exchange Agent that such tax either has been paid or is not payable.
(e) At the Effective Time, the stock transfer books of the
Company shall be closed, and no transfer of Shares shall be made thereafter,
other than transfers of Shares that have occurred prior to the Effective Time.
In the event that, after the Effective Time, certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for cash as provided
in SECTIONS 1.6(a) AND (b).
(f) The Per Share Amount paid in the Merger shall be net to
the holder of Shares in cash, and without interest thereon subject to reduction
only for any applicable federal back-up withholding or stock transfer taxes
payable by such holder.
(g) Promptly following the date which is one year after the
Effective Time, the Exchange Agent shall deliver to Parent all cash,
certificates and other documents in its possession relating to the transactions
contemplated hereby, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a certificate representing Shares (other than
certificates representing Dissenting Shares and certificates representing Shares
held directly or indirectly by Parent or in the treasury of the Company) may
surrender such certificate to the Surviving Corporation and (subject to any
applicable abandoned property, escheat or similar law) receive in consideration
therefor the aggregate Per Share Amount relating thereto, without any interest
thereon.
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(h) None of the Company, Parent, the Surviving Corporation or
the Exchange Agent shall be liable to any holder of Shares for any cash
delivered to a public official pursuant to any abandoned property, escheat or
similar law, rule, regulation, statute, order, judgment or decree.
1.9 OPTIONS AND WARRANTS. (a) Each of the Company and Parent
shall take all reasonable actions necessary to provide that all then outstanding
options to purchase Company Common Stock, whether or not then exercisable or
vested ("COMPANY OPTIONS"), shall become fully exercisable and vested upon the
consummation of the Offer. Holders of Company Options that have become fully
exercisable and vested upon the consummation of the Offer in accordance with the
provisions of the preceding sentence will have a period of sixty (60) days
following the consummation of the Offer to surrender their options to the
Company in exchange for cash equal to the excess of (i) the aggregate value of
the Common Shares underlying such options, based on the Common Per Share Amount,
over (ii) the aggregate exercise price for the Common Shares underlying such
options. Each of the Company and Parent shall take all reasonable actions
necessary to provide that, upon consummation of the Merger, all then outstanding
Company Options shall be converted into the right to receive cash equal to the
excess of (i) the aggregate value of the Common Shares underlying such options,
based on the Common Per Share Amount, over (ii) the aggregate exercise price for
the Common Shares underlying such options.
(b) Each of the Company and Parent shall take all reasonable
actions necessary so that each of the warrants to purchase 50,000 shares of
Company Common Stock at a price of $5.00 per share, subject to adjustment (the
"PATRICOF WARRANTS"), the warrants to purchase 80,000 shares of Company Common
Stock at a price of $8.66 per share, subject to adjustment (the "LEHMAN
WARRANTS"), and the warrants to purchase 215,939 shares of Company Common Stock
at a price of $11.11 per share, subject to adjustment (the "SUBORDINATED DEBT
WARRANTS" and together with the Patricof Warrants and the Lehman Warrants, the
"COMPANY WARRANTS"), shall be exercisable, from and after the Effective Time,
for an amount of cash equal in the aggregate to the Common Per Share Amount
multiplied by the number of shares of Company Common Stock for which such
warrant was exercisable immediately prior to the Effective Time. Otherwise, the
exercise of any Company Warrant shall remain subject to all terms and conditions
provided in the applicable Company Warrant and/or Warrant Agreement.
1.10 CERTIFICATE OF INCORPORATION AND BYLAWS. Subject to
SECTION 5.5 hereof, unless otherwise determined by Parent prior to the Effective
Time, at and after the Effective Time (a) the Restated Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by the Delaware Code and such Certificate
of Incorporation; PROVIDED, HOWEVER, that (i) Article IV shall be amended and
restated in its entirety to provide that the capital stock of the Surviving
Corporation shall consist of 1,000 shares of Common Stock, par value $.01 per
share; (ii) Article V shall be amended and
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restated in its entirety to provide that the Surviving Corporation's Board shall
consist of not less than three members, all of a single class, with the exact
number to be fixed from time to time by resolution of the Board of Directors;
and (iii) Article VII shall be deleted in its entirety; and (b) the Bylaws of
the Surviving Corporation shall be the Bylaws of Purchaser in effect at the
Effective Time (subject to any subsequent amendments).
1.11 DIRECTORS AND OFFICERS. At and after the Effective Time,
the directors of Purchaser immediately prior to the Effective Time shall be the
initial directors 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 successors are duly elected or
appointed and qualified.
1.12 OTHER EFFECTS OF MERGER. The Merger shall have all
further effects as specified in the applicable provisions of the Delaware Code.
1.13 PROXY STATEMENT. (a) Following the consummation of the
Offer and if required by the Securities Exchange Act because of action by the
Company's stockholders necessary in order to consummate the Merger, the Company
shall prepare and file with the SEC and, when cleared by the SEC, shall mail to
stockholders, a proxy statement in connection with a meeting of the Company's
stockholders to vote upon the adoption of this Agreement and the Merger and the
transactions contemplated hereby and thereby (the "COMPANY PROPOSALS"), or an
information statement, as appropriate, satisfying all requirements of the
Securities Exchange Act (such proxy or information statement in the form mailed
by the Company to its stockholders, together with any and all amendments or
supplements thereto, is herein referred to as the "PROXY STATEMENT").
(b) Parent will furnish the Company with such information
concerning Parent and its subsidiaries as is necessary in order to cause the
Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply
with applicable Law. Parent agrees promptly to advise the Company if, at any
time prior to the meeting of stockholders of the Company referenced herein, any
Parent Information (as defined below) in the Proxy Statement is or becomes
incorrect or incomplete in any material respect and to provide the Company with
the information needed to correct such inaccuracy or omission. Parent will
furnish the Company with such supplemental information as may be necessary in
order to cause the Proxy Statement, insofar as it relates to Parent and its
subsidiaries, to comply with applicable Law after the mailing thereof to the
stockholders of the Company.
(c) The Company and Parent agree to cooperate in making any
preliminary filings of the Proxy Statement with the SEC, as promptly as
practicable, pursuant to Rule 14a-6 under the Securities Exchange Act.
(d) The Company shall provide Parent for its review a copy of
the Proxy Statement prior to each filing thereof, with reasonable time and
opportunity for such review.
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Parent authorizes the Company to utilize in the Proxy Statement the information
concerning Parent and its subsidiaries provided to the Company in connection
with, or contained in, the Proxy Statement.
1.14 ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Purchaser or the Company or otherwise to carry
out this Agreement, the officers and directors of the Company and Purchaser
shall be authorized to execute and deliver, in the name and on behalf of
Purchaser or the Company, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of Purchaser or the
Company, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
1.15 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
the foregoing provisions of this ARTICLE I, in the event that Purchaser, or any
other direct or indirect subsidiary of Parent, shall acquire at least 90 percent
of the outstanding shares of each class of Shares, the parties hereto agree to
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
meeting of stockholders of the Company, in accordance with Section 253 of the
Delaware Code.
1.16 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates representing shares of Company Stock shall have been lost, stolen
or destroyed, the Exchange Agent shall make such payment in exchange for such
lost, stolen or destroyed certificates upon the making of an affidavit of that
fact by the holder thereof; PROVIDED, HOWEVER, that Parent 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 Parent or the Exchange Agent with respect to the certificates alleged to
have been lost, stolen or destroyed.
1.17 MATERIAL ADVERSE EFFECT. When used in connection with the
Company or any Company Subsidiaries or Parent or any of its subsidiaries, as the
case may be, the term "MATERIAL ADVERSE EFFECT" means any change, effect or
circumstance that, individually or when taken together with all other similar
changes, effects or circumstances that have occurred during the period relevant
to the determination of such Material Adverse Effect, is or is reasonably likely
to be materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of the Company and any Company
Subsidiaries or Parent and its subsidiaries, as the case may be, in each case
taken as a whole; PROVIDED, HOWEVER, that any change, effect or circumstance
directly resulting from the resignation of any
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of the Company's employees in response to the public announcement of the
transactions contemplated by this Agreement shall not be taken into
consideration in determining whether a Material Adverse Effect has occurred with
respect to the Company. Changes, effects and circumstances referred to in any of
the provisions of SECTION 2.15 hereof shall be deemed similar for purposes of
this SECTION 1.17.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser
that, except as set forth in the correspondingly numbered Sections of the
letter, dated the date hereof, from the Company to Parent (the "COMPANY
DISCLOSURE LETTER"):
2.1 ORGANIZATION AND GOOD STANDING. The Company and each of
the Company Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company and
each of the Company Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not reasonably be
expected to have a Material Adverse Effect. The Company has heretofore made
available to Parent accurate and complete copies of the Certificate of
Incorporation and Bylaws, as currently in effect, of the Company. For purposes
of this Agreement, the term "COMPANY SUBSIDIARY" shall mean any "subsidiary" (as
such term is defined in Rule 1-02 of Regulation S-X of the SEC) of the Company.
2.2 CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (A) 25,000,000 shares of Company Common
Stock and (B) 5,000,000 shares of Company Preferred Stock, of which 35,700 have
been designated as Series A Preferred Stock and 5,000 shares have been
designated as Series B Preferred Stock. As of December 23, 1998, (i) 5,569,983
shares of Company Common Stock were issued and outstanding, (ii) 35,700 shares
of Series A Preferred Stock were issued and outstanding, (iii) 5,000 shares of
Series B Preferred Stock were issued and outstanding, (iv) no shares of Company
Common Stock or shares of Company Preferred Stock were issued and held in the
treasury of the Company, (vi) no shares of Company Common Stock or Company
Preferred Stock were held by Company Subsidiaries, (vii) 4,972,434 shares of
Company Common Stock were reserved for future issuance upon conversion of the
outstanding shares of Company Preferred Stock, (viii) 849,083 shares of Company
Common Stock were reserved for future issuance pursuant to outstanding Company
Options, and (ix) 345,939 shares of Company Common Stock were reserved for
future issuance upon exercise of Company Warrants. No material change in the
capitalization of the Company has occurred between December 23, 1998 and the
date hereof. No other capital stock of the Company is authorized or issued. All
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issued and outstanding shares of the Company Stock are duly authorized, validly
issued, fully paid and non-assessable. Except as set forth in the Company
Securities Filings (as hereinafter defined) filed prior to the date of this
Agreement or as otherwise contemplated by this Agreement, as of the date hereof,
there are no outstanding rights, subscriptions, warrants, puts, calls,
unsatisfied preemptive rights, options or other agreements of any kind relating
to any of the outstanding, authorized but unissued or treasury shares of the
capital stock or any other security of the Company, and there is no authorized
or outstanding security of any kind convertible into or exchangeable for any
such capital stock or other security. Except as disclosed in the Company
Securities Filings filed prior to the date of this Agreement, there are no
obligations, contingent or other, of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of any Company Subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such Company Subsidiary or any other entity.
2.3 SUBSIDIARIES. Section 2.3 of the Company Disclosure Letter
sets forth the name and jurisdiction of incorporation of each Company
Subsidiary, each of which is wholly owned by the Company except as otherwise
indicated in said Section 2.3 of the Company Disclosure Letter. All of the
capital stock and other interests of the Company Subsidiaries so held by the
Company are owned by it or a Company Subsidiary as indicated in said Section 2.3
of the Company Disclosure Letter, free and clear of any claim, lien, encumbrance
or security interest with respect thereto. All of the outstanding shares of
capital stock of each of the Company Subsidiaries directly or indirectly held by
the Company are duly authorized, validly issued, fully paid and non-assessable
and were issued free of preemptive rights and in compliance with applicable
Laws. No equity securities or other interests of any of the Company Subsidiaries
are or may become required to be issued or purchased by reason of any options,
warrants, rights to subscribe to, puts, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any capital stock of any Company Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Company
Subsidiary is bound to issue additional shares of its capital stock, or options,
warrants or rights to purchase or acquire any additional shares of its capital
stock or securities convertible into or exchangeable for such shares. Except as
set forth in the Company Securities Filings filed prior to the date of this
Agreement or Section 2.3 of the Company Disclosure Letter, 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, with respect to which interest the Company has invested
or is required to invest $100,000 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.
2.4 AUTHORIZATION; BINDING AGREEMENT. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the
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transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, including, but not
limited to, the Merger, have been duly and validly authorized by the Company's
Board of Directors, and no other corporate proceedings on the part of the
Company or any Company Subsidiary are necessary to authorize the execution and
delivery of this Agreement or to consummate the transactions contemplated hereby
(other than (i) the consent of the holders of 75% of the outstanding Preferred
Shares and (ii) adoption of this Agreement by the holders of Shares with voting
power equal to a majority of the voting power of all outstanding Shares in
accordance with the Delaware Code). This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except to the extent that enforceability thereof may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies ("ENFORCEABILITY EXCEPTIONS").
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("CONSENT") any nation
or government, any state or other political subdivision thereof or any entity,
authority or body exercising executive, legislative, judicial or regulatory
functions of or pertaining to government, including, without limitation, any
governmental or regulatory authority, agency, department, board, commission or
instrumentality, any court, tribunal or arbitrator and any self-regulatory
organization ("GOVERNMENTAL AUTHORITY"), on the part of the Company or any of
the Company Subsidiaries is required in connection with the execution or
delivery by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby other than (i) the filing of the
Certificate of Merger with the Secretary of State of Delaware in accordance with
the Delaware Code, (ii) filings with the SEC, (iii) filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR ACT"), (iv) consents or filings
required under the Communications Act of 1934, as amended, relating to change in
ownership or control of certain business radio and related licenses held by the
Company or the Company Subsidiaries, (v) filings pursuant to the rules and
regulations of the American Stock Exchange ("AMEX") and (vi) those Consents
that, if they were not obtained or made, would not reasonably be expected to
have a Material Adverse Effect.
2.6 NO VIOLATIONS. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by the Company with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws of the Company or any of the Company Subsidiaries, (ii)
require any Consent under or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of, any Company Material Contract (as hereinafter
defined), (iii) result in the creation or imposition of any lien or encumbrance
of any kind upon any of the assets of the Company or
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any Company Subsidiary or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in SECTION 2.5 hereof, violate any
applicable provision of any statute, law, rule or regulation or any order,
decision, injunction, judgment, award or decree ("LAW") to which the Company or
any Company Subsidiary or its assets or properties are subject, except, in the
case of each of clauses (ii), (iii) and (iv) above, for any deviations from the
foregoing which would not reasonably be expected to have a Material Adverse
Effect.
2.7 SECURITIES FILINGS. The Company has made available to
Parent true and complete copies of (i)its Annual Report on Form 10-K, for the
year ended December 31, 1997, as filed with the SEC, (ii) its proxy statements
relating to all of the meetings of stockholders (whether annual or special) of
the Company since January 1, 1996 as filed with the SEC, and (iii) all other
reports, statements and registration statements and amendments thereto
(including, without limitation, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as amended) filed by the Company with the SEC since January
1, 1998. The reports and statements set forth in clauses (i) through (iii)
above, and those subsequently provided or required to be provided pursuant to
this SECTION 2.7, are referred to collectively herein as the "COMPANY SECURITIES
FILINGS." Except as set forth in Section 2.7 of the Company Disclosure Letter,
as of their respective dates, or as of the date of the last amendment thereof,
if amended after filing, the Company Securities Filings (i) were prepared in all
material respects in accordance with the requirements of the Securities Act of
1933, as amended (the "SECURITIES ACT") and the rules and regulations
promulgated thereunder, or the Securities Exchange Act, as the case may be, and
none of the Company Securities Filings contained or, as to the Company
Securities Filings subsequent to the date hereof, will contain, any untrue
statement of a material fact or omitted or, as to the Company Securities Filings
subsequent to the date hereof, will omit, to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2.8 COMPANY FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited interim financial statements of the Company
included in the Company Securities Filings (the "COMPANY FINANCIAL STATEMENTS")
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and present fairly, in all material respects, the financial
position of the Company and the Company Subsidiaries as at the dates thereof and
the results of their operations and cash flows for the periods then ended
subject, in the case of the unaudited interim financial statements, to normal
year-end audit adjustments, any other adjustments described therein and the fact
that certain information and notes have been condensed or omitted in accordance
with the Securities Exchange Act.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Company Securities Filings filed prior to the date of this Agreement or
Section 2.9 of the Company Disclosure Letter, since December 31, 1997, through
the date of this Agreement, there has not been: (i) any event that has had or
would reasonably be expected to have a
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Material Adverse Effect; (ii) any declaration, payment or setting aside for
payment of any dividend or other distribution or any redemption or other
acquisition of any shares of capital stock or securities of the Company by the
Company; (iii) any material damage or loss to any material asset or property,
whether or not covered by insurance; (iv) any change by the Company in
accounting principles or practices; (v) any material revaluation by the Company
of any of its assets, including writing down the value of inventory or writing
off notes or accounts receivable other than in the ordinary course of business;
(vi) any sale of a material amount of property of the Company, except in the
ordinary course of business; or (vii) any other action or event, involving an
amount exceeding $250,000, that would have required the consent of Parent
pursuant to SECTION 4.1 hereof had such action or event occurred after the date
of this Agreement.
