<PAGE>
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- --------------------------------------------------------------------------------
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
HOLMES PROTECTION GROUP, INC.
(Name of Subject Company)
------------------------------
TYCO INTERNATIONAL LTD.
T9 ACQUISITION CORP.
(Bidders)
------------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of class of securities)
------------------------------
436419105
(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:
JOSHUA M. BERMAN, ESQ.
KRAMER, LEVIN, NAFTALIS & FRANKEL
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>
- ------------------------------------------------------------------------------------------------
$143,098,078 $28,620
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
* For purposes of calculating fee only. Assumes purchase of 8,417,534 shares
of Common Stock, par value $.01 per share, of Holmes Protection Group, Inc.
at $17.00 per share, representing 6,310,034 shares outstanding and 2,107,500
shares reserved for issuance pursuant to outstanding options, warrants and
convertible debentures.
** 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.
Amount previously paid: Not applicable
Form or registration no.: Not applicable.
Filing party: Not applicable.
Date filed: Not applicable.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 1 of 9 Pages
Exhibit Index is located on Page 9
<PAGE>
14D-1
Page 2 of 9 Pages
<TABLE>
<C> <S> <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
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 9 Pages
<TABLE>
<C> <S> <C>
1 NAMES OF REPORTING PERSONS
T9 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
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 T9 Acquisition Corp., a Delaware
corporation (the "Purchaser") and an indirect wholly-owned subsidiary of Tyco
International Ltd., a Bermuda company ("Tyco"), to purchase all outstanding
shares (the "Shares") of common stock, par value $.01 per share (the "Common
Stock"), of Holmes Protection Group, Inc., a Delaware corporation (the
"Company"), upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated January 6, 1998, 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 $17.00 per 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 Holmes Protection Group, Inc., a
Delaware corporation. The address of the Company's principal executive offices
is 440 Ninth Avenue, New York, New York 10001-1695.
(b) The securities to which this statement relates are the Common Stock. 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 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 the Purchaser and Tyco
(collectively, the "Reporting Persons"). The Purchaser is an indirect
wholly-owned subsidiary of Tyco.
The information set forth in Section 9 ("Certain Information Concerning Tyco
and the 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 the Purchaser"), Section 11 ("Contacts with the
Company; Background of the Offer") and Section 13 ("The Merger Agreement;
Stockholder 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 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 the Purchaser") and 13 ("The Merger Agreement; Stockholder Agreement")
of the Offer to Purchase is incorporated herein by reference.
Page 4 of 9 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 the 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; Stockholder 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 the 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 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; Stockholder
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 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 6, 1998.
(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 December 29, 1997.
(a)(7) Form of Summary Advertisement, dated January 6, 1998.
(a)(8) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b) Not applicable.
Page 5 of 9 Pages
<PAGE>
(c)(1) Confidentiality Agreement between Tyco and the Company, dated October
14, 1997.
(c)(2) Agreement and Plan of Merger, dated as of December 28, 1997, among
the Purchaser, Tyco and the Company.
(c)(3) Stockholder Agreement, dated as of December 28, 1997, among Tyco, the
Purchaser and HP Partners L.P.
(d)-(f) Not applicable.
Page 6 of 9 Pages
<PAGE>
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.
TYCO INTERNATIONAL LTD.
By: /s/ MARK H. SWARTZ
-----------------------------------------
Name: Mark H. Swartz
Title: Executive Vice President
and Chief Financial Officer
Dated: January 6, 1998
Page 7 of 9 Pages
<PAGE>
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.
T9 ACQUISITION CORP.
By: /s/ MARK H. SWARTZ
-----------------------------------------
Name: Mark H. Swartz
Title: Vice President
Dated: January 6, 1998
Page 8 of 9 Pages
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HOLMES PROTECTION GROUP, INC.
AT
$17.00 NET PER SHARE
BY
T9 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 TUESDAY, FEBRUARY 3, 1998, 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 A NUMBER OF
SHARES (AS HEREINAFTER DEFINED) REPRESENTING AT LEAST 51% OF THE TOTAL NUMBER OF
OUTSTANDING SHARES OF HOLMES PROTECTION GROUP, INC. (THE "COMPANY") ON A FULLY
DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE
OFFER. HP PARTNERS L.P., WHICH OWNS 1,515,886 ISSUED AND OUTSTANDING SHARES,
CONSTITUTING APPROXIMATELY 18% OF THE SHARES ON A FULLY DILUTED BASIS
(APPROXIMATELY 26% OF THE SHARES ON A FULLY DILUTED BASIS INCLUDING 685,714
SHARES ISSUABLE TO IT UPON THE EXERCISE OF WARRANTS), HAS AGREED TO TENDER ITS
SHARES IN THE OFFER.
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 (AS HEREINAFTER DEFINED), THE
OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT
ANY STOCKHOLDER DESIRING TO TENDER ALL OR ANY PORTION OF SUCH STOCKHOLDER'S
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 SHARES TO THE
DEPOSITARY ALONG WITH THE LETTER OF TRANSMITTAL OR TENDER SUCH 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 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 SHARES.
A STOCKHOLDER WHO DESIRES TO TENDER SHARES AND WHOSE CERTIFICATE(S) FOR
SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY WITH THE PROCEDURES
FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, MAY TENDER SUCH 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 6, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Introduction............................................................................................... 1
The Tender Offer........................................................................................... 3
1. Terms of the Offer; Extension of Tender Period; Termination; Amendments............................... 3
2. Procedure for Tendering Shares........................................................................ 4
3. Withdrawal Rights..................................................................................... 7
4. Acceptance for Payment and Payment of Offer Price..................................................... 8
5. Certain Federal Income Tax Consequences............................................................... 9
6. Price Range of Shares; Dividends...................................................................... 9
7. Effects of the Offer on the Market for Shares; Stock Quotations; Registration Under the Exchange
Act................................................................................................... 10
8. Certain Information Concerning the Company............................................................ 11
9. Certain Information Concerning Tyco and the Purchaser................................................. 13
10. Source and Amount of Funds........................................................................... 15
11. Contacts with the Company; Background of the Offer................................................... 15
12. Purpose of the Offer; Short Form Merger; Plans for the Company; Dissenters' Rights; Going Private
Transactions......................................................................................... 17
13. The Merger Agreement; Stockholder Agreement.......................................................... 19
14. Dividends and Distributions.......................................................................... 29
15. Certain Conditions of the Offer...................................................................... 29
16. Certain Legal Matters................................................................................ 31
17. Fees and Expenses.................................................................................... 33
18. Miscellaneous........................................................................................ 33
Annex I Certain Information Concerning the Directors and Executive Officers of Tyco International Ltd...... 34
Annex II Certain Information Concerning the Directors and Executive Officers of the Purchaser.............. 38
</TABLE>
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF
HOLMES PROTECTION GROUP, INC.
INTRODUCTION
T9 Acquisition Corp., a Delaware corporation (the "Purchaser") and an
indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company
("Tyco"), hereby offers to purchase all outstanding shares of common stock, par
value $.01 per share (the "Shares"), of Holmes Protection Group, Inc., a
Delaware corporation (the "Company"), at $17.00 per 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").
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 Shares by the 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 ChaseMellon
Shareholder Services, L.L.C., as Depositary (the "Depositary"), incurred in
connection with the Offer. See Section 17.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES REPRESENTING AT LEAST 51% OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF
THE COMPANY ON A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR
PAYMENT PURSUANT TO THE OFFER. HP PARTNERS L.P., WHICH OWNS 1,515,886 ISSUED AND
OUTSTANDING SHARES, CONSTITUTING APPROXIMATELY 18% OF THE SHARES ON A FULLY
DILUTED BASIS (APPROXIMATELY 26% OF THE SHARES ON A FULLY DILUTED BASIS
INCLUDING 685,714 SHARES ISSUABLE TO IT UPON THE EXERCISE OF WARRANTS), HAS
AGREED TO TENDER ITS SHARES IN THE OFFER. 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 December 28, 1997 (the "Merger Agreement"), among Tyco, the 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, the 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 Share (other than 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 of the Company, Tyco, the Purchaser or
any other subsidiary of Tyco, will be converted into and represent the right to
receive $17.00 in cash or any higher price that may be paid per Share in the
Offer (the "Per Share Amount"), without interest. 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
SHARES PURSUANT TO THE OFFER.
J.P. Morgan Securities Inc., the Company's financial advisor ("J.P.
Morgan"), has delivered to the Company's Board of Directors its written opinion
that the consideration to be received by the stockholders of the Company
pursuant to the Offer and the Merger 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 Shares
pursuant to the Offer, Tyco will be entitled to designate for election to the
Company's Board of Directors a number of directors
<PAGE>
(rounded up to the next whole number) which equals the product of (i) the total
number of directors on the Company's Board of Directors (giving effect to the
directors appointed or elected pursuant to this provision) and (ii) the
percentage that the aggregate number of Shares beneficially owned by Tyco or any
affiliate of Tyco (including such Shares as are accepted for payment pursuant to
the Offer, but excluding Shares held by the Company) bears to the total number
of Shares outstanding. The Company has agreed, upon the request of Tyco, to
increase the size of the Board of Directors of the Company or use 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
to cause Tyco designees to be so elected. See Section 13.
The Company has informed the Purchaser that as of December 28, 1997 there
were 6,310,034 Shares outstanding and 2,107,500 Shares reserved for issuance
pursuant to outstanding options, warrants and convertible debentures. As of the
date hereof, Tyco, through an indirect wholly-owned subsidiary, beneficially
owns 3,014 Shares (excluding Shares that Tyco or the Purchaser may be deemed to
beneficially own by virtue of the Stockholder Agreement described herein). Based
on such number of outstanding Shares, options, warrants and convertible
debentures, if the Purchaser acquires at least 4,208,768 Shares as a result of
the Offer (including the Shares beneficially owned by Tyco as of the date
hereof), it will own a majority of the outstanding Shares on a fully diluted
basis. In such event the Purchaser would have sufficient voting power to approve
the Merger without the affirmative vote of any other stockholder. HP Partners
L.P., which owns 1,550,886 issued and outstanding Shares, constituting
approximately 18% of the Shares on a fully diluted basis (approximately 26% of
the Shares on a fully diluted basis including 685,417 Shares issuable to it upon
the exercise of warrants), has agreed to tender its Shares in the Offer. If the
Purchaser acquires 90% or more of the outstanding Shares in the Offer, the
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.
2
<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), the Purchaser will accept for payment and pay for
all 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 Tuesday,
February 3, 1998, unless and until the 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 the Purchaser,
shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition (as defined in Section 15). Subject to the provisions of the
Merger Agreement, the 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 Tuesday,
February 3, 1998, 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, the Purchaser may elect to (i) terminate the Offer and return
all tendered Shares to tendering stockholders, (ii) waive all of the unsatisfied
conditions and, subject to any required extension, purchase all Shares validly
tendered by the Expiration Date and not withdrawn, (iii) extend the Offer and,
subject to the right of stockholders to withdraw Shares until the Expiration
Date, retain the Shares that have been tendered until the expiration of the
Offer as extended or (iv) delay acceptance for payment of, or payment for, the
Shares, subject to complying with applicable law, until the satisfaction or
waiver of the conditions of the Offer. Under the terms of the Merger Agreement,
the Purchaser may not (except as described in the next sentence), without the
prior written consent of the Company, (i) decrease the Per Share Amount or
change the form of consideration payable in the Offer, (ii) decrease the number
of 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 the Shares.
Notwithstanding the foregoing, the 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 the Purchaser's
obligation to accept for payment and pay for Shares 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 conditions to the Purchaser's
obligation to accept for payment and pay for Shares are satisfied or waived but
the number of Shares tendered is less than 90% of the then outstanding number of
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.
Subject to the applicable regulations of the Commission and the provisions
of the Merger Agreement, the Purchaser also expressly reserves the right, in its
sole discretion, at any time or from time to time, to (i) delay acceptance for
payment of or, regardless of whether such Shares were theretofore accepted for
payment, payment for any Shares, (ii) terminate the Offer (whether or not any
Shares have theretofore been accepted for payment) 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) waive any condition or otherwise
amend the Offer in any respect, in each case by giving oral or written notice of
such delay, termination, waiver or amendment to the Depositary and by making a
public announcement thereof. If the Purchaser accepts for payment any Shares
pursuant to the terms of the Offer, it will accept for payment all Shares
validly tendered prior to the Expiration Date and not withdrawn and, subject to
clause (i) above, will promptly pay for all Shares so accepted for payment. The
Purchaser acknowledges that its reservation of the right to delay payment for
Shares that it has accepted for payment is limited by Rule 14e-l(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which requires
the Purchaser to pay
3
<PAGE>
the consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer.
The rights reserved by the Purchaser in the preceding paragraph are in
addition to the 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 the
Purchaser may choose to make any public announcement, the 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 the 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 the Minimum Condition), the 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, the Purchaser decreases the number of 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 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 the
Purchaser with the names and addresses of all record holders of Shares and
security position listings of 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 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 Shares.