2.10 NO UNDISCLOSED LIABILITIES. Except as set forth in the
Company Securities Filings filed prior to the date of this Agreement or Section
2.10 of the Company Disclosure Letter, neither the Company nor any Company
Subsidiary has any liabilities (absolute, accrued, contingent or otherwise),
except liabilities (a) in the aggregate adequately provided for in the Company's
audited balance sheet (including any related notes thereto) for the fiscal year
ended December 31, 1997 included in the Company's 1997 Annual Report on Form
10-K (the "1997 BALANCE SHEET"), (b) incurred in the ordinary course of business
and not required under generally accepted accounting principles to be reflected
on the 1997 Balance Sheet, (c) incurred since December 31, 1997 in the ordinary
course of business consistent with past practice, (d) incurred in connection
with this Agreement or (e) which would not reasonably be expected to have a
Material Adverse Effect.
2.11 COMPLIANCE WITH LAWS. The business of the Company and
each of the Company Subsidiaries has been operated in compliance with all Laws
applicable thereto, except for any non-compliance which would not reasonably be
expected to have a Material Adverse Effect.
2.12 PERMITS. Except as set forth in Section 2.12 of the
Company Disclosure Letter, (i) the Company and the Company Subsidiaries have all
permits, certificates, licenses, approvals and other authorizations from
Governmental Authorities required in connection with the operation of their
respective businesses (collectively, "COMPANY PERMITS"), (ii) neither the
Company nor any Company Subsidiary is in violation of any Company Permit and
(iii) no proceedings are pending or, to the knowledge of the Company,
threatened, to revoke or limit any Company Permit, except, in the case of each
of clauses (i), (ii) and (iii) above, those the absence or violation of which
would not reasonably be expected to have a Material Adverse Effect.
2.13 LITIGATION. Except as disclosed in the Company Securities
Filings filed prior to the date of this Agreement or Section 2.13 of the Company
Disclosure Letter, there is no suit, action or proceeding ("LITIGATION") pending
or, to the knowledge of the Company, threatened against the Company or any of
the Company Subsidiaries which, individually or in
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the aggregate, would reasonably be expected to have a Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Authority outstanding against the Company or any Company Subsidiary which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. Except as set forth in the Company Securities Filings
filed prior to the date of this Agreement or Section 2.13 of the Company
Disclosure Letter, since December 31, 1997, and prior to or on the date hereof,
there have been no actions, suits or proceedings made or pending against the
Company or any Company Subsidiary alleging (x) any Environmental Claims (as
hereinafter defined) or (y) any claim against the Company in connection with its
rendering of any security services, except for (i) such claims (not resulting as
of the date hereof in an action, suit or proceeding) not exceeding in any
individual case $500,000 or (ii) such actions, suits or proceedings which, in
the case of either clause (x) or (y) above, would not reasonably be expected to
result in liability to the Company or any Company Subsidiary, not covered by
insurance, of $100,000 or more in any individual case or (without regard to
whether or not any thereof is covered by insurance) $500,000 in the aggregate.
The Company has not established any reserves in the Company Financial Statements
with respect to claims referred to in clauses (x) and (y) of the preceding
sentence. Section 2.13 of the Company Disclosure Letter lists all letters
received by the Company from insurance carriers asserting a reservation of
rights with respect to any action, suit or proceeding in which $25,000 or more
is at stake.
2.14 CONTRACTS. Section 2.14 of the Company Disclosure Letter
includes a list of all loan agreements and financing agreements and of all
equipment lease financing agreements involving obligations of the Company or any
Company Subsidiary in excess of $250,000. Neither the Company nor any of the
Company Subsidiaries is a party or is subject to any note, bond, mortgage,
indenture, contract, lease, license, agreement or instrument that is required to
be described in or filed as an exhibit to any Company Securities Filing filed
prior to the date of this Agreement (collectively with those agreements listed
in Section 2.14 of the Company Disclosure letter, the "COMPANY MATERIAL
CONTRACTS") that is not so described in or filed as required by the Securities
Act or the Securities Exchange Act, as the case may be. The Company is not a
party to any agreements to acquire in the future the stock or substantially all
the assets of another person. Except as disclosed in the Company Securities
Filings filed prior to the date of this Agreement, all such Company Material
Contracts are valid and binding and are in full force and effect and nforceable
against the Company or such Company Subsidiary in accordance with their
respective terms, subject to the Enforceability Exceptions. Neither the Company
nor any Company Subsidiary is in violation or breach of or default under any
such Company Material Contract where such violation or breach would reasonably
be expected to have a Material Adverse Effect. To the knowledge of the Company,
no party (other than the Company or Company Subsidiaries) is in default,
violation or breach of any Company Material Contract where such violation or
breach would reasonably be expected to have a Material Adverse Effect.
2.15 EMPLOYEE BENEFIT PLANS. (a) Section 2.15(a) of the
Company Disclosure Letter lists all employee pension benefit plans (as defined
in Section 3(2) of the Employee
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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, 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 or consultant who is an individual or an individual doing
business in a corporate form (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
(an "ERISA AFFILIATE") within the meaning of Section 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986, as amended, and the regulations thereunder
(the "CODE") or Section 4001(a)(14) or (b) of ERISA, or any Company Subsidiary,
with respect to which the Company has or could have any current (actual or
contingent) material liability (together for purposes of this SECTION 2.15, the
"EMPLOYEE PLANS"). Prior to the date of this Agreement, the Company has provided
or made available to Parent copies of (i) each such written Employee Plan (or a
written description of any 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 any material
communications to plan participants, (ii) the three most recent annual reports
on Form 5500 series, with accompanying schedules and attachments, filed with
respect to each Employee Plan required to make such a filing, (iii) the latest
reports which have been filed with the Department of Labor with respect to each
Employee Plan required to make such filing and (iv) the most recent favorable
determination letters issued for each Employee Plan and related trust which is
subject to Parts 1, 2 and 4 of Subtitle B of Title I of ERISA (and, if an
application for such determination is pending, a copy of the application for
such determination).
(b) (i) None of the Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person (other than in
accordance with Section 4980B of the Code or Part 6 of Subtitle B of Title I of
ERISA), and none of the Employee Plans is a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA; (ii) to the knowledge of the Company, 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 Employee Plan which could subject the Company or any ERISA
Affiliate, directly or indirectly, to a tax, penalty or other liability for
prohibited transactions under ERISA or Section 4975 of the Code, except for any
such tax, penalty or liability that would not reasonably be expected to result
in a Material Adverse Effect; (iii) to the knowledge of the Company, no
fiduciary of any Employee Plan has breached any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA, except where such
breach would not reasonably be expected to result in a Material Adverse Effect;
(iv) all Employee Plans have been established and maintained substantially in
accordance with their terms and have operated in compliance with the
requirements prescribed by any and all statutes (including ERISA and the Code),
orders, or governmental rules and regulations currently in effect with respect
thereto (including all applicable requirements for notification to participants
or the
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Department of Labor, the Internal Revenue Service (the "IRS") or the Secretary
of the Treasury), except where failure to do so would not reasonably be expected
to result in a Material Adverse Effect; and the Company and each Company
Subsidiary have performed all obligations required to be performed by them
under, are not in default under or in violation of any Employee Plan except
where failure to do so would not reasonably be expected to result in a Material
Adverse Effect, and have no knowledge of any default or violation by any other
party to, any of the Employee Plans; (v) each Employee Plan which is subject to
Parts 1, 2 and 4 of Subtitle B of ERISA is the subject of a favorable
determination letter from the IRS, and to the knowledge of the Company nothing
has occurred which may reasonably be expected to impair such determination; (vi)
all contributions required to be made with respect to any Employee Plan pursuant
to the terms of the Employee Plan have been made on or before their due dates
except for any failure to make contributions that would not reasonably be
expected to result in a Material Adverse Effect; (vii) no facts exist or have
existed under which the Company or any ERISA Affiliate could incur any liability
under Title IV of ERISA; and (viii) there are no complaints, charges or claims
against the Company pending or to the Company's knowledge threatened to be
brought by or filed with any governmental authority based on, arising out of, in
connection with or otherwise relating to the classification of any individual by
the Company as an independent contractor or "leased employee" (within the
meaning of section 414(n) of the Code) rather than as an employee.
(c) Section 2.15(c) of the Company Disclosure Letter sets
forth a true and complete list of each current or former employee, officer or
director of the Company or any Company Subsidiary 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 as a result of an agreement
with or stock plan of the Company; and (iii) any other right, directly or
indirectly, to receive Company Common Stock, except as otherwise disclosed in
Section 2.15 of the Company Disclosure Letter, together with the number of
shares of Company Stock subject to such right. Section 2.15(c) of the Company
Disclosure Letter also sets forth the total number of any such ISOs and any such
nonqualified options and other such rights.
(d) Unless otherwise disclosed in Section 2.15(a) of the
Company Disclosure Letter, Section 2.15(d) of the Company Disclosure Letter sets
forth a true and complete list of (i) all employment agreements with officers of
the Company or any of the Company Subsidiaries; (ii) all agreements with
consultants who are individuals obligating the Company or any of the Company
Subsidiaries to make annual cash payments in an amount exceeding $100,000; (iii)
all agreements which individually or in the aggregate are or could be material
with respect to the services of independent contractors or leased employees who
are individuals or individuals doing business in a corporate form whether or not
they participate in any of the Employee Plans; (iv) all officers of the Company
or any of the Company
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Subsidiaries who have executed a non-competition agreement with the Company or
any of the Company Subsidiaries; (v) all severance agreements, programs and
policies of the Company or any of the Company Subsidiaries with or relating to
its employees, in each case with outstanding commitments exceeding $100,000,
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 in control provisions.
(e) (i) Except as set forth in Section 2.15(e) of the Company
Disclosure Letter, no Employee Plan is an employee stock ownership plan (within
the meaning of Section 4975(e)(7) of the Code) or otherwise invests in Company
Stock; and (ii) 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 except as otherwise provided in
SECTION 1.9 hereof or disclosed in Section 2.15(e) of the Company Disclosure
Letter or except where such increase or acceleration would not reasonably be
expected to result in a Material Adverse Effect. The Company will take all
actions within its control to ensure that all actions required to be taken by a
fiduciary of any Employee Plan in order to effectuate the transaction
contemplated by this Agreement shall comply with the terms of such Plan, ERISA
and other applicable laws. The Company will take all actions within its control
to ensure that all actions required to be taken by a trustee of any Employee
Plan that owns Company Stock shall have been duly authorized by the appropriate
fiduciaries of such Plan and shall comply with the terms of such Plan, ERISA and
other applicable laws.
(f) The Company maintains no Employee Plan covering non-U.S.
employees.
(g) The Company has fiduciary liability insurance of at least
$500,000 in effect covering the fiduciaries of the Employee Plans (including the
Company) with respect to whom the Company may have liability.
2.16 TAXES AND RETURNS. (a) The Company and each of the
Company Subsidiaries has timely filed, or caused to be timely filed, all
material Tax Returns (as hereinafter defined) required to be filed by it, and
all such tax returns are true, complete and correct in all material respects,
and has timely 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 Company Financial Statements have been established or which are being
contested in good faith. Except as set forth in Section 2.16 of the Company
Disclosure Letter, there are no material claims or assessments pending against
the Company or any of the Company Subsidiaries for any alleged deficiency in any
Tax, and the Company has not been notified in writing of any proposed Tax claims
or assessments against the Company or any of the Company Subsidiaries (other
than in each case, claims or assessments for which adequate reserves in the
Company Financial Statements have been established or which are being contested
in good faith or are immaterial in amount). Except as would not reasonably be
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expected to have a Material Adverse Effect: (i) neither the Company nor any of
the Company Subsidiaries has executed any waivers or extensions of any
applicable statute of limitations to assess any material amount of Taxes; and
(ii) there are no outstanding requests by the Company or any of the Company
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. The statute of limitations period for assessment of federal
income taxes has expired for all taxable years through the taxable year of
Security Systems Holdings, Inc. ending December 31, 1994, and of Triton Group
Ltd. ending March 31, 1994. 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 the
Company Subsidiaries except for statutory liens for current Taxes not yet due
and payable. There are no outstanding powers of attorney enabling any party to
represent the Company or any of the Company Subsidiaries with respect to Tax
matters.
(b) For purposes of this Agreement, the term "TAX" shall mean
any federal, state, local, foreign 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 of any
kind whatsoever, together with any interest or penalty imposed by any
Governmental Authority. 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 entity with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
(c) (i) Except as set forth in Section 2.16 of the Company
Disclosure Letter, neither the Company nor any of the Company Subsidiaries has,
since consummation of the Triton Group Ltd. plan of reorganization pursuant to
Chapter 11 of the United States Bankruptcy Code on June 25, 1993, been a member
of an affiliated group within the meaning of Section 1504 of the Code or filed
or been included in a combined, consolidated or unitary Tax Return, other than
of the Company and the Company Subsidiaries; (ii) other than with respect to the
Company and the Company Subsidiaries, neither the Company nor any of the Company
Subsidiaries is currently 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 securityholders 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
the Company Subsidiaries with respect to Taxes; (iii) neither the Company nor
any of the Company Subsidiaries is a party to any joint venture, partnership or
other arrangement or contract which could be treated as a partnership for
federal income tax purposes; (iv) neither the Company nor any of the Company
Subsidiaries has entered into any sale leaseback or any leveraged lease
transaction that fails to satisfy the requirements of Revenue Procedure 75-21
(or similar provisions of foreign law); (v) neither the Company nor any of the
Company Subsidiaries has agreed or is required, as a result of a
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change in method of accounting or otherwise, to include any adjustment under
Section 481 of the Code (or any corresponding provision of state, local or
foreign law) in taxable income; (vi) neither the Company nor any of the Company
Subsidiaries is a party to any agreement, contract, arrangement or plan that
would result (taking into account the transactions contemplated by this
Agreement), separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code; (vii) the
prices for any property or services (or for the use of property) provided by the
Company or any of the Company Subsidiaries to any other subsidiary or to the
Company have been arm's length prices, determined using a method permitted by
the Treasury Regulations under Section 482 of the Code; (viii) neither the
Company nor any of the Company Subsidiaries is liable with respect to any
indebtedness the interest of which is not deductible for applicable federal,
foreign, state or local income tax purposes; (ix) neither the Company nor any of
the Company Subsidiaries is a "consenting corporation" under Section 341(f) of
the Code or any corresponding provision of state, local or foreign law; and (x)
none of the assets owned by the Company or any of the Company Subsidiaries is
property that is required to be treated as owned by any other person pursuant to
Section 168(g)(8) of the Internal Revenue Code of 1954, as amended, as in effect
immediately prior to the enactment of the Tax Reform Act of 1986, or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(d) The amount of net operating losses (as defined in Section
172 of the Code) of the Company and the Company Subsidiaries as of the end of
the fiscal year ended December 31, 1997 is as set forth in the Company's
financial statements for such year.
Each of the statements made in this SECTION 2.16 shall be deemed true and
correct for purposes of this Agreement unless in any such case any failure of
such statement to be true or correct would reasonably be expected to result in a
Material Adverse Effect.
2.17 INTELLECTUAL PROPERTY. The Company or the Company
Subsidiaries own, or are licensed or otherwise possess legal enforceable rights
to use, all patents, trademarks, trade names, service marks, copyrights and any
applications therefor, technology, know-how, trade secrets, computer software
programs or applications, domain names and tangible or intangible proprietary
information or materials that are used in the respective businesses of the
Company and the Company Subsidiaries as currently conducted, except for any such
failures to own, be licensed or possess that would not reasonably be expected to
have a Material Adverse Effect. To the best knowledge of the Company, there are
no valid grounds for any bona fide claims (i) to the effect that the business of
the Company or any of the Company Subsidiaries infringes on any copyright,
patent, trademark, service mark or trade secret; (ii) against the use by the
Company or any of the Company Subsidiaries of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software programs
and applications used in the business of the Company or any of the Company
Subsidiaries as currently conducted or as proposed to be conducted; (iii)
challenging the ownership, validity or effectiveness of any of the patents,
registered and material unregistered trademarks and service marks, registered
copyrights, trade names and any applications
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therefor owned by the Company or any of the Company Subsidiaries (the "COMPANY
INTELLECTUAL PROPERTY RIGHTS") or other trade secret material to the Company; or
(iv) challenging the license or legally enforceable right to use of any
third-party patents, trademarks, service marks and copyrights by the Company or
any of the Company Subsidiaries, except, in the case of each of clauses (i),
(ii), (iii) and (iv) above, for matters that, if determined adversely to the
Company, would not reasonably be expected to have a Material Adverse Effect. To
the best knowledge of the Company, all material patents, registered trademarks,
service marks and copyrights held by the Company are valid and subsisting.