2. PROCEDURE FOR TENDERING SHARES. Except as set forth below, in order for
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 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 Shares must be received by the Depositary, or such Shares
must be tendered pursuant to the
4
<PAGE>
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 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 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 Shares is registered in the name of a person
other than the signer of the Letter of Transmittal (or a facsimile thereof), or
if payment is to be made, or 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 the Purchaser, proper evidence satisfactory to the
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 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 Shares
by causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the Book-Entry Transfer Facility's
procedure for such transfer. However, although delivery of 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 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.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates representing 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 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 the Purchaser; and
5
<PAGE>
(c) the certificates representing all tendered Shares in proper form for
transfer (or confirmation of a book-entry transfer of such 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 National Market of The Nasdaq Stock
Market ("The Nasdaq National Market") 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 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 Shares (or timely confirmation of a book-entry
transfer of such 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 Shares or confirmations of book-entry transfers of such Shares are
actually received by the Depositary.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR 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 Shares will be determined by the Purchaser in its sole
discretion, and its determination shall be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders of any Shares
that it determines are not in appropriate form or the acceptance for payment of
or payment for which may, in the opinion of the Purchaser's counsel, be
unlawful. The 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 Shares or any particular stockholder, and the 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 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 the Purchaser. None of the 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 the Purchaser as such
stockholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by the Purchaser (and any and all other Shares or other securities or
rights issued or issuable in respect of such Shares on or after January 6,
1998), effective if, when and to the extent that the Purchaser accepts such
Shares for payment pursuant to the Offer. Upon such acceptance for payment, all
prior proxies given by such stockholder with respect to such 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 the Purchaser will, with respect to such Shares and other
securities or rights issuable in respect thereof, be empowered to exercise all
voting
6
<PAGE>
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. The Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon the Purchaser's acceptance for
payment of such Shares the Purchaser must be able to exercise full voting rights
with respect to such Shares.
The Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and the 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 SHARES PURCHASED PURSUANT TO THE OFFER, EACH
STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER IDENTIFICATION
NUMBER 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. FOREIGN 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 Shares made pursuant to the Offer will be
irrevocable, except that Shares tendered may be withdrawn at any time prior to
the Expiration Date, and, unless theretofore accepted for payment by the
Purchaser as provided herein, may also be withdrawn on or after March 8, 1998.
For a withdrawal of 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 Shares to be withdrawn, the number of Shares to be withdrawn and
the name(s) in which the certificate(s) representing such Shares are registered,
if different from that of the person who tendered such Shares. If certificates
for 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 Shares to be withdrawn must also be
furnished to the Depositary prior to the physical release of the Shares to be
withdrawn. The signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If 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 Shares and must otherwise comply with the
Book-Entry Transfer Facility's procedures.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of any Shares tendered, or is unable to accept for payment or pay for Shares
tendered pursuant to the Offer, for any reason whatsoever, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
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 Exchange Act. Any such
delay will be accompanied by an extension of the Offer to the extent required by
law.
Withdrawals of tenders of Shares may not be rescinded, and Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn 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 the Purchaser, in its sole
discretion, and its determination will be final and binding on all parties. None
of the 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.
7
<PAGE>
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), the Purchaser
will accept for payment and will pay for all 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 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 the Purchaser, and such determination shall be final and
binding on all tendering stockholders. See Section 15.
The Purchaser expressly reserves the right to delay acceptance for payment
of, or payment for, Shares in order to comply in whole or in part with any
applicable law. If the Purchaser desires to delay payment for 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, the Purchaser will formally
extend the Offer. In all cases, payment for Shares accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing such Shares (or a timely confirmation of a book-entry
transfer of such 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, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares when, as and if the Purchaser
gives oral or written notice to the Depositary, as agent for the tendering
stockholders, of the Purchaser's acceptance for payment of such Shares. Payment
for 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 the Purchaser and
transmitting such payment to tendering stockholders. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer
is delayed, or the Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to the Purchaser's rights under
Section 1, the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such 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 Shares are not accepted for payment and paid for,
certificates representing such Shares will be returned (or, in the case of
Shares delivered by book-entry transfer with the Book-Entry Transfer Facility as
permitted by Section 2, such Shares will be credited to 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, the Purchaser increases the consideration
to be paid for Shares pursuant to the Offer, the Purchaser will pay such
increased consideration for all Shares accepted for payment pursuant to the
Offer, whether or not such Shares have been tendered or accepted for payment
prior to such increase in the consideration.
The Purchaser reserves the right to transfer or assign in whole or in part
to one or more affiliates of the Purchaser or Tyco the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve the Purchaser of its obligations under the Offer
and will in no way prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
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<PAGE>
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer (or in the Merger) will be a taxable transaction for
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 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 Shares (i.e., 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 Shares
are a capital asset in the hands of the stockholder and will be long term
capital gain or loss if the 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 Shares pursuant to the exercise of
dissenters' rights, if any, will generally be taxed in the same manner described
above. An individual stockholder's long-term capital gain will be taxed at the
lowest applicable rate (generally 20%) if such stockholder held the Shares for
more than eighteen months on the date of sale or the Effective Time of the
Merger, whichever is the relevant date.
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 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
Shares pursuant to the exercise of employee stock options or otherwise as
compensation, or to 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 Shares or of debentures
convertible into 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 foreign income and other tax laws.
6. PRICE RANGE OF SHARES; DIVIDENDS. From March 27, 1995 through September
20, 1996, the Shares traded on the SmallCap Market of The Nasdaq Stock Market
(the "Nasdaq SmallCap Market"). Since September 23, 1996, the Shares have traded
on The Nasdaq National Market under the symbol "HLMS." The following table sets
forth, for the periods indicated, the high and low per Share sales prices on The
Nasdaq National Market or the Nasdaq SmallCap Market, as the case may be, each
as reported by
9
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published financial sources. The Company has not declared or paid any cash
dividends with respect to the Shares for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
Fiscal Year Ended December 31, 1996:
First Quarter........................................................................... $ 9.000 $ 4.375
Second Quarter.......................................................................... 9.250 7.750
Third Quarter........................................................................... 11.750 9.000
Fourth Quarter.......................................................................... 15.125 11.250
Fiscal Year Ending December 31, 1997:
First Quarter........................................................................... $ 16.750 $ 12.875
Second Quarter.......................................................................... 15.875 13.000
Third Quarter........................................................................... 20.750 13.500
Fourth Quarter.......................................................................... 20.000 13.000
</TABLE>
On December 26, 1997, the last trading day prior to the public announcement
of the terms of the Offer and the Merger, the closing per Share sales price on
The Nasdaq National Market was $18.00. On January 5, 1998, the last trading day
prior to commencement of the Offer, the closing per Share sales price on The
Nasdaq National Market was $16.8125. Stockholders are urged to obtain a current
market quotation for the Shares.
7. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; STOCK QUOTATIONS;
REGISTRATION UNDER THE EXCHANGE ACT. The purchase of Shares pursuant to the
Offer will reduce the number of holders of Shares and the number of Shares that
might otherwise trade publicly. Consequently, depending upon the number of
Shares purchased and the number of remaining holders of Shares, the purchase of
Shares pursuant to the Offer may adversely affect the liquidity and market value
of the remaining Shares held by the public. The Purchaser cannot predict whether
the reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for, or marketability
of, the Shares or whether it would cause future market prices to be greater or
less than the Offer price.
The Shares are currently listed and traded on The Nasdaq National Market,
which constitutes the principal trading market for the Shares. Depending upon
the aggregate market value and the number of Shares not purchased pursuant to
the Offer, the Shares may no longer meet the quantitative maintenance criteria
of the National Association of Securities Dealers, Inc. (the "NASD") for
continued inclusion on The Nasdaq National Market and may cease to be authorized
for quotation on such market. Pursuant to new maintenance criteria, beginning
February 22, 1998 issuers on the Nasdaq National Market are required to have (i)
(A) at least 750,000 publicly held shares, (B) at least 400 holders of round
lots, (C) a market value of publicly held shares of at least $5 million, (D) a
minimum bid price per share of $1, and (E) net tangible assets of at least $4
million or (ii) (A) at least 1.1 million publicly held shares, (B) at least 400
holders of round lots, (C) a market value of publicly held shares of at least
$15 million, (D) a market capitalization of at least $50 million or total assets
and total revenue of at least $50 million (each for the most recently completed
fiscal year or two of the last three most recently completed fiscal years), (E)
a minimum bid price per share of $5, and (F) at least four registered and active
market makers for the Shares. Shares held directly or indirectly by directors,
officers or beneficial owners of more than 10% of the Shares outstanding are not
considered as being publicly held for this purpose.
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<PAGE>
If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NASD for continued
inclusion in The Nasdaq National Market or in any other tier of The Nasdaq Stock
Market, and the Shares are no longer included in The Nasdaq National Market or
in any other tier of The Nasdaq Stock Market, the market for Shares could be
adversely affected.
In the event that the Shares no longer meet the requirements of the NASD for
continued inclusion in any tier of The Nasdaq Stock Market, it is possible that
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 Shares and the availability of such quotations would, however, depend
upon the number of holders of Shares remaining at such time, the interest in
maintaining a market in Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the Commission
if such Shares are not listed on a national securities exchange and there are
fewer than 300 holders of record of the Shares. The termination of the
registration of the 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 Shares or to the Company. Furthermore, if
registration of the 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 December 28, 1997,
there were 1,500 holders of record of the Shares.
The 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 Shares as collateral. Depending on factors similar to those described
above regarding listing and market quotations, it is possible the 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 Shares under the Exchange Act
were terminated, the 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 the
Purchaser nor Tyco has any knowledge that would indicate that the statements
contained herein based on such information are untrue, neither the 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 the Purchaser or Tyco.
The Company was incorporated in October 1982 under the laws of the State of
Delaware under the name "Security Centres USA Inc." and changed its name to
"Holmes Protection Group, Inc." in June 1986. The Company's principal executive
offices are located at 440 Ninth Avenue, New York, New York 10001-1695 and its
telephone number is (212) 760-0630. The following description of the Company's
business has been taken from Amendment No. 1, dated December 29, 1997, to the
Company's Registration Statement on Form S-3:
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"[The Company] provides security alarm monitoring services and designs,
sells, installs and services electronic security systems for commercial and
mid- to high-end residential subscribers. These systems include event
detection devices, surveillance equipment and access control devices which
restrict access to specified areas. The Company currently provides its
services in New York, New Jersey, Pennsylvania, Texas, Tennessee,
California, Massachusetts and Florida, and conducts its operations primarily
through 20 branch offices, ten National Account sales offices, eight central
monitoring stations and 76 independent alarm service dealers and
franchisees. According to the latest available survey, published in May
1997, the Company was the eleventh largest provider of electronic security
services in the United States in terms of total 1996 revenues."
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/A for the fiscal year ended December 31, 1996 and its Quarterly Report on
Form 10-Q/A for the quarter ended September 30, 1997. 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 ENDED FISCAL YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
---------------------------- --------------------
1997 1996 1996 1995
------------- ------------- --------- ---------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Total revenues.......................................... $ 48,709 $ 37,814 $ 51,424 $ 50,821
Operating loss.......................................... (6,871) (1,179) (2,963) (4,573)
Loss before provision for income taxes.................. (7,713) (1,494) (3,218) (5,047)
Net loss................................................ (5,399) (1,272) (2,185) (3,231)
Net loss per share...................................... (0.90) (0.28) (0.45) (0.72)
BALANCE SHEET:
Working capital (deficit)............................... $ (19,968) $ (2,870) $ (6,054)
Total assets............................................ 110,926 90,394 80,859
Long-term liabilities................................... 11,874 17,330 17,219
Stockholders' equity.................................... 58,197 58,628 45,638
</TABLE>
OTHER INFORMATION. The 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
12
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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.
9. CERTAIN INFORMATION CONCERNING TYCO AND THE PURCHASER. The Purchaser is
a newly formed Delaware corporation and an indirect wholly-owned subsidiary of
Tyco. To date, the 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 the Purchaser purchases Shares
pursuant to the Offer, 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 and the Merger. Since the Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information is available. The
address of the principal office of the 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 manufacture and distribution of
disposable medical supplies and other specialty products, and the conduct of
vehicle auctions and related services; (ii) the design, manufacture,
installation and service of fire detection and suppression systems, and the
installation, monitoring and maintenance of electronic security systems; (iii)
the manufacture and distribution of flow control products; and (iv) the
manufacture and distribution of electrical and electronic components, and the
design, manufacture, installation and service of undersea cable communication
systems.
On July 2, 1997, Tyco International Ltd., a Massachusetts corporation ("Tyco
(US)"), merged with a subsidiary of Tyco, and Tyco continued as the surviving
public corporation. In connection with the merger, Tyco changed its name from
ADT Limited ("ADT") to Tyco International Ltd.
Tyco is a Bermuda company. Its registered offices are located at The Gibbons
Building, 10 Queen Street, Hamilton HM11 Bermuda, and its telephone number is
(441) 292-8674. The executive offices of the subsidiary that supervises the
activities of the subsidiaries of Tyco in North America is located at One Tyco
Park, Exeter, New Hampshire 03833, and its telephone number is (603) 778-9700.
The following table was derived from Tyco's Transition Report on Form 10-K
(the "Tyco 1997 Form 10-K") for the period ended September 30, 1997 ("Fiscal
1997"), and sets forth selected consolidated financial information of Tyco for
the nine month fiscal year ended September 30, 1997 and the two years in the
period ended December 31, 1996. The selected financial data reflects the
combined results of operations and financial position of Tyco, Tyco (US) and
Keystone International, Inc. ("Keystone"), which was acquired by Tyco in August
1997, restated for all periods presented pursuant to the pooling of interests
method of accounting. The selected financial data prior to January 1, 1997 does
not reflect the results of operations and financial position of INBRAND
Corporation ("INBRAND"), which was acquired by Tyco in August 1997 and accounted
for under the pooling of interests method of accounting, due to immateriality.