Except as set forth in the Company Securities Filings filed prior to the date of
this Agreement or Section 2.17 of the Company Disclosure Letter, to the
Company's knowledge, there is no material unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property by any third party,
including any employee or former employee of the Company or any of the Company
Subsidiaries.
2.18 DISCLOSURE DOCUMENTS. The Proxy Statement will comply in
all material respects with the applicable requirements of the Securities
Exchange Act except that no representation or warranty is being made by the
Company with respect to the Parent Information included in the Proxy Statement.
The Proxy Statement will not, at the time the Proxy Statement is filed with the
SEC or first sent to stockholders, at the time of the Company's stockholders'
meeting or at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading except that no representation or
warranty is being made by the Company with respect to the Parent Information
included in the Proxy Statement. The Schedule 14D-9 will comply in all material
respects with the Securities Exchange Act except that no representation or
warranty is being made by the Company with respect to the Parent Information
included in the Schedule 14D-9. Neither the Schedule 14D-9 nor any of the
information relating to the Company or its affiliates provided by or on behalf
of the Company specifically for inclusion in the Schedule 14D-1 or the Offer
Documents will, at the respective times the Schedule 14D-9, the Schedule 14D-1
and the Offer Documents are filed with the SEC and are first published, sent or
given to stockholders of the Company, 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 made therein, in light of the
circumstances under which they were made, not misleading.
2.19 LABOR MATTERS. Except as set forth in the Company
Securities Filings filed prior to the date of this Agreement, (i) there are no
controversies pending or, to the knowledge of the Company or any of the Company
Subsidiaries, threatened, between the Company or any of the Company Subsidiaries
and any of their respective employees, which controversies would reasonably be
expected to have a Material Adverse Effect; (ii) neither the Company nor any of
the Company Subsidiaries is a party to any material collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company or the Company Subsidiaries, nor, as of the date of this Agreement, does
the Company or any of the
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Company Subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither the Company nor any of the
Company Subsidiaries has any knowledge of any strikes, slowdowns, work
stoppages, lockouts, or threats thereof, by or with respect to any employees of
the Company or any of the Company Subsidiaries which would reasonably be
expected to have a Material Adverse Effect.
2.20 LIMITATION ON BUSINESS CONDUCT. Except as set forth in
the Company Securities Filings filed prior to the date of this Agreement,
neither the Company nor any of the Company Subsidiaries is a party to, or has
any obligation under, any contract or agreement, written or oral, which contains
any covenants currently or prospectively limiting in any material respect the
freedom of the Company or any of the Company Subsidiaries to engage in any line
of business or to compete with any entity.
2.21 TITLE TO PROPERTY. Except as set forth in the Company
Securities Filings filed prior to the date of this Agreement or Section 2.21 of
the Company Disclosure Letter, each of the Company and each of the Company
Subsidiaries owns the properties and assets that it purports to own free and
clear of all liens, charges, mortgages, security interests or encumbrances of
any kind ("LIENS"), except for Liens which arise in the ordinary course of
business and do not materially impair the Company's or the Company Subsidiaries'
ownership or use of such properties or assets, Liens for taxes not yet due and
Liens securing obligations under the Fourth Amended and Restated Term Loan and
Acquisition Credit Agreement, dated as of July 31, 1998, by and among
Alarmguard, Inc., as Borrower, the Company, as Guarantor, and BankBoston, N.A.
and the other banks parties thereto, as Lenders (the "CREDIT AGREEMENT"). With
respect to the property and assets it leases, the Company, the Company
Subsidiaries, and to the best of the Company's knowledge each of the other
parties thereto, is in material compliance with such leases, and the Company or
the Company Subsidiaries, as the case may be, hold a valid leasehold interest
free of any Liens, except those referred to above. The rights, properties and
assets presently owned, leased or licensed by the Company and the Company
Subsidiaries include all rights, properties and assets necessary to permit the
Company and the Company Subsidiaries to conduct their business in all material
respects in the same manner as their businesses have been conducted prior to the
date hereof.
2.22 LEASED PREMISES. Neither the Company nor any of the
Company Subsidiaries owns any real property. Each of the buildings, structures
and premises leased by the Company or any of the Company Subsidiaries is in
reasonably good repair and operating condition, except as would not reasonably
be expected to have a Material Adverse Effect.
2.23 ENVIRONMENTAL MATTERS. (a) Except as set forth in the
Company Securities Filings filed prior to the date of this Agreement or Section
2.23 of the Company Disclosure Letter, the Company and the Company Subsidiaries
are in material compliance with the Environmental Laws (as hereinafter defined),
which compliance includes the possession by the Company and the Company
Subsidiaries of all material permits and governmental authorizations required
under applicable Environmental Laws, and compliance in all material
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respects with the terms and conditions thereof, except in each case where such
non-compliance would not reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any of the Company Subsidiaries has received any
communication (written or oral), whether from a governmental authority, citizens
group, employee or otherwise, that alleges that the Company or any of the
Company Subsidiaries is not in such material compliance, and there are no
circumstances that may prevent or interfere with such compliance in the future,
except where such non-compliance would not reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth in Section 2.23 of the Company
Disclosure Letter, 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 the Company
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of the Company Subsidiaries has retained
or assumed either contractually or by operation of law, except for such
Environmental Claims that would not reasonably be expected to have a Material
Adverse Effect.
(c) Except as set forth in Section 2.23 of the Company
Disclosure Letter, to the best knowledge of the Company, there are no past or
present actions, inactions, activities, circumstances, conditions, events or
incidents, including the release, emission, discharge, presence or disposal of
any Material of Environmental Concern (as hereinafter defined), that would form
the basis of any Environmental Claim against the Company or any of the Company
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of the Company Subsidiaries have retained
or assumed either contractually or by operation of law, except for such
Environmental Claims that would not reasonably be expected to have a Material
Adverse Effect.
(d) Except as set forth in Section 2.23 of the Company
Disclosure Letter, the Company is in compliance in all material respects with
Environment Laws as they relate to (i) any on-site or off-site locations where
the Company or any of the Company Subsidiaries has stored, disposed or arranged
for the disposal of Materials of Environmental Concern for itself (but not on
behalf of others) or (ii) any underground storage tanks located on property
owned or leased by the Company or any of the Company Subsidiaries. To the
knowledge of Company, there is no asbestos contained in or forming part of any
building, building component, structure or office space owned or leased by the
Company or any of the Company Subsidiaries. To the knowledge of Company, no
polychlorinated biphenyls (PCB's) or PCB-containing items are used or stored at
any property owned or leased by the Company or any of the Company Subsidiaries.
(e) For purposes of this Agreement:
(i) "ENVIRONMENTAL CLAIM" means any written claim, action,
cause of action, investigation or notice by any person or entity
alleging potential liability (including
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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 (x) 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 the Company Subsidiaries, or
(y) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
(ii) "ENVIRONMENTAL LAWS" means all Federal, state, local and
foreign laws or regulations relating to pollution or protection of
human health and the environment (including ambient air, surface water,
ground water, land surface or 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 manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern.
(iii) "MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances and
hazardous wastes, toxic substances, petroleum and petroleum products
that are regulated under the Environmental Laws.
2.24 INSURANCE. The Company maintains insurance that provides
adequate coverage for normal risks incident to the business of the Company and
the Company Subsidiaries and their respective properties and assets and in
character and amount comparable to that carried by persons engaged in similar
businesses. The insurance polices maintained by the Company are with reputable
insurance carriers and have no premium delinquencies.
2.25 CUSTOMERS. No customer of the Company accounted for more
than 4.0% of the revenues of the Company and the Company Subsidiaries for the
fiscal year ended December 31, 1997.
2.26 INTERESTED PARTY TRANSACTIONS. Except as set forth in the
Company Securities Filings filed prior to the date of this Agreement, since the
date of the Company's proxy statement dated April 30, 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, except for contracts entered into in the ordinary course of business of the
Company, on an arms-length basis, with terms no less favorable to the Company
than would reasonably be expected in a similar transaction with an unaffiliated
third party.
2.27 ALARM CONTRACTS. The Chief Executive Officer and the
Chief Financial Officer of the Company believe, following reasonable inquiry,
that no more than 20% of accounts for alarm system monitoring and/or service
owned by the Company or any Company Subsidiary are not evidenced by a written
contract.
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2.28 FINDERS AND INVESTMENT BANKERS. Neither the Company nor
any of its officers or directors has employed any broker, finder or financial
advisor or otherwise incurred any liability for any brokerage fees, commissions,
or financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to an agreement with Donaldson, Lufkin
& Jenrette Securities Corporation, the terms of which are as set forth in
Section 2.10 of the Company Disclosure Letter.
2.29 FAIRNESS OPINION. The Company's Board of Directors has
received from its financial advisor, Donaldson, Lufkin & Jenrette Securities
Corporation, a written opinion addressed to it for inclusion in the Schedule
14D-9 and the Proxy Statement to the effect that the consideration to be
received by the stockholders of the Company pursuant to each of the Offer and
the Merger is fair to the Company's stockholders from a financial point of view.
2.30 TAKEOVER STATUTES. Assuming Parent and its "associates"
and "affiliates" (as defined in Section 203 of the Delaware Code) collectively
beneficially own and have beneficially owned at all times during the three-year
period prior to the date hereof less than fifteen percent (15%) of the Company
Stock outstanding, Section 203 of the Delaware Code is, and shall be,
inapplicable to the acquisition of Shares pursuant to the Offer and the Merger.
2.31 FULL DISCLOSURE. No statement contained in any
certificate or schedule, including, without limitation, the Company Disclosure
Letter, furnished or to be furnished by the Company or the Company Subsidiaries
to Parent or Purchaser in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
2.32 YEAR 2000. Except as would not reasonably be expected to
have a Material Adverse Effect on the Company:
(a) None of the computer software, computer firmware,
computer hardware (whether general or special purpose) or other similar or
related items of automated, computerized or software systems that are used or
relied on by Company or by any of the Company Subsidiaries in the conduct of
their respective businesses will malfunction, will cease to function, will
generate incorrect data or will produce incorrect results when processing,
providing or receiving (i) date-related data from, into and between the
twentieth and twenty-first centuries or (ii) date-related data in connection
with any valid date in the twentieth and twenty-first centuries.
(b) None of the products and services sold, licensed,
rendered, or otherwise provided by the Company or by any of the Company
Subsidiaries in the conduct of their respective businesses will malfunction,
will cease to function, will generate incorrect data or will produce incorrect
results when processing, providing or receiving (i) date-related data
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from, into and between the twentieth and twenty-first centuries or (ii)
date-related data in connection with any valid date in the twentieth and
twenty-first centuries; and, accordingly, neither the Company nor any of the
Company Subsidiaries is or will be subject to any claim, demand, action, suit,
liability, damage, material loss, or material expense arising from, or related
to, circumstances where such products and services malfunction, cease to
function, generate incorrect data, or produce incorrect results when processing,
providing or receiving (i) date-related data from, into and between the
twentieth and twenty- first centuries or (ii) date-related data in connection
with any valid date in the twentieth and twenty-first centuries.
(c) Neither the Company nor any of the Company Subsidiaries
has made any other representations or warranties regarding the ability of any
product or service sold, licensed, rendered, or otherwise provided by the
Company or by any of the Company Subsidiaries in the conduct of their respective
businesses to operate without malfunction, to operate without ceasing to
function, to generate correct data or to produce correct results when
processing, providing or receiving (i) date-related data from, into and between
the twentieth and twenty-first centuries and (ii) date-related data in
connection with any valid date in the twentieth and twenty-first centuries.
2.33 RIGHTS AGREEMENT. The Board of Directors of the Company
has authorized and approved an amendment to the Rights Agreement to the effect
that (i) none of Parent, Purchaser or their affiliates, either individually or
as a group, shall become an "ACQUIRING PERSON" (as defined in the Rights
Agreement), and (ii) no Distribution Date, Share Acquisition Date or Trigger
Event (as each such term is defined in the Rights Agreement) shall occur, with
respect to each of clauses (i) and (ii), by reason of the approval, execution or
delivery of this Agreement, the consummation of the transactions contemplated
hereby 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.
2.34 STANDARD FORM CONTRACTS (a) The term "STANDARD FORM
SERVICE CONTRACT" shall mean any written contract between the Company or any
Company Subsidiary and its respective customers which contains a clause that
either limits the liability of the Company or such Company Subsidiary to a sum
not in excess of the lesser of (A) $500, or (B) six times the monthly service
charge pursuant to any such agreement, for losses from whatever cause (including
the negligence of the Company or such Company Subsidiary) or that exculpates the
Company or such Company Subsidiary from all liability and such clause has not
been modified in any material respect, either as a result of any other document
or as a result of a course of dealing between the Company or such Company
Subsidiary and its customers. To the best of the Company's knowledge, none of
the Company or any Company Subsidiary has entered into any service contract or
agreement with any of its customers other than pursuant to a Standard Form
Service Contract. Each Standard Form Service Contract which the Company or any
Company Subsidiary has with its customers and each of the terms, provisions and
conditions thereof are valid, binding and in full force and effect, subject to
the Enforceability
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Exceptions.
(b) Since January 1, 1996, the Company has not materially
increased the service charges payable by its customers.
(c) The Company and the Company Subsidiaries have no material
free, bartered or discounted service liability to customers existing with
respect to its business. The Company and the Company Subsidiaries have no
obligation or liability for the refund of any material monies to its customers
other than obligations to refund deposits made by customers in the ordinary
course of business.
(d) To the best of the Company's knowledge, all service
contracts or agreements negotiated with residential customers have provided the
3-day right of recision in compliance in all material respects with the
provisions of 16 C.F.R. Part 429 (Cooling-Off Period for Door-to-Door Sales) and
any applicable state laws.
2.35 CENTRAL STATION/INSPECTION. The Company's central station
located at 125 Frontage Road, Orange, Connecticut 06477, has been approved
and/or listed by Underwriters' Laboratory and by the other insurance rating
organizations indicated in Section 2.35 of the Company Disclosure Letter; is
operated in conformity in all material respects with current Underwriters'
Laboratory and such other applicable insurance rating organization's standards;
and no such approval and/or listings are suspended or, to the best of the
Company's knowledge, threatened to be suspended. Except as set forth in Section
2.35 of the Company Disclosure Letter, no material deficiency reports have been
issued by Underwriters' Laboratory or by any other applicable insurance rating
organizations relating to the operations of such facility and, as to any such
reports which have been issued, all material deficiencies noted therein have
been remedied to the satisfaction of the issuer of such report. Section 2.35 of
the Company Disclosure Letter also sets forth, as of the date of this Agreement,
a listing of the dates upon which the last inspection of the central station
location was conducted by Underwriters' Laboratory and the other appropriate
insurance rating organizations. All required fire inspections with respect to
each fire alarm system installed at the premises of customers of the Company
have been performed as required in accordance with the obligations and
commitments of the Company to its customers, to Underwriters' Laboratory and to
any other applicable insurance rating organizations, other than any such
inspections the absence of which would not reasonably be expected to have a
Material Adverse Effect. All Underwriters' Laboratory or other applicable
insurance rating organization's certificates issued for alarm systems installed
at the premises of the Company's customers have been properly issued and the
systems for which such certificates have been issued comply in all respects with
all of the Underwriters' Laboratory or other applicable insurance rating
organization's specifications and standards for such systems, other than any
such matters that would not reasonably be expected to have a Material Adverse
Effect.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and
warrant to the Company that:
3.1 ORGANIZATION AND GOOD STANDING. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
3.2 AUTHORIZATION; BINDING AGREEMENT. Parent and Purchaser
have all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, including, but not limited to, the Merger, have been duly
and validly authorized by the respective Boards of Directors of Parent and
Purchaser, as appropriate, and no other corporate proceedings on the part of
Parent, Purchaser or any other subsidiary of Parent are necessary to authorize
the execution and delivery of this Agreement or to consummate the transactions
contemplated hereby (other than the requisite approval by the sole stockholder
of Purchaser of this Agreement and the Merger). This Agreement has been duly and
validly executed and delivered by each of Parent and Purchaser and constitutes
the legal, valid and binding agreement of Parent and Purchaser, enforceable
against each of Parent and Purchaser in accordance with its terms, subject to
the Enforceability Exceptions.
3.3 GOVERNMENTAL APPROVALS. No Consent from or with any
Governmental Authority on the part of Parent or Purchaser is required in
connection with the execution or delivery by Parent and Purchaser of this
Agreement or the consummation by Parent and Purchaser of the transactions
contemplated hereby other than (i) filings with the SEC and (ii) filings under
the HSR Act.
3.4 NO VIOLATIONS. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent or Purchaser with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Memorandum of
Association or Bye-laws or other governing instruments of Parent or any
subsidiary of Parent, (ii) require any Consent under or result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of, any material note, bond,
mortgage, indenture, contract, lease, license, agreement or instrument to which
Parent is a party or by which Parent or any of its assets or property is
subject, (iii) result in the creation or imposition of any material lien or
encumbrance of any kind upon any of the assets of Parent or any subsidiary of
Parent or (iv)
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subject to obtaining the Consents from Governmental Authorities referred to in
SECTION 3.3 hereof, violate any Law to which Parent or any subsidiary of Parent
or its assets or properties are subject, except in any such case for any such
conflicts, violations, breaches, defaults or other occurrences that would not
prevent or delay consummation of the Offer or the Merger, or otherwise
materially and adversely affect the ability of Parent or Purchaser to perform
their respective obligations under this Agreement.
3.5 DISCLOSURE DOCUMENTS. None of the information supplied by
Parent, its officers, directors, representatives, agents or employees (the
"PARENT INFORMATION") for inclusion in the Proxy Statement will, at the time the
Proxy Statement is filed with the SEC or first mailed to the Company's
stockholders, at the time of the Company's stockholders' meeting or at the
Effective Time, contain any untrue statement of a material fact, or will omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances in which they were made not misleading or necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for such stockholders' meeting which has become false or
misleading. Neither the Schedule 14D-1 or the Offer Documents or any amendments
thereof or supplements thereto nor any of the Parent Information provided
specifically for inclusion in the Schedule 14D-9 will, at the respective times
the Schedule 14D-1, the Offer Documents or the Schedule 14D-9 are filed with the
SEC or first published, sent or given to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing, neither
Parent nor Purchaser makes any representation or warranty with respect to any
information that has been supplied by the Company or its accountants, counsel or
other authorized representatives for use in any of the foregoing documents. The
Schedule 14D-1 and the Offer Documents will comply as to form in all material
respects with the provisions of the Securities Exchange Act.
3.6 FINDERS AND INVESTMENT BANKERS. Neither Parent, Purchaser
nor any of their respective officers or directors has employed any broker,
finder or financial advisor or otherwise incurred any liability for any
brokerage fees, commissions or financial advisors' or finders' fees in
connection with the transactions contemplated hereby.
3.7 FINANCING ARRANGEMENTS. Parent (including for this purpose
one or more of its wholly-owned subsidiaries) has funds available to it
sufficient to enable the Purchaser to purchase the Shares in accordance with the
terms of this Agreement and to pay all amounts due (or which will, as a result
of the transactions contemplated hereby, become due) in respect of any
indebtedness of the Company for money borrowed.
3.8 NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing in connection therewith), Purchaser has not incurred
any obligations or liabilities and has not engaged in any
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business or activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person or entity.
ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
4.1 CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY
SUBSIDIARIES. (a) Unless Parent shall otherwise consent in writing (which
consent shall not be unreasonably withheld) and except as expressly contemplated
by this Agreement or in the Company Disclosure Letter, during the period from
the date of this Agreement to the Effective Time, (i) the Company shall conduct,
and it shall cause the Company Subsidiaries to conduct, its or their businesses
in the ordinary course and consistent with past practice, and the Company shall,
and it shall cause the Company Subsidiaries to, use its or their reasonable best
efforts to preserve substantially intact its business organization, to keep
available the services of its present officers and employees and to preserve the
present commercial relationships of the Company and the Company Subsidiaries
with persons with whom the Company or the Company Subsidiaries do significant
business and (ii) without limiting the generality of the foregoing, neither the
Company nor any of the Company Subsidiaries will:
(A) amend or propose to amend its Certificate of
Incorporation or Bylaws in any material respect;
(B) authorize for issuance, issue, grant, sell, pledge,
dispose of or propose to issue, grant, sell, pledge or dispose of any shares of,
or any options, warrants, commitments, subscriptions or rights of any kind to
acquire or sell any shares of, the capital stock or other securities of the
Company or any of the Company Subsidiaries, including, but not limited to, any
securities convertible into or exchangeable for shares of stock of any class of
the Company or any of the Company Subsidiaries, except for (a) the issuance of
shares pursuant to the exercise of Company Options outstanding on the date of
this Agreement in accordance with their present terms, (b) the issuance of
shares upon the exercise of Company Warrants outstanding on the date of this
Agreement in accordance with their present terms and (c) the issuance of shares
upon the conversion of Preferred Shares outstanding on the date of this
Agreement in accordance with the present terms of the Company Preferred Stock;
(C) split, combine or reclassify any shares of its
capital stock or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, other than dividends to the holders of Preferred Shares in
accordance with the present terms of the Company Preferred Stock and dividends
or distributions to the Company or a Company Subsidiary, or directly or
indirectly redeem, purchase or otherwise acquire or offer to acquire any shares
of its capital stock or other securities;
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(D) create, incur or assume any indebtedness for borrowed
money or issue any debt securities, except pursuant to the Credit Agreement, or
make any loans (except as provided in clause (b) of paragraph (E) below);
(E) other than in the ordinary course of business
consistent with past practice, (a) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, indirectly, contingently or
otherwise) for the obligations of any person (other than the Company or a
Company Subsidiary); (b) make any capital expenditures or make any advances or
capital contributions to, or investments in, any other person (other than to a
Company Subsidiary); (c) voluntarily incur any material liability or obligation
(absolute, accrued, contingent or otherwise); or (d) sell, transfer, mortgage,
pledge or otherwise dispose of, or encumber, or agree to sell, transfer,
mortgage, pledge or otherwise dispose of or encumber, any assets or properties,
real, personal or mixed, material to the Company and the Company Subsidiaries
taken as a whole other than to secure debt permitted under paragraph (D);
(F) increase in any manner the compensation of any of its
officers or employees (other than, except with respect to employees who are
executive officers or directors, in the ordinary course of business reasonably
consistent with past practice) or enter into, establish, amend or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other welfare,
stock option or other equity, pension, retirement, vacation, severance, deferred
compensation or other compensation or benefit plan, policy, agreement, trust,
fund or arrangement with, for or in respect of, any stockholder, officer,
director, employee, consultant or affiliate other than, in any such case
referred to above, as may be required by Law or as required pursuant to the
terms of agreements in effect on the date of this Agreement or in the ordinary
course of business reasonably consistent with past practice and other than
arrangements with new employees (other than employees who will be officers of
the Company) hired in the ordinary course of business reasonably consistent with
past practice and providing for compensation (other than equity-based
compensation) and other benefits reasonably consistent with those provided for
similarly situated employees of the Company as of the date hereof;
(G) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
any subsidiary or the Company;
(H) except as may be required as a result of a change in
law or as required by the SEC, change any of the accounting principles or
practices used by it;
(I) make any tax election or settle or compromise any
material income tax liability;
(J) pay, discharge or satisfy any material claims,
liabilities or obligations
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(absolute, accrued, asserted or unasserted, contingent or otherwise), 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, or contemplated by, the financial statements (or the
notes thereto) of the Company or incurred in the ordinary course of business
consistent with past practice;
(K) except to the extent necessary for the exercise of
its fiduciary duties by the Board of Directors of the Company as set forth in,
and consistent with the provisions of, SECTION 4.8 hereof, waive, amend or allow
to lapse any term or condition of any confidentiality or "standstill" agreement
to which the Company or any subsidiary is a party; or
(L) take, or agree in writing or otherwise to take, any
of the foregoing actions or any action which would make any of the
representations or warranties of the Company contained in this Agreement untrue
or incorrect in any material respect at or prior to the Effective Time.
(b) The Company shall, and the Company shall cause each of the
Company Subsidiaries, to comply with all Laws applicable to it or any of its
properties, assets or business and to maintain in full force and effect all the
Company Permits necessary for such business, except in any such case for any
failure so to comply or maintain that would not reasonably be expected to result
in a Material Adverse Effect.
4.2 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent if any of the following occur after the date of this
Agreement: (i) receipt of any notice or other communication in writing from any
third party alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement, provided
that such Consent would have otherwise been required to have been disclosed in
this Agreement; (ii) receipt of any material notice or other communication from
any Governmental Authority (including, but not limited to, the National
Association of Securities Dealers ("NASD"), the AMEX or any other securities
exchange) in connection with the transactions contemplated by this Agreement;
(iii) the occurrence of an event which would be reasonably likely (A) to have a
Material Adverse Effect or (B) to cause any condition set forth in ANNEX I
hereto to be unsatisfied in any material respect at any time prior to the
consummation of the Offer; or (iv) the commencement or threat of any Litigation
involving or affecting the Company or any of the Company Subsidiaries, or any of
their respective properties or assets, or, to the Company's knowledge, any
employee, agent, director or officer, in his or her capacity as such, of the
Company or any of the Company Subsidiaries which, if pending on the date hereof,
would have been required to have been disclosed in this Agreement or which
relates to the consummation of the Offer or the Merger.
4.3 ACCESS AND INFORMATION. Between the date of this Agreement
and the Effective Time, and without intending by this SECTION 4.3 to limit any
of the other obligations of the parties under this Agreement, the Company will
give, and shall direct its accountants
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and legal counsel to give, Parent and its authorized representatives (including,
without limitation, its financial advisors, accountants and legal counsel), at
reasonable times and without undue disruption to or interference with the normal
conduct of the business and affairs of the Company, access as reasonably
required in connection with the transactions provided for in this Agreement to
all offices and other facilities and to all contracts, agreements, commitments,
books and records of or pertaining to the Company and the Company Subsidiaries
and will furnish Parent with (a) such financial and operating data and other
information with respect to the business and properties of the Company and the
Company Subsidiaries as Parent may from time to time reasonably request in
connection with such transactions and (b) a copy of each material report,
schedule and other document filed or received by the Company or any of the
Company Subsidiaries pursuant to the requirements of applicable securities laws,
the NASD or the AMEX.
4.4 STOCKHOLDER APPROVAL. As soon as practicable following the
consummation of the Offer, the Company will take all steps necessary to duly
call, give notice of, convene and hold a meeting of its stockholders for the
purpose of voting upon the Company Proposals and for such other purposes as may
be necessary or desirable in connection with effectuating the transactions
contemplated hereby, if such meeting is required. Except as otherwise
contemplated by this Agreement, the Board of Directors of the Company will
recommend to the stockholders of the Company that they approve the Company
Proposals.
4.5 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein provided, the Company agrees to use reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, but not limited to, (i) obtaining all Consents from Governmental
Authorities and other third parties required for the consummation of the Offer
and the Merger and the transactions contemplated thereby and (ii) timely making
all necessary filings under the HSR Act. Upon the terms and subject to the
conditions hereof, the Company agrees to use reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy the other conditions of the Closing set forth herein.
4.6 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
effect, the Company shall not, and shall use reasonable best efforts to cause
its affiliates not to, issue or cause the publication of any press release or
any other announcement with respect to the Offer or the Merger or the
transactions contemplated hereby without the consent of Parent (such consent not
to be unreasonably withheld or delayed), except where such release or
announcement is required by applicable Law or pursuant to any applicable listing
agreement with, or rules or regulations of, the NASD or the AMEX, in which case
the Company, prior to making such announcement, will consult with Parent
regarding the same.
4.7 COMPLIANCE. In consummating the transactions contemplated
hereby, the Company shall comply in all material respects with the provisions of
the Securities Exchange
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Act and the Securities Act and shall comply, and cause the Company Subsidiaries
to comply or to be in compliance, in all material respects, with all other
applicable Laws.
4.8 NO SOLICITATION. (a) The Company shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company or any of the Company 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 Company Subsidiaries that if consummated would
constitute an Alternative Transaction (as defined below) (any of the foregoing
inquiries or proposals being referred to herein as a "COMPANY TAKEOVER
PROPOSAL"). Nothing contained in this Agreement shall prevent the Board of
Directors of the Company from (i) furnishing information to a third party which
has made a BONA FIDE Company Takeover 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 Parent or
(ii) subject to compliance with the other terms of this SECTION 4.8, considering
and negotiating a bona fide Company Takeover Proposal that is a Superior
Proposal not solicited in violation of this Agreement; provided that, as to each
of clauses (i) and (ii), the Board of Directors of the Company reasonably
determines in good faith (after due consultation with independent counsel, which
may be Latham & Watkins) 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 (after consultation with a financial advisor of nationally recognized
reputation) to be more favorable from a financial point of view to its
stockholders than the Offer and the Merger taking into account at the time of
determination all factors relating to such proposed transaction deemed relevant
by the Board of Directors of the Company, including, without limitation, the
financing thereof, the proposed timing thereof and all other conditions thereto
and any changes to the financial terms of this Agreement proposed by Parent and
Purchaser. "ALTERNATIVE TRANSACTION" means any of (i) a transaction pursuant to
which any person (or group of persons) other than Parent 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
Company Subsidiaries and securities of the entity surviving any merger or
business combination including any of the Company Subsidiaries) of the Company
or any Company Subsidiaries having a fair market value (as determined by the
Board of Directors of the Company in good faith) equal to more
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than 20% of the fair market value of all the assets of the Company and the
Company 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 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. Notwithstanding anything to the contrary contained in this
SECTION 4.8 or elsewhere in this Agreement, prior to the Effective Time, the
Company may, in connection with a possible Company Takeover Proposal, refer any
third party to this SECTION 4.8 and SECTION 8.7 and make a copy of this SECTION
4.8 and SECTION 8.7 available to a third party.
(b) The Company shall immediately notify Parent and Purchaser
after receipt of any Company Takeover Proposal, or any modification of or
amendment to any Company Takeover Proposal, or any request for nonpublic
information relating to the Company or any of the Company Subsidiaries in
connection with a Company Takeover 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, a Company Takeover Proposal. Such notice to
Parent and Purchaser shall be made orally and in writing, and shall indicate the
identity of the person making the Company Takeover Proposal or intending to make
the Company Takeover Proposal or requesting non-public information or access to
the books and records of the Company, the terms of any such Company Takeover
Proposal or modification or amendment to a Company Takeover Proposal, and
whether the Company is providing or intends to provide the person making the
Company Takeover Proposal with access to information concerning the Company as
provided in SECTION 4.8(a). The Company shall also immediately notify Parent and
Purchaser, orally and in writing, if it enters into negotiations concerning any
Company Takeover Proposal.
(c) Except as set forth in this SECTION 4.8, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or indicate publicly its intention to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of Directors or
such committee of the Offer or the Company Proposals, (ii) approve or recommend,
or indicate publicly its intention to approve or recommend, any Company Takeover
Proposal or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
a "COMPANY ACQUISITION AGREEMENT") related to any Company Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the Effective Time the
Board of Directors of the Company determines in good faith, with the advice of
outside counsel, that the failure to do so could reasonably be determined to be
a breach of its fiduciary duties to the Company's stockholders under applicable
law, the Board of Directors of the Company may (subject to this and the
following sentences) approve or recommend a Superior Proposal and, in connection
therewith, withdraw or modify its approval or recommendation of the Offer or the
Company Proposals and/or terminate this Agreement (and concurrently with or
after such
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termination, if it so chooses, cause the Company to enter into any Company
Acquisition Agreement with respect to any Superior Proposal), but only at a time
that is after the third business day following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company has received a
Superior Proposal and, in the case of any previously received Superior Proposal
that has been materially modified or amended, such modification or amendment and
specifying the material terms and conditions of such Superior Proposal,
modification or amendment.
(d) Nothing contained in this SECTION 4.8 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Securities Exchange Act or from making
any disclosure to the Company's stockholders if, in the good faith judgment of
the Board of Directors of the Company, with the advice of outside counsel,
failure so to disclose could be determined to be a breach of its fiduciary
duties to the Company's stockholders under applicable law; PROVIDED, HOWEVER,
that neither the Company nor its Board of Directors nor any committee thereof
shall, except as permitted by SECTION 4.8(c), withdraw or modify, or indicate
publicly its intention to withdraw or modify, its position with respect to the
Offer or the Company Proposals or approve or recommend, or indicate publicly its
intention to approve or recommend, a Company Takeover Proposal.
(e) The Company shall advise its officers and directors and
any investment banker or attorney retained by the Company in connection with the
transactions contemplated by this Agreement of the restrictions set forth in
this SECTION 4.8.
(f) For so long as the this Agreement shall not have been
terminated in accordance with its terms, the Board of Directors of the Company
shall not redeem the Rights or waive or amend any provision of the Rights
Agreement, in any such case to permit or facilitate the consummation of any
Company Takeover Proposal or Alternative Transaction.
4.9 SEC AND STOCKHOLDER FILINGS. The Company shall send to
Parent a copy of all material public reports and materials as and when it sends
the same to its stockholders, the SEC or any state or foreign securities
commission.
4.10 TAKEOVER STATUTES. If any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
enacted under state or federal laws in the United States (each a "TAKEOVER
STATUTE"), including, without limitation, Section 203 of the Delaware Code, is
or may become applicable to the Offer or the Merger, the Company will use
reasonable best efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated by this Agreement and the
Company Proposals may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act so as to eliminate or minimize the effects
of any Takeover Statute on any of the transactions contemplated hereby.
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4.11 RIGHTS AGREEMENT. The Board of Directors of the Company
shall take all further action (in addition to that referred to in SECTION 2.33),
if any, necessary in order to render the Rights inapplicable to the Offer, the
Merger and the other transactions contemplated by this Agreement.