The combination of Tyco and Tyco (US) and the transactions pursuant to which
Tyco acquired Keystone and INBRAND are collectively referred to as the
"Mergers." More comprehensive financial information is included in the Tyco 1997
Form 10-K and other documents filed by Tyco with the Commission, and the
following summary is qualified in its entirety by reference to such report and
such other documents and of the financial information (including any related
notes) contained therein. Such report and other documents should be available
for inspection and copies thereof should be obtainable in the manner set forth
in Section 8. Such report 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.
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF TYCO INTERNATIONAL LTD.
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER
ENDED 31,
SEPTEMBER 30, --------------------
1997(1) 1996 1995(5)
------------- --------- ---------
<S> <C> <C> <C>
Consolidated Statements of Operations Data:
Net sales........................................................... $ 7,588.2 $ 8,103.7 $ 6,915.6
Operating (loss) income (2)(3)(4)................................... (476.5) (18.8) 649.6
(Loss) income from continuing operations............................ (776.8) (296.7) 267.5
(Loss) income per share from continuing operations (6).............. (1.50) (0.62) 0.57
Consolidated Balance Sheet Data:
Total assets........................................................ $ 10,447.0 $ 8,471.3 $ 7,357.8
Long-term debt...................................................... 2,480.6 1,878.4 1,760.7
Convertible redeemable preferred shares............................. -- -- 4.9
Shareholders' equity................................................ 3,429.4 3,288.6 3,342.7
</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 is presented.
(2) Operating loss in Fiscal 1997 results include 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
the integration of ADT, Tyco (US), Keystone and INBRAND. See Notes 11 and 15
to the Consolidated Financial Statements contained in the Tyco 1997 Form
10-K. Fiscal 1997 also includes a charge of $361.0 million for the write-off
of purchased in-process research and development related to the acquisition
of AT&T's submarine systems business.
(3) Operating loss in 1996 includes non-recurring charges of $744.7 million
related to the adoption of Statement of Financial Accounting Standards No.
121 "Accounting for the Impairment of Long-Lived Assets to be Disposed Of,"
$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 1996 merger with Automated
Security (Holdings) plc. See Notes 11 and 15 to the Consolidated Financial
Statements contained in the Tyco 1997 Form 10-K.
(4) Operating income in 1995 included a loss of $65.8 million on the disposal of
Tyco's European auto auction business and a gain of $31.4 million from the
disposal of the Tyco's European electronic article surveillance business.
See Note 3 to the Consolidated Financial Statements contained in the Tyco
1997 Form 10-K. Operating income also includes non-recurring charges of
$97.1 million for restructuring charges at ADT and at Keystone and for the
fees and expenses related to Tyco (US)'s 1994 merger with Kendall
International, Inc., as well as a charge of $8.2 million relating to the
divestiture of certain assets by Keystone. See Notes 11 and 15 to the
Consolidated Financial Statements contained in the Tyco 1997 Form 10-K.
(5) Prior to the Mergers, ADT and Keystone had a calendar year end and Tyco (US)
had a June 30 fiscal year end. The historical results have been combined
using a calendar year end for ADT, Keystone and Tyco (US) for the year ended
December 31, 1996. For 1995, the results of operations and financial
position reflect the combination of ADT and Keystone with a calendar year
end and Tyco (US) with a June 30 fiscal year end. Net sales and net income
for Tyco (US) for the period July 1, 1995 through December 31, 1995 (which
results are not included in the historical combined results) were $2.46
billion and $136.4 million, respectively.
14
<PAGE>
(6) Per share amounts for all periods presented have been restated to give
effect to the Mergers, including a reverse stock split in the ratio of
0.48133:1 on July 2, 1997 in connection with the merger of Tyco and Tyco
(US), and a two-for-one stock split distributed on October 22, 1997 effected
in the form of a stock dividend.
The name, citizenship, business address, present principal occupation or
employment and five year employment history of each of the directors and
executive officers of Tyco and the Purchaser are set forth in Annex I and Annex
II hereto, respectively.
Other than the 3,014 Shares owned by an indirect wholly-owned subsidiary of
Tyco, none of Tyco, the Purchaser or, to the best of their knowledge, any of the
persons listed on Annex I or Annex II hereto, or any associate or majority-owned
subsidiary of Tyco, the Purchaser or any of the persons so listed, owns or has
the right to acquire any Shares (except pursuant to the Stockholder Agreement
described in Section 13) or has effected any transaction in the Shares during
the past 60 days.
Except as set forth in this Offer to Purchase, none of Tyco, the 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 the Purchaser to purchase all Shares that may be tendered pursuant to the
Offer and in the Merger, and to pay related fees and expenses, is estimated to
be approximately $144 million.
The Purchaser will obtain all such funds from Tyco or its affiliates. Tyco
has sufficient financial resources to satisfy its and the Purchaser's
obligations under the Offer and the Merger Agreement. This Offer is not
conditioned upon any financing arrangements.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER. In early October
1997, Tyco was contacted by J.P. Morgan to solicit Tyco's interest in acquiring
the Company. On October 14, 1997, Tyco and J.P. Morgan, as the representative of
the Company, executed a confidentiality agreement regarding the furnishing of
non-public information concerning the Company to Tyco. At a regular scheduled
meeting of the Board of Directors of Tyco on October 29, 1997, management of
Tyco made a presentation concerning a possible acquisition of the Company.
Although the Tyco Board discussed the possibility of such an acquisition, no
action in this regard was proposed or taken at the meeting. Thereafter, on
November 3, 1997, Tyco delivered to J.P. Morgan a letter containing a
non-binding indication of interest to acquire the Company in an all cash
transaction at a price in the range of $17.50 to $19.50 per Share. The letter
also requested access to information, management and facilities of the Company
to allow Tyco to conduct its due diligence investigation. On November 13 and 14,
1997, representatives of Tyco met with the Company's management and reviewed
diligence materials on the Company.
On November 21, 1997, Tyco submitted its non-binding proposal to acquire the
Company in an all-cash tender offer at a price of $19.625 per Share, subject to
the negotiation of definitive documentation, including a customary break-up fee,
regulatory approvals and the approval of the transaction by the Tyco Board. The
proposal also contemplated Tyco's receiving a "lock-up" agreement from the
Company's major insider stockholders. In consideration of the Tyco proposal, the
Company agreed that it would not solicit or discuss an acquisition proposal with
any party other than Tyco, or in connection with such a
15
<PAGE>
proposal allow any other party access to the Company's properties and records,
through 6:00 p.m. EST on November 26, 1997. On November 24 and 25, counsel for
Tyco and the Company conducted negotiations on the form of a draft merger
agreement between the parties.