ARTICLE V
ADDITIONAL COVENANTS OF PURCHASER AND PARENT
Parent and Purchaser covenant and agree as follows:
5.1 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein provided, Parent and Purchaser agree to use reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement,
including, but not limited to, (i) obtaining all Consents from Governmental
Authorities and other third parties required for the consummation of the Offer
and the Merger and the transactions contemplated thereby and (ii) timely making
all necessary filings under the HSR Act. Upon the terms and subject to the
conditions hereof, Parent and Purchaser agree to use reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary to satisfy the other conditions of the Closing set forth
herein.
5.2 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
effect, Parent and Purchaser shall not, and shall use reasonable best efforts to
cause their affiliates not to, issue or cause the publication of any press
release or any other announcement with respect to the Offer or the Merger or the
transactions contemplated hereby without the consent of the Company (such
consent not to be unreasonably withheld or delayed), except where such release
or announcement is required by applicable Law or pursuant to any applicable
listing agreement with, or rules or regulations of, any stock exchange on which
shares of Parent's capital stock are listed or the NASD, or other applicable
securities exchange, in which case Parent, prior to making such announcement,
will consult with the Company regarding the same.
5.3 COMPLIANCE. In consummating the transactions contemplated
hereby, Parent and Purchaser shall comply in all material respects with the
provisions of the Securities Exchange Act and the Securities Act and shall
comply, and cause their subsidiaries to comply or to be in compliance, in all
material respects, with all other applicable Laws.
5.4 EMPLOYEE BENEFIT PLANS. (a) As of the Effective Time,
Parent shall cause the Surviving Corporation to honor and satisfy all
obligations and liabilities with respect to the Employee Plans. Notwithstanding
the foregoing, the Surviving Corporation shall not be required to continue any
particular Employee Plan after the Effective Time, and any Employee Plan may be
amended or terminated in accordance with its terms and applicable Law. To the
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extent that any Employee Plan is terminated or amended after the Effective Time
so as to reduce the benefits that are then being provided with respect to
participants thereunder, Parent shall arrange for each individual who is then a
participant in such terminated or amended plan to participate in a comparable
Parent Benefit Plan ("PARENT BENEFIT PLAN") in accordance with the eligibility
criteria thereof, provided that (i) such participant shall receive full credit
for years of service with the Company or any of the Company Subsidiaries prior
to the Effective Time for all purposes for which such service was recognized
under the applicable Employee Plan, including, but not limited to, recognition
of service for eligibility, vesting (including acceleration thereof pursuant to
the terms of the applicable Employee Plan), entitlement to commence benefits
and, to the extent not duplicative of benefits received under such Employee
Plan, the amount of benefits, (ii) such participant shall participate in the
Parent Benefit Plans on terms no less favorable than those offered by Parent to
similarly situated employees of Parent, (iii) Parent shall cause any and all
pre-existing condition limitations (to the extent such limitations did not apply
to a pre-existing condition under the Employee Plans) and eligibility waiting
periods under any group health plans to be waived with respect to such
participant and his or her eligible dependents and (iv) Parent shall cause the
Parent Benefit Plans that are group welfare plans to provide such participant
with credit towards any applicable deductibles, co-payments and similar
exclusions for expenses incurred prior to the Effective Time.
(b) Parent and the Company hereby acknowledge that the
consummation of the Offer and the transactions contemplated under this Agreement
will be treated as a "Change in Control" for purposes of each of the applicable
Employee Plans, and each applicable employment, severance or similar agreement
applicable to any employee of the Company or any of the Company Subsidiaries,
listed in Section 5.4(b) of the Company Disclosure Letter (such Employee Plans
and agreements collectively, "CHANGE IN CONTROL AGREEMENTS") and agree to abide
by the provisions of any Change in Control Agreements which relate to a Change
in Control, including, but not limited to, the accelerated vesting and/or
payment of equity-based awards.
(c) The provisions of this SECTION 5.4 are not intended to and
do not create rights of third party beneficiaries.
5.5 INDEMNIFICATION. (a) From and after the Effective Time,
the Surviving Corporation shall indemnify and hold harmless all past and present
officers and directors (the "INDEMNIFIED PARTIES") of the Company and of the
Company Subsidiaries to the full extent such persons may be indemnified by the
Company pursuant to Delaware law, the Company's Certificate of Incorporation and
Bylaws, as each is in effect on the date of this Agreement, for acts and
omissions (x) arising out of or pertaining to the transactions contemplated by
this Agreement or arising out of the Offer Documents or (y) otherwise with
respect to any acts or omissions occurring or arising at or prior to the
Effective Time and shall advance reasonable litigation expenses incurred by such
persons in connection with defending any action arising out of such acts or
omissions, PROVIDED that such persons provide the requisite affirmations and
undertaking, as set forth in Section 145(e) of the Delaware Code.
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(b) In addition, Parent 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 or arising 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 Parent and the
Surviving Corporation shall not be required to pay an annual premium for the D&O
Insurance in excess of 300% 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.
(c) This SECTION 5.5 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of Parent, Purchaser,
the Company and the Surviving Corporation. Parent hereby guarantees the
performance by the Surviving Corporation of the indemnified obligations pursuant
to this SECTION 5.5, which guaranty is absolute and unconditional and shall not
be affected by any circumstance whatsoever, including the bankruptcy or
insolvency of the Surviving Corporation or any other person. The Indemnified
Parties shall be intended third-party beneficiaries of this SECTION 5.5.
5.6 VOTING OF SHARES. At any meeting of the Company's
stockholders held for the purpose of voting upon the Company Proposals, all of
the Shares then owned by Parent, Purchaser or any other subsidiaries of Parent
shall be voted in favor of the Company Proposals.
5.7 GUARANTEE OF PARENT. Parent hereby guarantees the payment
by Purchaser of the Common Per Share Amount, the Preferred Per Share Amount and
any other amounts payable by Purchaser pursuant to this Agreement and will cause
Purchaser to perform all of its other obligations under this Agreement in
accordance with their terms.
ARTICLE VI
MERGER CONDITIONS
The respective obligations of each party to effect the Merger
shall be subject to the fulfillment or waiver at or prior to the Effective Time
of the following conditions:
6.1 OFFER. The Offer shall have been consummated; provided
that this condition shall be deemed to have been satisfied with respect to the
obligation of Parent and Purchaser to effect the Merger if Parent fails to
accept for payment or pay for Common Shares pursuant to the Offer in violation
of the terms of the Offer or of this Agreement.
6.2 STOCKHOLDER APPROVAL. If required, the Company Proposals
shall have been
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approved at or prior to the Effective Time by the requisite vote
of the stockholders of the Company in accordance with the Delaware Code.
6.3 NO INJUNCTION OR ACTION. No order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction shall have
been enacted, entered, promulgated or enforced by any court or other
Governmental Authority which prohibits or prevents the consummation of the
Merger which has not been vacated, dismissed or withdrawn prior to the Effective
Time. The Company and Parent shall use all reasonable best efforts to have any
of the foregoing vacated, dismissed or withdrawn by the Effective Time.
6.4 GOVERNMENTAL APPROVALS. All Consents of any Governmental
Authority required for the consummation of the Merger and the transactions
contemplated by this Agreement shall have been obtained, except for those
Consents the failure to obtain which will not have a material adverse effect on
the business, assets, condition (financial or other), liabilities or results of
operations of the Surviving Corporation and its subsidiaries taken as a whole.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
stockholders of the Company described herein:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if any Governmental
Authority shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement and such order, decree or ruling or other action shall have
become final and nonappealable;
(c) by Parent if
(i) the Company shall have breached or failed to perform in
any material respect any of its covenants or other agreements contained
in this Agreement, which breach or failure to perform is incapable of
being cured or has not been cured within five (5) days after the giving
of written notice thereof to the Company (but not later than the
expiration of the twenty (20) business day period provided for the
Offer under SECTION 1.1(b) hereof);
(ii) any representation or warranty of the Company shall not
have been true and
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correct in all material respects when made;
(iii) any representation or warranty of the Company shall
cease to be true and correct in all material respects at any later date
as if made on such date (other than representations and warranties made
as of a specified date) other than as a result of a breach or failure
to perform by the Company of any of its covenants or agreements under
this Agreement; PROVIDED, HOWEVER, that such representation or warranty
is incapable of being cured or has not been cured within five (5) days
after the giving of written notice thereof to the Company (but not
later than the expiration of the twenty (20) business day period
provided for the Offer under SECTION 1.1(b) hereof);
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant
to this SECTION 7.1(c) shall not be available to Parent if Purchaser or
any other affiliate of Parent shall acquire shares of Company Common
Stock pursuant to the Offer;
(d) by Parent if, whether or not permitted to do so by this
Agreement, (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Purchaser its approval or recommendation of the Offer or any of the
Company Proposals; (ii) the Board of Directors of the Company or any
committee thereof shall have approved or recommended to the
stockholders of the Company any Company Takeover Proposal or
Alternative Transaction; (iii) the Board of Directors of the Company or
any committee thereof shall have approved or recommended that the
stockholders of the Company tender their Shares in any tender or
exchange offer that is an Alternative Transaction; (iv) the Board of
Directors of the Company or any committee thereof shall have taken any
position or make any disclosures to the Company's stockholders
permitted pursuant to SECTION 4.8(e) which has the effect of any of the
foregoing; (v) the Board of Directors of the Company or any committee
thereof shall have resolved to take any of the foregoing actions or
(vi) the Board of Directors of the Company or any committee thereof
shall have redeemed the Rights, or waived or amended any provision of
the Rights Agreement, in any such case to permit or facilitate the
consummation of any Company Takeover Proposal or Alternative
Transaction;
(e) by either Parent or the Company if, as the result of the
failure of the Minimum Condition or any of the other conditions set
forth in Annex I hereto, the Offer shall have terminated or expired in
accordance with its terms without Purchaser having purchased any Shares
pursuant to the Offer, provided that if the failure to satisfy any
conditions set forth in Annex I shall be a basis for termination of
this Agreement under any other clause of this Section 7.1, a
termination pursuant to this clause (e) shall be deemed a termination
under such other clause;
(f) by either Parent or the Company if the Offer shall not
have been consummated on or before March 31, 1999, PROVIDED that the
right to terminate this
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Agreement pursuant to this SECTION 7.1(f) shall not be available to any
party whose failure to perform any of its obligations under this
Agreement results in the failure of the Offer to be consummated by such
time;
(g) by the Company if Parent or Purchaser shall have breached
or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in
this Agreement, which breach or failure to perform is incapable of
being cured or has not been cured within 5 days after the giving of
written notice thereof to Parent; or
(h) by the Company in accordance with SECTION 4.8(c) hereof;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant
to this SECTION 7.1(h) shall not be available (x) if the Company has
breached in any material respect its obligations under SECTION 4.8
hereof, or (y) if the Company shall fail to pay when due the fees and
expenses contemplated by SECTION 8.7 hereof.
The party desiring to terminate this Agreement pursuant to the preceding
paragraphs shall give written notice of such termination to the other party in
accordance with SECTION 8.5 hereof.
7.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Offer or the Merger
pursuant to this ARTICLE VII, this Agreement (other than SECTIONS 7.2, 8.1, 8.3,
8.5, 8.6, 8.7, 8.8, 8.10, 8.11, 8.12, 8.14 and 8.15 hereof) shall become void
and of no effect with no liability on the part of any party hereto (or of any of
its directors, officers, employees, agents, legal or financial advisors or other
representatives); PROVIDED, HOWEVER, that no such termination shall relieve any
party hereto from any liability for any willful breach of this Agreement prior
to termination. If this Agreement is terminated as provided herein, each party
shall use all reasonable best efforts to redeliver all documents, work papers
and other material (including any copies thereof) of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same.
ARTICLE VIII
MISCELLANEOUS
8.1 CONFIDENTIALITY. (a) Unless (i) otherwise expressly
provided in this Agreement, (ii) required by applicable Law or any listing
agreement with, or the rules and regulations of, the AMEX or any other
applicable securities exchange or the NASD, (iii) necessary to secure any
required Consents as to which the other party has been advised or (iv) consented
to in writing by Parent and the Company, all information (whether oral or
written) and documents furnished in connection herewith together with analyses,
compilations, studies or other documents prepared by such party which contain or
otherwise reflect such information
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shall be kept strictly confidential by the Company, Parent, Purchaser and their
respective officers, directors, employees and agents. Prior to any disclosure
permitted pursuant to the preceding sentence, the party intending to make such
disclosure shall consult with the other party regarding the nature and extent of
the disclosure. Nothing contained herein shall preclude disclosures to the
extent necessary to comply with accounting, SEC and other disclosure obligations
imposed by applicable Law. In the event the transactions contemplated by this
Agreement are not consummated, each party shall return to the other any
documents furnished by the other and all copies thereof that any of them may
have made and will hold in confidence any information obtained from the other
party except to the extent (a) such party is required to disclose such
information by Law or such disclosure is necessary or desirable in connection
with the pursuit or defense of a claim, (b) such information was known by such
party prior to such disclosure (and PROVIDED that, except with respect to
information referred to in the following clause (c), such party shall have
advised the other party of such knowledge upon or promptly after its receipt of
such information) or was thereafter developed or obtained by such party
independent of such disclosure or (c) such information is or becomes generally
available to the public other than by breach of this SECTION 8.1 (or, to such
party's knowledge, breach of a confidentiality agreement with the other party).
Prior to any disclosure of information pursuant to the exception in clause (a)
of the preceding sentence, the party intending to disclose the same shall so
notify the party which provided the same in order that such party may seek a
protective order or other appropriate remedy should it choose to do so.
(b) The Parent and the Company further acknowledge that
certain of the business and activities of each of them is competitive with
business and activities of the other party, and each of them therefore agrees
that it will not use, or seek to obtain any competitive or other business
advantage as a result of, the information or documents so received by it in
connection herewith, such party acknowledging that such use would be unfair and
materially detrimental to the other party, PROVIDED that the provisions of this
SECTION 8.1(b) shall not apply to information referred to in clause (c) of
SECTION 8.1(a) hereof.
8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement among the Company, Parent
and Purchaser.
8.3 WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company
on the one hand, or Parent and Purchaser on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent on
the one hand, or the Company on the other hand, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
SECTION 8.3.
8.4 SURVIVAL. The respective representations, warranties,
covenants and
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agreements of the Company and Parent contained herein or in any certificates or
other documents delivered prior to or at the Closing shall survive the execution
and delivery of this Agreement, notwithstanding any investigation made or
information obtained by the other party, but shall terminate at the Effective
Time, except for those contained in SECTIONS 1.7, 1.8, 1.9, 1.14, 5.4, 5.5, 5.7
and 8.8 hereof and this SECTION 8.4, which shall survive beyond the Effective
Time.
8.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by facsimile, receipt confirmed, or on the next business day when
sent by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to the Company, to:
Alarmguard Holdings, Inc.
125 Frontage Road
Orange, CT 06477
Attention: Russell R. MacDonnell
Telecopy: 203-795-9712
with a copy to:
Latham & Watkins
701 "B" Street, Suite 2100
San Diego, California 92101
Attention: David A. Hahn, Esq.
Telecopy: (619) 696-7419
Confirm: (619) 236-1234
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(ii) if to Parent or Purchaser, to:
Tyco International Ltd.
The Gibbons Building
10 Queen Street, Suite 301
Hamilton HM11 Bermuda
Attention: Secretary
Telecopy: (441) 295-9647
Confirm: (441) 292-8674
with a copy to:
Tyco International (US) Inc.
One Tyco Park
Exeter, New Hampshire 03833
Attention: Mark A Belnick, Esq.
Telecopy: (603) 778-7700
Confirm: (603) 778-9700
and to
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Abbe L. Dienstag, Esq.
Telecopy: (212) 715-8000
Confirm: (212) 715-9100
8.6 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the Company, in the case of a proposed assignment by
Parent or Purchaser, or by Parent, in the case of a proposed assignment by the
Company, except that Purchaser may assign its rights, interest and obligations
hereunder to any other wholly-owned direct or indirect subsidiary of Parent,
provided that the provisions of SECTION 5.7 hereof shall apply to such other
subsidiary.
8.7 EXPENSES. (a) Except as provided in SECTION 8.7(b) or
8.7(C) hereof, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs or expenses.
(b) The Company agrees that if this Agreement is terminated
pursuant to
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(i) SECTION 7.1(d);
(ii) SECTION 7.1(h); or
(iii) SECTION 7.1(e) OR 7.1(f) and, with respect to this
clause (iii), at the time of such termination any person, entity or
group (as defined in Section 13(d)(3) of the Securities Exchange Act)
(other than Parent or any of its affiliates or any person identified in
the Company's Proxy Statement dated April 30, 1998 and who has executed
the Preferred Stock Purchase Agreement, provided that such person has
not breached the terms of such Preferred Stock Purchase Agreement)
shall have become the beneficial owner of more than 15% of the
outstanding shares of Company Stock and such person, entity or group
(or any affiliate of such person, entity or group) thereafter (x) shall
make a Company Takeover Proposal and, in the case of a consensual
transaction with the Company, shall substantially have negotiated the
terms thereof, at any time on or prior to the date which is six months
after such termination of this Agreement, and (y) shall consummate such
Company Takeover Proposal at any time on or prior to the date which is
one year after termination of this Agreement, in the case of a
consensual transaction, or six months after termination of this
Agreement, in the case of a non-consensual transaction, in each case
with a value per share of Company Common Stock of at least $9.25 (with
appropriate adjustments for reclassifications of capital stock, stock
dividends, stock splits, reverse stock splits and similar events);
then the Company shall pay to Parent the sum of (a) $4.5 million. Any payment
required by this SECTION 8.7(b) shall be made as promptly as practicable but in
no event later than two business days following termination of this Agreement
pursuant to SECTION 7.1(d) OR 7.1(h) hereof, or, in the case of clause (iii) of
this SECTION 8.7(b), upon consummation of such Company Takeover Proposal, and
shall be made by wire transfer of immediately available funds to an account
designated by Parent.
(c) The Company further agrees that if this Agreement is
terminated pursuant to SECTION 7.1(c)(i) hereof,
(i) the Company will pay to Parent, as promptly as practicable
but in no event later than two business days following termination of
this Agreement, the amount of all documented and reasonable costs and
expenses incurred by Parent, Purchaser and their affiliates (including
but not limited to fees and expenses of counsel and accountants and
out-of-pocket expenses (but not fees) of financial advisors) in an
aggregate amount not to exceed $450,000 in connection with this
Agreement or the transactions contemplated hereby ("PARENT EXPENSES");
and
(ii) in the event that the Company consummates a Company
Takeover Proposal (whether or not solicited in violation of this
Agreement) which is publicly
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announced within one year from the date of termination of this
Agreement, the sum of $4.5 million, less the amount of any payment made
pursuant to clause (i) of this SECTION 8.7(c), which payment shall be
made not later than two business days following consummation of such
Company Takeover Proposal.
(d) The Company further agrees that if this Agreement is
terminated pursuant to SECTION 7.1(c)(ii) hereof, the Company will pay to
Parent, as promptly as practicable but in no event later than two business days
following termination of this Agreement, the Parent Expenses.
(e) The Company shall not be obligated to make any payments to
Parent pursuant to SECTION 8.7(b)(iii) or SECTION 8.7(c)(ii) if the Company
Takeover Proposal referenced therein is a transaction ("PERMITTED FINANCING") in
which the Company sells equity securities for gross proceeds not in excess of
$25,000,000; PROVIDED THAT the securities issued, or issuable upon exercise,
conversion or exchange of the securities issued, in such Permitted Financing
constitute or upon issuance would constitute less than forty (40%) percent of
the outstanding voting power of the Company after such issuance, exercise,
conversion or exchange.
8.8 GOVERNING LAW. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed and governed by and in
accordance with the laws of, the State of New York.
8.9 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 INTERPRETATION. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. As used in this Agreement, (i) the term
"PERSON" shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity, (ii)
unless otherwise specified herein, the term "AFFILIATE," with respect to any
person, shall mean and include any person controlling, controlled by or under
common control with such person and (iii) the term "SUBSIDIARY" of any specified
person shall mean any corporation 50 percent or more of the outstanding voting
power of which, or any partnership, joint venture, limited liability company or
other entity 50 percent or more of the total equity interest of which, is
directly or indirectly owned by such specified person.
8.11 ENTIRE AGREEMENT. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Annex(es)
attached hereto and the Company Disclosure Letter referred to herein, which
Annex(es) and Company Disclosure
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Letter are incorporated herein by reference, embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants, or undertakings other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties with respect to such subject matter. Notwithstanding the foregoing
provisions of this SECTION 8.11, the provisions of the letter agreement dated
November 2, 1998 between Tyco International (US) Inc. and Donaldson, Lufkin &
Jenrette Securities Corporation, as agent for the Company, shall remain in
effect in accordance with its terms.
8.12 SEVERABILITY. (a) In case any provision in this Agreement
shall be held invalid, illegal or unenforceable in a jurisdiction, such
provision shall be modified or deleted, as to the jurisdiction involved, only to
the extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
(b) Parent and the Company agree that the payments to Parent
provided in SECTION 8.7 are fair and reasonable in the circumstances,
considering not only the consideration payable to the holders of Shares in the
Offer and the Merger but also the outstanding funded indebtedness (including
capital leases) of the Company and the Company Subsidiaries and Parent's
anticipated costs, including lost opportunity costs, if the Offer and Merger are
not consummated. If a court of competent jurisdiction shall nonetheless, by a
final, non-appealable judgment, determine that the amount of such payments
exceed the maximum amount permitted by law, then the amount of such payments
shall be reduced to the maximum amount permitted by law in the circumstances, as
determined by such court of competent jurisdiction.
8.13 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
8.14 THIRD PARTIES. Nothing contained in this Agreement or in
any instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not a party hereto or
thereto or a successor or permitted assign of such a party; PROVIDED HOWEVER,
that the parties hereto specifically acknowledge that the provisions of SECTION
5.5 hereof are intended to be for the benefit of, and shall be enforceable by,
the Indemnified Parties.
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8.15 DISCLOSURE LETTER. Parent acknowledges that the Company
Disclosure Letter (i) relates to certain matters concerning the disclosures
required and transactions contemplated by this Agreement, (ii) is qualified in
its entirety by reference to specific provisions of this Agreement, (iii) is not
intended to constitute and shall not be construed as indicating that any such
matter is required to be disclosed, nor shall such disclosure be construed as an
admission that such information is material with respect to the Company, except
to the extent required by this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed and delivered by their respective duly
authorized officers as of the date first above written.
TYCO INTERNATIONAL LTD.
By: /s/ Mark A. Belnick
---------------------------------------------
Name: Mark A. Belnick
Title: Executive Vice President
Chief Corporate Counsel
T16 ACQUISITION CORP.
By: /s/ Mark A. Belnick
---------------------------------------------
Name: Mark A. Belnick
Title: President
ALARMGUARD HOLDINGS, INC.
By: /s/ Russell R. MacDonnell
---------------------------------------------
Name: Russell R. MacDonnell
Title: Chairman, CEO
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ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision
of the Offer, Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Securities Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in this Agreement) amend or terminate the Offer as to any
Shares not then paid for if (i) the conditions that (1) there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Common Shares which represents at least 51% of the total number of issued and
outstanding Common Shares and (2) the number of Common Shares tendered pursuant
to the Offer together with the Preferred Shares subject to the Preferred Stock
Purchase Agreement constitute at least 51% of the total voting power of the
Company on a fully diluted basis, shall not each have been satisfied (the
"MINIMUM CONDITION") or (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer
or (iii) at any time after the date of this Agreement and before the time of
payment for any such Common Shares (whether or not any Common Shares have
theretofore been accepted for payment or paid for pursuant to the Offer), any of
the following conditions exists:
(a) there shall be in effect an injunction or other order,
decree, judgment or ruling by a Governmental Authority of competent jurisdiction
or a Law shall have been promulgated, or enacted by a Governmental Authority of
competent jurisdiction which in any such case (i) restrains or prohibits the
making or consummation of the Offer or the consummation of the Merger or the
consummation of the purchase of the Company Preferred Stock pursuant to the
Preferred Stock Purchase Agreement, (ii) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or subsidiaries) of any portion of
the Company's business or assets, or Parent's business or assets relating to the
security services business, which is material to the security services business
of all such entities taken as a whole or which would substantially deprive
Parent and/or its affiliates or subsidiaries of the benefit of ownership of the
Company's business or assets, or compels Parent (or any of its affiliates or
subsidiaries) to dispose of or hold separate any portion of the Company's
business or assets, or Parent's business or assets relating to the security
services business, which is material to the security services business of all
such entities taken as a whole or which would substantially deprive Parent
and/or its affiliates or subsidiaries of the benefit of ownership of the
Company's business or assets, (iii) imposes material limitations on the ability
of Purchaser effectively to acquire or to hold or to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote Shares
purchased by Purchaser pursuant to the Offer, the Merger or the Preferred Stock
Purchase Agreement on all matters properly presented to the stockholders of the
Company, or (iv) imposes any material limitations on the ability of Parent
and/or its affiliates or subsidiaries effectively to control in any material
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respect the business and operations of the Company, or (v) seeks to restrict any
future business activity by Parent (or any of its affiliates) relating to the
security services business, including, without limitation, by requiring the
prior consent of any person or entity (including any Governmental Authority) to
future transactions by Parent (or any of its affiliates); or
(b) there shall have been instituted, pending or threatened an
action by a Governmental Authority seeking to restrain or prohibit the making or
consummation of the Offer, the consummation of the Merger or the purchase of
Preferred Shares pursuant to the Preferred Stock Purchase Agreement or to impose
any other restriction, prohibition or limitation referred to in the foregoing
paragraph (a); or
(c) this Agreement shall have been terminated by the Company
or Parent in accordance with its terms; or
(d) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in the Common Shares on the AMEX, (ii) a
declaration of a banking moratorium or any general suspension of payments in
respect of banks in the United States or (iii) in the case of any of the
foregoing existing at the time of the execution of this Agreement, a material
acceleration or worsening thereof; or
(e) Parent and the Company shall have agreed that Purchaser
shall amend the Offer to terminate the Offer or postpone the payment for Common
Shares pursuant thereto; or
(f) any of the representations and warranties made by the
Company in the Merger Agreement shall not have been true and correct in all
material respects when made, or shall thereafter have ceased to be true and
correct in all material respects as if made as of such later date (other than
representations and warranties made as of a specified date), or the Company
shall not in all material respects have performed each obligation and agreement
and complied with each covenant to be performed and complied with by it under
this Agreement, PROVIDED, however, that such breach or failure to perform is
incapable of being cured or has not been cured within 5 days after the giving of
written notice thereof to the Company, PROVIDED, however, that no such 5-day
cure period shall require extension of the Offer beyond the twenty (20) business
days provided under SECTION 1.1(b) of the Agreement; or
(g) the Company's Board of Directors shall have modified or
amended its recommendation of the Offer in any manner adverse to Parent or shall
have withdrawn its recommendation of the Offer, or shall have recommended
acceptance of any Company Takeover Proposal or shall have resolved to do any of
the foregoing; or
(h) (i) any corporation, entity or "group" (as defined in
Section 13(d)(3) of the Securities Exchange Act) ("PERSON/GROUP"), other than
Parent and Purchaser and any person/group identified in the Company's Proxy
Statement dated April 30, 1998 and who has executed the Preferred Stock Purchase
Agreement, provided that such person/group has not
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breached the terms of such Preferred Stock Purchase Agreement, shall have
acquired beneficial ownership of more than 15% of the outstanding Shares, or
shall have been granted any options or rights, conditional or otherwise, to
acquire a total of more than 15% of the outstanding Shares and which, in each
case, does not tender the Common Shares beneficially owned by it in the Offer;
(ii) any new group shall have been formed which beneficially owns more than 15%
of the outstanding Shares and which does not tender the Common Shares
beneficially owned by it in the Offer; or (iii) any person/group (other than
Parent or one or more of its affiliates) shall have entered into an agreement in
principle or definitive agreement with the Company with respect to a tender or
exchange offer for any Shares or a merger, consolidation or other business
combination with or involving the Company; or
(i) any change, development, effect or circumstance shall have
occurred or be threatened that would reasonably be expected to have a Material
Adverse Effect with respect to the Company; or
(j) the Company shall commence a case under any chapter of
Title XI of the United States Code or any similar law or regulation; or a
petition under any chapter of Title XI of the United States Code or any similar
law or regulation is filed against the Company which is not dismissed within 2
business days; or
(k) a Distribution Date shall have occurred under the Rights
Agreement.
The foregoing conditions are for the sole benefit of Parent
and Purchaser and may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to any such condition and may be waived by Parent or
Purchaser, in whole or in part, at any time and from time to time, in the sole
discretion of Parent. The failure by Parent or Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any right, the
waiver of such right with respect to any particular facts or circumstances shall
not be deemed a waiver with respect to any other facts or circumstances, and
each right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
Should the Offer be terminated pursuant to the foregoing
provisions, all tendered Common Shares not theretofore accepted for payment
shall forthwith be returned to the tendering stockholders.
A-3
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
Section
TERM WHERE DEFINED
- ----- -------------
<S> <C>
"1997 Balance Sheet" 2.10
"Acquiring Person" 2.33
"Advance" 1.3
"Advance Director" 1.3
"affiliate" 8.10
"Agreement" the recitals
"Alternative Transaction" 4.8(a)
"AMEX" 2.5
"arranger liability" 2.23(b)
"Certificate of Merger" 1.4
"Change in Control Agreements" 5.4(b)
"Closing" 1.5
"Closing Date" 1.5
"Code" 2.15(a)
"Common Per Share Amount" the recitals
"Common Shares" the recitals
"Company" the recitals
"Company Acquisition Agreement" 4.8(c)
"Company Common Stock" the recitals
"Company Disclosure Letter" Article II
"Company Financial Statements" 2.8
"Company Intellectual Property Rights" 2.17
"Company Material Contracts" 2.14
"Company Options" 1.9(a)
"Company Permits" 2.12
"Company Preferred Stock" the recitals
"Company Proposals" 1.13(a)
"Company Securities Filings" 2.7
"Company Stock" the recitals
"Company Subsidiary" 2.1
"Company Takeover Proposal" 4.8(a)
"Company Warrants" 1.9(b)
"Consent" 2.5
"consenting corporation" 2.16(c)
"Credit Agreement" 2.21
</TABLE>
G1
<PAGE>
<TABLE>
<CAPTION>
Section
TERM WHERE DEFINED
- ---- -------------
<S> <C>
"Current Preferred Director Condition" 1.3
"Current Preferred Holders" 1.3
"D&O Insurance" 5.5(b)
"Delaware Code" 1.4
"disqualified person" 5.4(a)
"Dissenting Shares" 1.7(a)
"Effective Time" 1.5
"Employee Plans" 2.15(a)
"Enforceability Exceptions" 2.4
"Environmental Claim" 2.23(e)(i)
"Environmental Laws" 2.23(e)(i)
"ERISA" 2.15(a)
"ERISA Affiliate" 2.15(a)
"excess parachute payments" 2.16(c)
"Exchange Agent" 1.8(a)
"Fairness Advisor" 1.2(a)
"Fairness Opinion" 1.2(a)
"Governmental Authority" 2.5
"group" paragraph (h) of Annex I
"HSR Act" 2.5
"Indemnified Parties" 5.5(a)
"Independent Directors" 1.3
"IRS" 2.15(b)
"ISO" 2.15(c)
"Law" 2.6
"leased employees" 2.15(b)
"Lehman Warrants" 1.9(b)
"Liens" 2.21
"Litigation" 2.13
"Majority of Current Preferred" 1.3
"Material Adverse Effect" 1.17
"Materials of Environmental Concern" 2.23(e)(iii)
"Merger" the recitals
"Minimum Condition" the introductory paragraph
of Annex I
"multiemployer plan" 2.15(b)
"NASD" 4.2
"Offer" the recitals
"Offer Documents" 1.1(c)
</TABLE>
G2
<PAGE>
<TABLE>
<CAPTION>
Section
TERM WHERE DEFINED
- ---- -------------
<S> <C>
"Offer to Purchase" 1.1(c)
"Parent" the recitals
"Parent Benefit Plan" 5.4(a)
"Parent Expenses" 8.7(c)(i)
"Parent Information" 3.5
"party in interest" 2.15(b)
"Patricof Warrants" 1.9(b)
"Permitted Financing" 8.7(e)
"Per Share Amount" the recitals
"person" 8.10
"person/group" paragraph (h) of Annex I
"Preferred Per Share Amount" the recitals
"Preferred Shares" the recitals
"Preferred Stock Purchase Agreement" the recitals
"Proxy Statement" 1.13(a)
"Purchaser" the recitals
"Rights" the recitals
"Rights Agreement" the recitals
"SEC" 1.1(b)
"Securities Act" 2.7
"Securities Exchange Act" 1.1(a)
"Shares" the recitals
"Schedule 14D-1" 1.1(c)
"Schedule 14D-9" 1.2(b)
"Standard Form Service Contract" 2.34
"Subordinated Debt Warrants" 1.9(b)
"subsidiary" 8.10
"Superior Proposal" 4.8(a)
"Surviving Corporation" 1.4
"Surviving Corporation Common Stock" 1.6(d)
"Takeover Statute" 4.10
"Tax" 2.16(b)
"Tax-exempt use property" 2.16(c)
"Tax Return" 2.16(b)
</TABLE>
G3
<PAGE>
EXHIBIT 99(c)(3)
PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT, (this "AGREEMENT") dated
as of January 8, 1999, by and among T16 Acquisition Corp. ("BUYER"), a Delaware
corporation and an indirect, wholly-owned subsidiary of Tyco International Ltd.,
a Bermuda company ("TYCO"), the persons listed on SCHEDULE I hereto (such
persons being herein referred to individually as a "SELLER," and, collectively,
as "SELLERS"), American Stock Transfer & Trust Company, as escrow agent
("AGENT") and, solely with respect to SUBSECTIONS 11(d) and (f), Alarmguard
Holdings, Inc., a Delaware corporation ("ISSUER").