On November 24, 1997, the Company informed Tyco that it had received a
comment letter from the staff of the Commission relating to a registration
statement previously filed by the Company. In the letter, the Commission staff
requested that the Company restate its financial statements with respect to the
recognition of customer revenues realized in connection with the installation of
security systems for customers, consistent with the method used by the Company
prior to an accounting change adopted in 1995. The staff also requested that the
Company depreciate company-owned equipment installed at its customers' premises
over the life of the related security services contract, and not over an average
estimated life, and write-off the undepreciated capitalized costs of such
equipment at the time any such contract is terminated.
On November 26, 1997, Tyco informed J.P. Morgan that it was unable to
proceed with its acquisition proposal until Tyco had had an opportunity to
review the Company's October operating results and until the Company had
resolved the comments of the Commission staff. On December 1, 1997,
representatives of Tyco met with management of the Company to discuss the letter
from the Commission staff and the Company's results of operations for October,
which were below certain projections that had been furnished to Tyco. During the
period through December 18, 1997, Tyco continued to conduct discussions with the
Company's management and representatives concerning matters related to the
acquisition proposal.
At a regularly scheduled meeting of the Board of Directors of Tyco held on
December 10, 1997, management of Tyco updated the Tyco Board concerning the
possible acquisition of the Company. The Board then authorized management to
proceed with such an acquisition, at a price per Share to be determined by Tyco
management but not in excess of the range of prices that had previously been
proposed.
On December 16, 1997, the Company filed with the Commission a current report
on Form 8-K stating, among other things, that in addition to its previously
announced failure to comply with the financial covenants under its bank credit
agreement for the month of October 1997, the Company did not expect to be in
compliance with such covenants for the months of November and December 1997 and
that the Company did not have any remaining loan availability under the credit
agreement.
On December 18, 1997, representatives of J.P. Morgan informed Tyco that the
Company and the Commission staff had reached agreement on the issues raised in
the staff's comment letter. The Company agreed to restate its financial
statements with respect to the recognition of installation revenue and to
commission a study regarding the Company's policy of utilizing an average
12-year life in its composite depreciation method for equipment installed on
customer premises.
Following the Company's resolution of these matters with the Commission and
based upon Tyco's review of the Company's recent operating results, Tyco called
J.P. Morgan on December 19, 1997 to propose an acquisition of the Company for
$16.00 per Share in cash. At the same time, Tyco requested financial information
regarding the Company's November 1997 operating results and certain other
information concerning the Company. Thereafter, Tyco conducted further
discussions concerning the proposed acquisition with the Company and J.P.
Morgan, received the additional requested information and, on December 23, 1997,
indicated its willingness to increase the purchase price under its acquisition
proposal to $17.00 per Share in cash.
On December 26, 1997, the Board of Directors of the Company, with the
participation of all but one of the Company's directors, held a telephonic Board
Meeting to consider the Offer, the Merger and the Merger Agreement. J.P. Morgan
delivered its oral opinion to the Company's Board (subsequently confirmed in
writing) that, as of such date, the consideration proposed to be paid to the
stockholders of the
16
<PAGE>
Company in the Offer and the Merger was fair to the stockholders from a
financial point of view. Thereafter, the Company's Board of Directors, by
unanimous vote of the directors present, approved the Offer, the Merger and the
Merger Agreement and determined to recommend the Offer and the Merger to the
Company's stockholders. A representative of the Company then contacted Tyco to
inform it of the Board's determination.
Counsel for Tyco and the Company conducted additional negotiations
concerning the Merger Agreement on December 26 prior to the Company Board
meeting and completed final negotiations on the document on December 28, 1997.
The Merger Agreement and the Stockholder Agreement were executed by the
respective parties on December 28, 1997. A joint press release announcing the
execution of the Merger Agreement was released by the parties prior to the
opening of the U.S. financial markets on December 29, 1997.
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 is for the Purchaser to
acquire control of, and a majority equity interest in, the Company. The purpose
of the Merger is to acquire all outstanding Shares not tendered and purchased
pursuant to the Offer. The acquisition of the entire 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 Company from
the public stockholders to Tyco and to provide stockholders with cash for all of
their Shares.
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 Shares 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 Shares. If the Minimum Condition is satisfied, the
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. HP Partners L.P., which owns 1,515,886 issued and outstanding
Shares, constituting approximately 18% of the Shares on a fully diluted basis
(approximately 26% of the Shares on a fully diluted basis including 685,714
Shares issuable to it upon the exercise of warrants), has agreed to tender its
Shares in the Offer.
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 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 the Purchaser acquires at least 90%
of the outstanding Shares, the Purchaser will be able to approve the Merger
without a vote of the Company's other stockholders. The Merger Agreement
provides that if the Purchaser, or any other direct or indirect subsidiary of
Tyco, acquires at least 90% of the outstanding Shares, Tyco, the 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. In the event that all of the conditions to the Purchaser's
obligation to purchase Shares in the Offer are satisfied or waived and the
number of Shares tendered is less than 90% of the outstanding Shares, the
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 the
Purchaser does not acquire at
17
<PAGE>
least 90% of the outstanding 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. The directors of the
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 the
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 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 Shares. Such rights, if the
statutory procedures were complied with, could lead to a judicial determination
of the fair value of the 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 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 Shares. In determining the fair value of the 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 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 Shares pursuant
to the Offer in which the Purchaser or Tyco seeks to acquire the remaining
Shares not held by it. The 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.
18
<PAGE>
13. THE MERGER AGREEMENT; STOCKHOLDER 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 the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement provides that,
without the written consent of the Company, the Purchaser will not (i) decrease
the Per Share Amount or change the form of consideration payable in the Offer,
(ii) decrease the number of 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 Shares, except that if on the initially scheduled Expiration Date all
conditions to the Offer shall not have been satisfied or waived, the 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 Shares tendered and not withdrawn pursuant to the Offer
equal less than 90% of the outstanding Common Stock, the Purchaser may extend
the Offer for a period not to exceed 10 business days.
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") the Purchaser shall be merged with and
into the Company and, as a result of the Merger, the separate corporate
existence of the Purchaser shall cease, and the Company shall continue as the
Surviving Corporation and an indirect subsidiary of Tyco.
The respective obligations of Tyco and the 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 the Purchaser or their affiliates shall have consummated
the Offer, unless such failure to purchase is a result of a breach of Tyco's or
the Purchaser's obligations under the Merger Agreement, (ii) the Merger, the
Merger Agreement and the transactions contemplated thereby (the "Company
Proposals") 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 will not have a material adverse effect on the business,
assets, condition (financial or other), liabilities or results of operations (a
"Material Adverse Effect") of the Surviving Corporation and its subsidiaries
taken as a whole.