W I T N E S S E T H:
WHEREAS, Sellers are the registered and beneficial owners of
issued and outstanding shares of Series A Preferred Stock (the "SERIES A
PREFERRED STOCK") and Series B Preferred Stock (the "SERIES B PREFERRED STOCK"
and, together with the Series A Preferred Stock, the "PREFERRED STOCK") of
Issuer, in such respective series and amounts as are set forth in SCHEDULE I and
on the signature pages hereto; and
WHEREAS, Buyer, Tyco and Issuer have entered into an Agreement
and Plan of Merger, dated as of January 8, 1999, a copy of which is annexed
hereto as ANNEX A (the "MERGER AGREEMENT"), pursuant to which Buyer will
commence an offer (the "OFFER") to acquire all of the outstanding shares of
common stock, par value $0.0001 per share, of Issuer (the "COMMON STOCK"), and,
following the consummation of the Offer and subject to applicable securities
laws and the Delaware General Corporation Law, Buyer will be merged with and
into Issuer (the "MERGER"), and Issuer will become an indirect, wholly-owned
subsidiary of Tyco; and
WHEREAS, subject to and upon consummation of the Offer, each
Seller desires to sell to Buyer, and Buyer desires to purchase from each Seller
all right, title and interest of such Seller in and to such Seller's Preferred
Stock free and clear of all liens, claims, charges or encumbrances of any kind
(all such right, title and interest being collectively referred to herein as the
"ASSIGNED RIGHTS").
NOW, THEREFORE, in consideration of the premises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
<PAGE>
Section 1. DELIVERY OF CERTIFICATES. Prior to the execution
and delivery of this Agreement, each Seller has delivered to Agent, with copies
to Buyer, the original certificates evidencing such Seller's Preferred Stock,
together with, in each case, stock powers duly endorsed in blank, accompanied by
such power-of-attorneys, certified board of directors resolutions or other
documentation as may be required for the registration of transfer to Buyer of
such Preferred Stock pursuant to the terms and conditions of this Agreement (all
such certificates, powers, powers of attorney, certified board resolutions and
other documents being referred to as the "PREFERRED STOCK DOCUMENTATION"), to be
held by Agent in escrow in accordance with the terms of this Agreement.
Signatures on the stock powers shall be guaranteed by a firm that is a
participant in the Security Transfer Agents Medallion Program or the Stock
Exchange Medallion Program.
Section 2. SALE AND PURCHASE OF PREFERRED STOCK. (a) Within
one (1) business day following the date on which Buyer first makes payment for
shares of Common Stock that Buyer has accepted for payment pursuant to the
Offer, Buyer shall pay to each Seller the purchase price of $1,400 per share of
Preferred Stock together with accrued and unpaid dividends to and including the
date of the Effective Time (as defined below) delivered in accordance with
SECTION 1 hereof by such Seller to Agent (the "PURCHASE PRICE") by wire transfer
of immediately available funds to the account designated by such Seller on its
respective signature page hereto. Upon payment of the Purchase Price to each
Seller, such Seller shall irrevocably sell, transfer, grant and convey
(collectively, "TRANSFER") to Buyer, without representation or warranty except
as provided in this Agreement, and Buyer shall purchase, the Assigned Rights of
such Seller (the time of such transfer and purchase of the Assigned Rights of a
Seller as aforesaid is referred to as the "EFFECTIVE TIME" with respect to such
Seller). Promptly upon delivery by Buyer to Agent of written evidence,
consisting of a Federal Reserve Wire Network Reference Number, the time
processed and the value date, of payment of the Purchase Price to a Seller,
Agent shall release and deliver to Buyer the Preferred Stock Documentation of
such Seller held by Agent.
(b) If (v) Buyer or its affiliate shall not publicly announce
the commencement of the Offer within seven (7) business days from the date of
this Agreement, or (w) Buyer or its affiliate or Issuer shall publicly announce
that the Merger Agreement has been terminated in accordance with its terms, or
(x) Buyer or its affiliate shall publicly announce that the Offer has expired
without Buyer having purchased any shares of Common Stock thereunder or (y)
Buyer shall publicly announce that it has increased the per share price payable
to the holders of Common Stock in the Offer and the Merger to an amount in
excess of $9.25 and such announcement shall not state that the holders of at
least 75% of the outstanding shares of Preferred Stock have consented to such
increase or (z) Buyer shall not furnish to Agent evidence of payment of the
Purchase Price to any Seller or Sellers on or before March 31, 1999, then, in
the case of clauses (v), (w), (x) and (y), Agent shall promptly thereafter
return the Preferred Stock Documentation to all Sellers or, in the case of
clause (z), Agent shall promptly thereafter return to the affected Seller(s),
their respective Preferred Stock Documentation. (Any event referred to in the
preceding sentence is hereinafter referred to as a "TERMINATION EVENT," except
that any event referred to in clause (z) shall be deemed to be a Termination
Event only with respect to the affected Sellers(s).) Nothing in this SUBSECTION
2(b) or elsewhere in this
2
<PAGE>
Agreement shall relieve Buyer of its obligation to purchase and pay for the
shares of Preferred Stock in accordance with SUBSECTION 2(a) if Buyer has
accepted shares of Common Stock for payment pursuant to the Offer.
(c) Upon delivery of all of the Preferred Stock Documentation
to Buyer and/or each Seller as provided in SUBSECTIONS 2(a) or 2(b), Agent shall
have no further duties or obligations under this Agreement.
Section 3. SELLERS' REPRESENTATIONS. Each Seller, severally
and not jointly, hereby represents and warrants to Buyer and its successors and
assigns, as of the date hereof, and as of the Effective Time with respect to
such Seller, that:
(a) POWER AND AUTHORITY. Such Seller has full power and
authority to assign its Assigned Rights and to enter into and perform this
Agreement. This Agreement (i) has been duly authorized, executed and delivered
by such Seller and (ii) is (subject to the application of bankruptcy, insolvency
or receivership laws to such Seller and equitable principles generally) legal,
valid and binding and enforceable against such Seller in accordance with its
terms;
(b) TITLE. Such Seller is the sole legal and beneficial owner
of the Assigned Rights and has good title thereto, free and clear of all liens,
claims, charges and encumbrances of any kind and at the Effective Time will
transfer to Buyer such good title, free and clear of any liens, claims, charges
and encumbrances of any kind;
(c) NO OTHER CONSENT. No consent, approval, waiver,
authorization, notice, declaration or filing ("CONSENT") is required to be
received by such Seller from or made by such Seller with any governmental or
regulatory authority, agency, department, board, commission or instrumentality
or any court, tribunal or arbitrator and any self-regulatory organization
(collectively, "GOVERNMENTAL AUTHORITY"), or any other person, in connection
with the execution or delivery by such Seller of this Agreement or the transfer
by such Seller of such Seller's Assigned Rights pursuant to this Agreement other
than such Consents that have heretofore been made or obtained;
(d) NO VIOLATIONS. Such Seller's execution and delivery of
this Agreement, the consummation by such Seller of the transactions contemplated
hereby and compliance by such Seller with any of the provisions hereof will not
(i) conflict with or result in any breach of any provision of the Certificate of
Incorporation, Bylaws or other charter document of such Seller, (ii) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of, any material
contract, agreement, note, indenture, mortgage, lease, license or other
arrangement or understanding to which such Seller is a party or by which such
Seller or any of its assets are bound, (iii) result in the creation or
imposition of any lien or encumbrance of any kind upon the Assigned Rights of
such Seller, or (iv) violate any applicable provision of any statute, law, rule
or regulation or any order, decision, injunction, judgment, award or decree to
which such Seller or its assets or properties are subject;
3
<PAGE>
(e) LITIGATION. There is no suit, action or proceeding pending
or, to the knowledge of such Seller, threatened, nor is there any judgment,
decree, injunction, rule or order of any Governmental Authority against such
Seller or with respect to its Assigned Rights which, individually or in the
aggregate, would reasonably be expected adversely to affect such Seller's
transfer of its Assigned Rights pursuant to this Agreement or otherwise to
affect its ability to perform its obligations under this Agreement;
(f) SOPHISTICATED SELLER. (i) Such Seller is a sophisticated
seller with respect to its Assigned Rights, and has adequate information
concerning the business and financial condition of Issuer to make an informed
decision regarding the sale of its Assigned Rights and has independently and
without reliance upon Buyer and based on such information as such Seller has
deemed appropriate, made its own analysis and decision to sell its Assigned
Rights and to enter into this Agreement; (ii) Buyer has not given any investment
advice or rendered any opinion as to whether the sale of the Assigned Rights is
prudent; and (iii) such Seller acknowledges that if the Effective Time with
respect to such Seller shall occur, the transfer of the Assigned Rights to Buyer
hereunder shall be irrevocable and without any recourse to Buyer except with
respect to breaches of representations, warranties and covenants expressly set
forth in this Agreement, and pursuant to the indemnities contained herein;
(g) BUYER'S ACCESS TO INFORMATION. Such Seller acknowledges
that Buyer and Buyer's affiliates may have received material non-public
information concerning Issuer (the "BUYER UNDISCLOSED INFORMATION") in the
course of its due diligence investigation of Issuer conducted in connection with
the negotiation of the Merger Agreement. Such Seller acknowledges that the Buyer
Undisclosed Information may have caused Buyer to enter into this Agreement to
purchase the Assigned Rights and, if disclosed, could have a material affect on
such Seller's decision to transfer the Assigned Rights;
(h) INSOLVENCY. Such Seller is not insolvent or otherwise in
any condition that would entitle any creditor of such Seller, any person acting
or purporting to act under authority of any legislation pertaining to bankruptcy
or creditors' rights or any banking authority, to require that such Seller
divest itself of the purchase price in respect of the assignment hereunder;
(i) ACCREDITED INVESTOR. Such Seller is an "accredited
investor" as that term is defined in Rule 501 ("RULE 501") of Regulation D
promulgated under the United States Securities Act of 1933, as amended,
(together with the rules and regulations promulgated thereunder, the "SECURITIES
ACT");
(j) NO PRIOR ASSIGNMENT. Such Seller has made no prior
transfer of its Assigned Rights or of any interest therein;
(k) UNPAID OBLIGATIONS. There is no payment obligation of any
kind (whether fixed, contingent, conditional or otherwise) in respect of its
Assigned Rights that such Seller is or shall be required to pay or otherwise
perform that such Seller has not paid or otherwise
4
<PAGE>
performed in full; and
(l) NO BROKER OR FINDER. Such Seller has not engaged,
consented to or authorized any broker, finder or intermediary to act on its
behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this Agreement other than
Donaldson, Lufkin & Jenrette Securities Corp.
Section 4. BUYER'S REPRESENTATIONS. Buyer hereby represents
and warrants to each Seller and such Seller's successors and assigns, as of the
date hereof, and as of the Effective Time with respect to such Seller that:
(a) POWER AND AUTHORITY. Buyer has full power and authority to
purchase such Seller's Assigned Rights and to enter into and perform this
Agreement. This Agreement (i) has been duly authorized, executed and delivered
by Buyer (ii) is (subject to the application of bankruptcy, insolvency or
receivership laws to Buyer and equitable principles generally) legal, valid and
binding and enforceable against Buyer in accordance with its terms;
(b) NO OTHER CONSENTS. No Consent is required to be received
by Buyer from or made by Buyer with any Governmental Authority or any other
person in connection with the execution or delivery by Buyer of this Agreement
or the purchase by Buyer of such Seller's Assigned Rights pursuant to this
Agreement other than such Consents that have heretofore been obtained or made or
will be obtained or made prior to the Effective Time;
(c) NO VIOLATIONS. Buyer's execution and delivery of this
Agreement, the consummation by Buyer of the transactions contemplated hereby and
compliance by Buyer with any of the provisions hereof will not (i) conflict with
or result in any breach of any provision of the Certificate of Incorporation,
Bylaws or other charter document of Buyer, (ii) result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of, any material contract, agreement,
note, indenture, mortgage, lease, license or other arrangement or understanding
to which Buyer is a party or by which Buyer or any of its assets or property is
subject, (iii) result in the creation or imposition of any material lien or
encumbrance of any kind upon any of the assets of Buyer or any subsidiary of
Buyer or (iv) violate any applicable provision of any statute, law, rule or
regulation or any order, decision, injunction, judgment, award or decree to
which Buyer or its assets or properties are subject;
(d) LITIGATION. There is no suit, action or proceeding,
pending or, to the knowledge of Buyer, threatened, nor is there any judgment,
decree, injunction, rule or order of any Governmental Authority against Buyer or
any of its affiliates which, individually or in the aggregate, would reasonably
be expected adversely to affect Buyer's ability to perform its obligations under
this Agreement.
(e) SOPHISTICATED BUYER. (i) Buyer is a sophisticated buyer
with respect to the Assigned Rights, and has adequate information concerning the
business and financial condition
5
<PAGE>
of Issuer to make an informed decision regarding the purchase of the Assigned
Rights and has independently and without reliance upon such Seller and based on
such information as Buyer has deemed appropriate, made its own analysis and
decision to acquire the Assigned Rights and to enter into this Agreement; (ii)
such Seller has not given any investment advice or rendered any opinion as to
whether the purchase of the Assigned Rights is prudent; and (iii) Buyer
acknowledges that if the Effective Time with respect to such Seller shall occur,
the transfer of the Assigned Rights by such Seller hereunder is irrevocable and
without any recourse to such Seller except with respect to breaches of
representations, warranties and covenants expressly set forth in this Agreement,
and pursuant to the indemnities contained herein;
(f) SELLER'S ACCESS TO INFORMATION. Buyer acknowledges that
such Seller may possess material non-public information concerning Issuer (the
"SELLER UNDISCLOSED INFORMATION") by virtue of such Seller's relationship to
Issuer. Buyer acknowledges that the Seller Undisclosed Information may have
caused such Seller to enter into this Agreement to transfer the Assigned Rights
and, if disclosed, could have a material affect on Buyer's decision to purchase
the Assigned Rights;
(g) BUSINESS ACTIVITIES. Buyer is a newly formed Delaware
corporation and has conducted no business, except such business activities as
are contemplated by or incident to the performance of Buyer's obligations under
the Merger Agreement, the Offer and this Agreement;
(h) ACCREDITED INVESTOR; RESALE. Buyer, together with its
affiliates, is an "accredited investor" within the meaning of Rule 501. Buyer
acknowledges that the Assigned Rights are not being acquired with a view to
resale that would violate any applicable securities law;
(i) NO BROKER OR FINDER. Buyer has not engaged, consented to
or authorized any broker, finder or intermediary to act on its behalf, directly
or indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement.
(j) FINANCING ARRANGEMENTS. Buyer and Tyco (including for this
purpose one or more of its wholly-owned subsidiaries) have funds available to
them sufficient to enable Buyer to purchase such Seller's Assigned Rights in
accordance with the terms of this Agreement.
Section 5. COVENANTS OF SELLERS. Each Seller, severally and
not jointly, covenants and agrees that unless a Termination Event shall have
occurred:
(a) AGREEMENT TO VOTE SHARES. At every meeting of the
stockholders or of the holders of any class or series of stock of Issuer called
with respect to any of the following, and at every adjournment thereof, and on
every action or approval by written consent of the stockholders or of the
holders of any class or series of stock of Issuer with respect to any of the
following, such Seller shall cast any votes that it may have at the time against
(x) approval of any Company Takeover Proposal (as defined in the Merger
Agreement), (y) any merger
6
<PAGE>
(including, without limitation, an Alternative Transaction (as defined in the
Merger Agreement)), consolidation, sale of assets requiring stockholder approval
or the approval of the holders of any class or series of stock, reorganization
or recapitalization of Issuer, with any other person other than Buyer or its
affiliates, and (z) any liquidation or winding up of Issuer (each of the
foregoing is hereinafter referred to as an "OPPOSING PROPOSAL");
(b) AGREEMENT NOT TO SOLICIT. Such Seller will not, and will
not permit any entity under its control to: (1) solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) with
respect to an Opposing Proposal or otherwise encourage or assist any person in
taking or planning any action that would constitute an Opposing Proposal; or (2)
initiate a vote or action by written consent of Issuer's stockholders or of the
holders of any class or series of stock with respect to an Opposing Proposal;
(c) AGREEMENT NOT TO TRANSFER SHARES. Such Seller shall not
effect a transfer or any pledge or other encumbrance of any of its Assigned
Rights to or in favor of any person, other than to an affiliate of such Seller
who shall have agreed in a writing, in form and substance acceptable to Buyer in
its sole discretion, for the benefit of and delivered to Buyer, to be bound by
all provisions of this Agreement applicable to such Seller.
(d) TENDER OF COMMON STOCK. Such Seller agrees to tender all
shares of Common Stock now owned or hereafter acquired by such Seller in the
Offer.
Section 6. COVENANT OF BUYER. Buyer covenants and agrees that
Buyer or its affiliate shall make a prompt public announcement of: (i) the
Merger Agreement is terminated in accordance with its terms; or (ii) the Offer
expires without Buyer having purchased any shares of Common Stock thereunder; or
(iii) the consideration payable to the holders of the Common Stock in the Offer
and the Merger has been increased to an amount in excess of $9.25.
Section 7. NO OTHER REPRESENTATIONS. Each Seller and Buyer
acknowledge and represent and warrant to each other that no party has made any
representation or warranty, whether express or implied, of any kind or character
except as expressly set forth or implied in this Agreement.
Section 8. PAYMENT AND DELIVERY BY SELLERS. Each Seller,
severally and not jointly, agrees to cause any distributions with respect to
Preferred Stock ("DISTRIBUTIONS") owned by such Seller paid or delivered after
the Effective Time to be paid or delivered directly to Buyer. In the event that
a Seller nevertheless receives any such Distributions after the Effective Time
with respect to such Seller, (i) such Seller agrees to accept the same as agent
on behalf of and for the sole benefit of Buyer, and to pay or deliver the same
forthwith to Buyer (free of any withholding, set-off or deduction of any kind)
in the same form received, with the endorsement of such Seller, without
recourse, when necessary or appropriate; and (ii) no Seller shall have any
legal, equitable or beneficial interest in such Distributions.
7
<PAGE>
Section 9. INDEMNITIES. (a) Each Seller, severally and not
jointly, agrees to indemnify, defend and hold Buyer and its officers, directors,
employees, agents and controlling persons and their successors and assigns
(collectively, the "BUYER INDEMNITEES") harmless from and against any and all
expenses, losses, claims, judgments, damages, liabilities or obligations
(collectively, "LIABILITIES") which are incurred by the Buyer Indemnitees or any
of them, including without limitation reasonable attorneys' fees and expenses,
caused by, or in any way resulting from or relating to such Seller's breach of
any of the representations, warranties, covenants or agreements of such Seller
set forth in this Agreement.
(b) Buyer agrees to indemnify, defend and hold each Seller and
such Seller's officers, directors, employees, agents and controlling persons and
their successors and assigns (collectively, the "SELLER INDEMNITEES") harmless
from and against any and all Liabilities which are incurred by or threatened
against the Seller Indemnitees or any of them, including without limitation
reasonable attorneys' fees and expenses, caused by, or in any way resulting from
or relating to Buyer's breach of any of the representations, warranties,
covenants or agreements of Buyer set forth in this Agreement.
Section 10. FILINGS AND FURTHER ASSURANCES. From and after the
Effective Time, each Seller agrees to take such other reasonable steps as may be
requested by Buyer to effect the transfer of the Assigned Rights of such Seller
to Buyer. Each party further agrees to execute and deliver, or to cause to be
executed and delivered, all such instruments (including all necessary
endorsements) and to take all such action as any other party may reasonably
request in order to effectuate the intent and purposes, and to carry out the
terms, of this Agreement.
Section 11. CERTAIN AGENT MATTERS. (a) Agent shall receive,
hold and distribute the Preferred Stock Documentation in accordance with
SECTIONS 1 and 2.
(b) Agent shall be entitled to rely, and shall be protected in
acting in reliance, upon any instructions and directions furnished pursuant to
and in accordance with this Agreement.
(c) Agent shall be entitled to treat as genuine, and as the
document it purports to be, any letter, paper, notice or other document
furnished to it by Buyer or any Seller and believed by Agent to be genuine and
to have been signed and presented by the proper party or parties, without being
required to determine the authenticity or correctness of any fact stated
therein, the propriety or validity thereof, or the authority or authorization of
the party or parties making and/or delivering the same to do so.
(d) Buyer and Issuer, jointly and severally, agree to pay
Agent upon demand all reasonable expenses incurred by Agent in connection with
its duties hereunder, including any reasonable attorneys fees or other legal
costs, expenses and disbursements.
(e) Neither Agent nor any of its directors, officers,
partners, employees, controlling persons or agents, direct or indirect, shall be
liable to Buyer or any Seller or any other person or entity for or in respect to
any loss, claim, damage, or liability resulting from, or
8
<PAGE>
arising out of, any action taken or omitted by Agent in connection with this
Agreement, except for any loss, claim, damage or liability which shall finally
be adjudicated to be the result of gross negligence or willful bad faith on the
part of Agent or any such director, officer, partner, employee, controlling
person or agent.
(f) Buyer and Issuer, jointly and severally, covenant and
agree to reimburse, indemnify and hold harmless Agent from and against any
and all claims, actions, judgments, damages, losses, liabilities, costs,
transfer or other taxes, and expenses (including without limitation
reasonable attorneys' fees and expenses) incurred or suffered by Agent, or to
which Agent may become subject and not resulting from any negligence, bad
faith or willful misconduct on Agent's part, arising out of or incident to
this Agreement or the administration of Agent's duties hereunder, or arising
out of or incident to Agent's compliance with the instructions set forth
herein or with any instructions delivered to Agent pursuant hereto, or as a
result of Agent defending itself against any claim or liability resulting
from Agent's actions as Agent, including any claim against Agent by any
Seller, which covenant and agreement shall survive the termination hereof.
Agent hereby represents that Agent will notify each of Buyer and Issuer by
letter, or facsimile confirmed by letter, of any receipt by Agent of a
written assertion of a claim against Agent, or any action commenced against
Agent, within ten (10) business days after Agent's receipt of written notice
of such assertion or Agent's having been served with the summons or other
first legal process giving information as to the nature and basis of any such
action. However, Agent's failure to so notify Buyer and Issuer shall not
operate in any manner whatsoever to relieve Buyer and Agent from any
liability which they may have on account of this SUBSECTION 11(f) if no
prejudice occurs. At their election, Buyer and/or Issuer may assume the
conduct of Agent's defense in any such action or claim at their joint cost
and expense. In the event that Buyer and/or Issuer elect to assume the
defense of any such action or claim and confirm to Agent in writing that the
indemnity provided for in this SUBSECTION 11(f) applies to such action or
claim, neither Buyer nor Issuer shall be liable for the fees and expenses of
any counsel thereafter retained by Agent.
(g) This Agreement sets forth exclusively the duties and
obligations of Agent with respect to any and all matters pertinent to its acting
as such hereunder. Agent shall not be obligated to refer to, and shall not be
bound by, any other document or agreement.
Section 12. MISCELLANEOUS. (a) COSTS AND FEES. Except as
otherwise expressly provided for herein, each party to this Agreement shall bear
its own costs and expenses, including, but not limited to, attorneys' fees and
expenses, in connection with the transactions contemplated hereby.
(b) INTEGRATION. This Agreement constitutes the complete
agreement of the parties hereto with respect to the subject matters referred to
herein and supersedes all prior or contemporaneous negotiations, promises,
covenants, agreements or representations of every nature whatsoever with respect
thereto, all of which have become merged and finally integrated into this
Agreement. Notwithstanding the foregoing, the confidentiality letters between
Issuer and each Seller shall survive the execution and delivery of this
Agreement.
9
<PAGE>
(c) AMENDMENT. This Agreement cannot be amended, modified or
supplemented except by an instrument in writing executed by the parties hereto
that are to be bound thereby. Furthermore, this Agreement cannot be amended to
increase the purchase price payable to any Seller to greater than $1,400 per
share of Preferred Stock together with accrued and unpaid dividends to and
including the date of the Effective Time without such increased purchase price
being offered to each Seller.
(d) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by facsimile, receipt confirmed, or on the next business day when
sent by overnight courier or on the third succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to
Agent or Buyer at the following addresses or to any Seller at the address set
forth on such Seller's signature page hereto (or at such other address for a
party as shall be specified by like notice):
(i) if to Agent, to:
American Stock Transfer Company
6201 15th Avenue
Brooklyn, NY 11219
Attention: Barry Rosenthal
Telecopy: (718) 259-1144
Confirm: (718) 921-8380
with a copy to:
American Stock Transfer Company
6201 15th Avenue
Brooklyn, NY 11219
Attention: Herbert Lemmer
Telecopy: (718) 331-1852
Confirm: (718) 921-8209
(ii) if to Buyer, to:
c/o Tyco International (US) Inc.
One Tyco Park
Exeter, New Hampshire 03833
Attention: Mark A Belnick, Esq.
Telecopy: (603) 778-7700
Confirm: (603) 778-9700
with a copy to
Kramer Levin Naftalis & Frankel LLP
10
<PAGE>
919 Third Avenue
New York, New York 10022
Attention: Abbe L. Dienstag, Esq.
Telecopy: (212) 715-8000
Confirm: (212) 715-9100.
(e) CHOICE OF LAW, CHOICE OF FORUM. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to any conflicts of laws provisions thereof. Each party to this
Agreement hereby irrevocably consents to the jurisdiction of the United States
Court for the Southern District of New York and the courts of the State of New
York located in the City of New York (collectively, the "COURTS") in any action
to enforce, interpret or construe any provision of this Agreement or of any
other agreement or document delivered in connection with this Agreement, and
also hereby irrevocably waives any defense of improper venue, forum non
conveniens or lack of personal jurisdiction to any such action brought in those
Courts. Each party further irrevocably agrees that any action to enforce,
interpret or construe any provision of this Agreement will be brought only in
such Courts. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(f) SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable harm would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. Accordingly the parties further agree that each party shall
be entitled to injunctions or restraining orders to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any of
the Courts, this being in addition to any other remedy to which they are
entitled at law or in equity.
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which when so executed shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
(h) BUSINESS DAY. The term "BUSINESS DAY" means any day other
than a day on which the commercial banking institutions in the City of New York,
Borough of Manhattan are authorized or required by law to remain closed.
(i) BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Nothing, including
without limitation the delivery of the Preferred Stock Documentation to Buyer,
Seller or Agent in accordance with SECTIONS 1 or 2, shall relieve any party from
any liability for such party's willful breach of this Agreement or under the
indemnification provisions of SECTION 9. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any Seller prior
to the Effective Time without the prior written consent of Buyer. Buyer may
assign its rights, interest and obligations hereunder to any other wholly-owned
direct or indirect subsidiary of Tyco, provided
11
<PAGE>
that the provisions of the Guarantee immediately following the signature pages
hereto shall apply to such other subsidiary.
(j) THIRD PARTIES. Nothing contained in this Agreement or in
any instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not a party hereto or
thereto or a successor or permitted assign of such a party; PROVIDED HOWEVER,
that (i) the parties hereto specifically acknowledge that the provisions of
SECTION 9 hereof are intended to be for the benefit of, and shall be enforceable
by, the Buyer Indemnitees and the Seller Indemnitees and (ii) Tyco shall be
deemed a third party beneficiary of this Agreement with respect to the rights of
Buyer.
Section 13. CONSENT. Each Seller irrevocably consents to any
necessary amendment, modification and/or waiver of (x) Section 8.1 of the
Preferred Stock Purchase Agreement, dated as of February 2, 1998 (the "INITIAL
PURCHASE AGREEMENT"), to provide that neither this Agreement or the Merger
Agreement, nor the transactions contemplated hereby or thereby, shall be deemed
to violate or impair the ability of Issuer to perform its obligations under any
provision of the Initial Purchase Agreement and (y) Section 4H of the
Certificate of Designations of the Preferred Stock to provide that in no event
shall the amount payable to the holder of any share of Preferred Stock as a
result of the consummation of the Offer or the merger contemplated by the Merger
Agreement be other than $1,400 per share of Preferred Stock together with
accrued and unpaid dividends to and including the date of the Effective Time.
Such consent shall be effective immediately prior to the Effective Time. Each
Seller's consent contained in this SECTION 13 shall be void and of no effect if
a Termination Event shall occur with respect to such Seller without such
Seller's Assigned Rights being transferred to Buyer.
Section 14. EFFECTIVENESS. This Agreement shall not be
effective unless it is executed by Buyer and by the holders of not less than
seventy-five percent (75%) in principal amount of the Preferred Stock and the
Guarantee annexed hereto is executed by Tyco.
12
<PAGE>
[SIGNATURE PAGES AND GUARANTEE FOLLOW]
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
stated above.
T16 ACQUISITION CORP.
By: /s/ Mark A. Belnick
----------------------------------
Name: Mark A. Belnick
Title: President
ALARMGUARD HOLDINGS, INC.
signing solely with respect to
SUBSECTIONS 11(d) and (f)
By: /s/ Russell R. MacDonnell
----------------------------------
Name: Russell R. MacDonnell
Title: Chairman, CEO
[SIGNATURE PAGES OF SELLERS AND GUARANTEE FOLLOW]
14
<PAGE>
FORM OF
SIGNATURE PAGE OF SELLER
TO
PREFERRED STOCK PURCHASE AGREEMENT
[NAME OF SELLER]
By: /s/
-------------------------------
Name:
Title:
Number of shares of
Series A Preferred Stock:
---------------------------
Number of shares of
Series B Preferred Stock:
---------------------------
Wire Payment Instructions:
Bank
-------------------------
ABA No.
-------------------------
Account No.
-------------------------
Account Name
-------------------------
Address for Notices:
-------------------------
-------------------------
-------------------------
Facsimile No.:
---------------------
Confirm No.:
---------------------
Attention:
---------------------
with a copy to:
-------------------------
-------------------------
-------------------------
Facsimile No.:
---------------------
Confirm No.:
---------------------
Attention:
---------------------
15
<PAGE>
GUARANTEE
Tyco International Ltd., a Bermuda company, hereby guarantees the full and
timely performance by Buyer of each and every obligation of Buyer or any
permitted assignee of Buyer under the foregoing Agreement. This is a guaranty of
payment and performance, and not of collection, and Tyco International Ltd.
acknowledges and agrees that this guarantee is unconditional, and no release or
extinguishment of the obligations or liabilities of Buyer or its permitted
assignee under this Agreement, whether by reason of bankruptcy or otherwise,
shall affect the continuing validity and enforceability of this guarantee.
The provisions of Section 11 of the Agreement shall apply to this Guarantee
mutatis mutandum, except that the address for notices and other communications
to Tyco International Ltd. is:
Tyco International Ltd.
The Gibbons Building
10 Queen Street, Suite 301
Hamilton HM11 Bermuda
Attention: Secretary
Telecopy: (441) 295-9647
Confirm: (441) 292-8674
TYCO INTERNATIONAL LTD.
By: /s/ Mark A. Belnick
---------------------------
Name: Mark A. Belnick
Title: Executive Vice President
Chief Corporate Counsel
G-1
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
SELLER SHARES OF SERIES A SHARES OF SERIES B PURCHASE PRICE*
PREFERRED STOCK PREFERRED STOCK
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ziff Asset Manage- 7,250 $10,150,000.00
ment, L.P.
- --------------------------------------------------------------------------------------------
Canaan Equity L.P. 5,000 7,000,000.00
- --------------------------------------------------------------------------------------------
BF Partners 400 560,000.00
- --------------------------------------------------------------------------------------------
Paul Finkelstein 100 140,000.00
- --------------------------------------------------------------------------------------------
David Heidecorn 75 105,000.00
- --------------------------------------------------------------------------------------------
Russell MacDonnell 125 175,000.00
- --------------------------------------------------------------------------------------------
Exeter Capital 2,500 3,500,000.00
Partners IV, L.P.
- --------------------------------------------------------------------------------------------
Aetna Life Insurance 5,000 7,000,000.00
Company
- --------------------------------------------------------------------------------------------
Advance Capital 1,726 2,416,400.00
Offshore Partners
- --------------------------------------------------------------------------------------------
Advance Capital 5,524 7,733,600.00
Partners, L.P.
- --------------------------------------------------------------------------------------------
Elliott Associates, 2,000 2,800,000.00
L.P.
- --------------------------------------------------------------------------------------------
OZ Master Fund, Ltd. 2,000 2,800,000.00
- --------------------------------------------------------------------------------------------
Lehman Brothers 5,000 7,000,000.00
Capital Partners III,
L.P.
- --------------------------------------------------------------------------------------------
IBJ Schroder Bank & 200 280,000.00
Trust Company, NY
- --------------------------------------------------------------------------------------------
Granite Properties 1,500 2,100,000.00
Management Corp.
- --------------------------------------------------------------------------------------------
Westgate 2,000 2,800,00.00
International, L.P.
- --------------------------------------------------------------------------------------------
Credit Suisse 200 280,000.00
- --------------------------------------------------------------------------------------------
Kenneth Gross 100 140,000.00
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
</TABLE>
* Purchase price does not include accrued and unpaid dividends.