At the Effective Time of the Merger, (i) each issued and outstanding Share
(other than Shares that are held by stockholders properly exercising dissenters'
rights under the DGCL) shall be canceled and extinguished and be converted into
the right to receive the Per Share Amount in cash payable to the holder thereof,
without interest, (ii) 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 (iii) 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 which shares shall
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constitute all of the issued and outstanding capital stock of the Surviving
Corporation and shall be owned by an indirect subsidiary of Tyco.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that
promptly upon the purchase by Tyco of 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 Shares as are accepted for payment
pursuant to the Offer, but excluding Shares held by the Company) bears to the
number of Shares outstanding. 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 directors as is necessary to enable Tyco's
designees to be elected to the Board of Directors of the Company in accordance
with the terms of this section and to cause Tyco's designees so to be elected;
PROVIDED, HOWEVER, that, in the event that Tyco's designees are appointed or
elected to the Board of Directors of the Company, 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"); PROVIDED FURTHER, that if no Independent Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall be neither an officer of the Company nor a designee,
shareholder, affiliate or associate of Tyco, and 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 affirmative vote of a majority 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 December 28, 1997.
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 Company Proposals. 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 Company Proposals, or an information statement, as
appropriate, satisfying all requirements of the Exchange Act.
If Purchaser acquires at least a majority of the Shares, it will have
sufficient voting power 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 the Purchaser
acquires at least 90% of the Shares, pursuant to the Offer or otherwise, Tyco,
the 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 the DGCL.
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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 Shares, whether or not
then exercisable or vested (i) under the Company's 1996 Stock Incentive Plan and
(ii) if and to the extent required by the terms of the Company Option Plans (as
hereinafter defined) other than the Company's 1996 Stock Incentive Plan, under
such other Company Option Plans, shall become fully exercisable and vested upon
the consummation of the Offer. Holders of options under the Company Option Plans
("Company Options") that 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 Shares underlying the options,
based on the Per Share Amount, over (B) the aggregate exercise price for the
Shares underlying the 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, whether or not then exercisable or vested
if and to the extent so provided in the applicable Company Option Plan, shall be
converted into the right to receive, at the election of the holder, either (1)
in cash, the aggregate value of the Shares underlying the options, based on the
Per Share Amount, less the aggregate exercise price for the Shares underlying
the options or (2) options, exercisable on the same terms and conditions as the
surrendered options (except that the option received in exchange shall be
immediately exercisable) to acquire that number of common shares, par value
$.20, of Tyco ("Tyco Shares") determined by multiplying, in the case of each
option, (a) the number of Shares for which the surrendered option was
exercisable immediately prior to the Effective Time by (b) a fraction, the
numerator of which is the Per Share Amount and the denominator of which is the
closing price per Tyco Share on the New York Stock Exchange on the trading day
immediately preceding the Closing Date. The exercise price per Tyco Share for
each new option issued pursuant to the foregoing clause (2) shall be an amount
equal to the aggregate exercise price for the Shares underlying the surrendered
option divided by the number of Tyco Shares for which such new option is
exercisable. "Company Option Plans" shall mean the Company's Amended and
Restated Senior Executives' Option Plan, the Company's 1992 Directors' Option
Plan and the Company's 1996 Stock Incentive Plan.
The Merger Agreement provides that each of the Company and Tyco shall take
all reasonable actions necessary so that the warrants expiring August 30, 2002
(except as otherwise provided therein) to purchase 166,666 Shares at a price of
$9.75 per Share, subject to adjustment (the "Bank Warrants"), shall be
exercisable, from and after the Effective Time, for an amount of cash equal in
the aggregate to the Per Share Amount multiplied by the number of Shares for
which such warrants were exercisable immediately prior to the Effective Time.
Each of the Company and Tyco shall take all reasonable actions necessary so that
the warrants expiring August 13, 2002 to purchase 203,033 Shares at a price of
$10.16 per Share, subject to adjustment, and the warrants expiring August 1 2004
to purchase 685,714 Shares at a price of $4.58 per Share, subject to adjustment
(collectively, the "Other Warrants" and, with the Bank Warrants, the "Company
Warrants"), shall be exercisable, from and after the Effective Time, at the
election of the holder as provided in the applicable Other Warrant, for either
(i) an amount of cash equal in the aggregate to the Per Share Amount multiplied
by the number of Shares for which such warrants were exercisable immediately
prior to the Effective Time or (ii) a number of Tyco Shares equal to the product
of (A) the number of Shares for which such warrants were exercisable immediately
prior to the Effective Time and (B) a fraction, the numerator of which is the
Per Share Amount and the denominator of which is the Current Market Price (as
defined in the applicable Other Warrant) of the Tyco Shares on the trading day
immediately preceding the Closing Date. The exercise price per Tyco Share under
each Other Warrant, as adjusted pursuant to the foregoing clause (ii), shall be
an amount equal to the aggregate exercise price for the Shares for which such
warrant was exercisable prior to such adjustment divided by the number of Tyco
Shares for which such warrant is exercisable as a result of such adjustment.
Notwithstanding the forgoing provisions, any holder exercising Company Warrants
for cash in accordance with the provisions of this paragraph shall not be
required to pay the exercise price thereof and instead may receive in the
aggregate
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upon exercise the difference between (A) the Per Share Amount multiplied by the
number of Shares for which such warrants were exercisable immediately prior to
the Effective Time and (B) the aggregate exercise price for the Shares
underlying such warrants.
The Merger Agreement provides that each of the Company and Tyco shall take
all reasonable actions necessary so that the Company's Subordinated Convertible
Debentures convertible into 24,810 shares of Company Stock, subject to
adjustment (the "Company Debentures"), shall be convertible, from and after the
Effective Time, into an amount of cash equal to the product of the number of
Shares into which such Company Debentures were convertible immediately prior to
the Effective Time multiplied by the Per Share Amount.
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 the Purchaser in connection with the Merger Agreement or agreed to in
writing by Tyco, after the date of execution of the Merger Agreement, and prior
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 the
Merger Agreement in accordance with their present terms, (b) the issuance of
shares upon the exercise of Company Warrants, or conversion of the Company
Debentures, outstanding on the date of the Merger Agreement in accordance with
their present terms and (c) the issuance of not more than an aggregate of 15,000
Shares to the sellers under the agreements pursuant to which the Company
acquired certain businesses to the extent required pursuant to the terms of such
agreements;
(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 or distributions to the Company or a subsidiary of the Company, or
directly or indirectly redeem, purchase or otherwise acquire or offer to acquire
any shares of its capital stock or other securities;
(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 paragraph (E) (b) 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 (it being understood that the acquisition of the
stock or substantially all the assets of any other person shall not be deemed a
"capital expenditures" for these purposes) 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
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(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 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 and other than
arrangements with new employees (other than employees who will be officers of
the Company) hired in the ordinary course of business 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 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 Commission, change any of the accounting principles or practices used by
it;
(I) make any material 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.
NO SOLICITATION. The Merger Agreement provides that the Company shall, and
shall cause its officers, directors, employees, representatives and agents to,
immediately cease any discussions or negotiations with any parties that may be
ongoing with respect to a Company Takeover Proposal (as hereinafter defined).
The Company shall not, nor shall it permit any of its subsidiaries to, nor shall
it authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Company Takeover Proposal or (ii)
participate in any discussions or negotiations regarding any Company Takeover
Proposal; PROVIDED, HOWEVER, that if, at any time 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 Company may (and may authorize or permit any of the
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other persons referred to above in this paragraph to), in response to a Company
Takeover Proposal, and subject to compliance with the second succeeding
paragraph), (x) furnish information with respect to the Company or its
subsidiaries to any person pursuant to a confidentiality agreement similar in
form to that between an affiliate of Tyco and the Company and (y) participate in
discussions or negotiations regarding such Company Takeover Proposal. "Company
Takeover Proposal" means any inquiry, proposal or offer, in each case not
solicited in violation of the Merger Agreement, from any person or persons
relating to any direct or indirect acquisition or purchase of a substantial
amount of the assets of the Company and its subsidiaries or 10% or more of any
class of equity securities of the Company or any Company Subsidiary, any tender
offer or exchange offer that if consummated would result in any person or group
of related persons beneficially owning 10% or more of any class of equity
securities of the Company or any Company Subsidiary or any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any
Company Subsidiary, other than the transactions contemplated by the Merger
Agreement.
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 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)
(x) withdraw or modify its approval or recommendation of the Offer or the
Company Proposals or (y) approve or recommend a Company Superior Proposal (as
hereinafter defined) 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 Company Superior Proposal),
but in each of the cases set forth in this clause (y), 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 Company Superior
Proposal and, in the case of any previously received Company Superior Proposal
that has been materially modified or amended, such modification or amendment and
specifying the material terms and conditions of such Company Superior Proposal,
modification or amendment (PROVIDED that such material terms shall not be deemed
to include the identity of the person or persons making such Company Superior
Proposal). "Company Superior Proposal" means any bona fide proposal, not
solicited in violation of the Merger Agreement, made by a third party or third
parties to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the combined voting power of the Shares then
outstanding or all or substantially all the assets of the Company and otherwise
on terms which the Board of Directors of the Company determines in its good
faith judgment (based on the advice of its advisors) to be more favorable to the
Company's stockholders than the Offer and the Merger (taking into account 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).
In addition to the obligations of the Company set forth in the two preceding
paragraphs, the Company shall promptly advise Tyco orally and in writing of any
request for information, or for access to information, or of any Company
Takeover Proposal and the material terms and conditions of such request or
Company Takeover Proposal or any amendment or modification thereto (PROVIDED
that such material terms shall not be deemed to include the identity of the
person or persons making such request or Company Takeover Proposal).
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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 second preceding paragraph, 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.
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 its
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 the Merger Agreement, for acts and omissions
(x) arising out of or pertaining to the transactions contemplated by the Merger
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 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
Effecting 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 therein, 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 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 the
Purchaser with respect to, among other things, its organization, capitalization,
authority relative to the Merger, financial statements, public filings, conduct
of business, employee benefit plans, intellectual property, employment matters,
compliance with laws, tax matters, litigation, environmental matters, material
contracts, brokers' fees, real property, insurance, undisclosed liabilities,
information in the Proxy Statement and the absence of any Material Adverse
Effect on the Company since December 31, 1996, except as disclosed.
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
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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, 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 pursuant to the
Offer;
(d) by Tyco if (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Tyco its
approval or recommendation of the Offer or any of the Company Proposals or
shall have approved or recommended any Company Takeover Proposal or (ii) the
Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) by either Tyco or the Company if the Offer shall have expired or been
terminated without any Shares being purchased thereunder by Purchaser as a
result of a failure of any of the conditions thereto set forth in the Merger
Agreement;
(f) by either the Company or Tyco if either (x) as the result of the
failure of the Minimum Condition or any of the other conditions thereto set
forth in the Merger Agreement, the Offer shall have terminated or expired in
accordance with its terms without Purchaser having purchased any Shares
pursuant to the Offer or (y) the Offer shall not have been consummated on or
before March 31, 1998, PROVIDED that the right to terminate this 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 5 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 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
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(iii) the provisions described in clause (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, 1997 and who has executed a Stockholder Agreement
with Tyco and Purchaser, PROVIDED that such person has not breached the
terms of such Stockholder Agreement) shall have become the beneficial owner
of more than 20% 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
at least $17.00 (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) $3.5 million, as promptly as
practicable but in no event later than two business days following termination
of the Merger Agreement pursuant to the provisions 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
$350,000 in connection with the Merger Agreement or the transactions
contemplated hereby ("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)
within one year from the date of termination of the Merger Agreement, the
sum of $3.5 million, less the amount of any payment made pursuant to the
preceding clause (i), 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.
GUARANTEE. Tyco has guaranteed the payment by Purchaser of the 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.
STOCKHOLDER AGREEMENT
As an inducement to Tyco and the Purchaser entering into the Merger
Agreement with the Company, HP Partners L.P. (the "Stockholder"), which
beneficially owns 1,515,886 issued and outstanding Shares, constituting
approximately 18% of the Shares on a fully diluted basis (approximately 26% of
the Shares on a fully diluted basis including 685,714 Shares issuable to it upon
the exercise of warrants), has entered into a Stockholder Agreement (the
"Stockholder Agreement") with Tyco and the Purchaser, pursuant to which it has
agreed to tender its Shares in the Offer.
27
<PAGE>
The following summary of certain provisions of the Stockholder 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 Stockholder Agreement.
AGREEMENT TO TENDER. The Stockholder has agreed to tender its Shares in the
Offer and not to withdraw any Shares so tendered unless the Offer (i) is
withdrawn in accordance with the terms of the Merger Agreement or (ii) expires
and the conditions set forth in Section 15 have not been satisfied or waived by
Tyco or the Purchaser. In connection therewith, the Company has agreed with, and
covenanted to, Tyco that the Company will not register the transfer of any
certificate representing the Stockholder's Shares, unless such transfer is made
to Tyco or the Purchaser or otherwise in compliance with the Stockholder
Agreement.
GRANT OF IRREVOCABLE PROXY. The Stockholder has irrevocably granted to, and
appointed, Tyco and individuals designated by Tyco as such Stockholder's proxy
and attorney-in-fact, to vote such Stockholder's Shares, or grant a consent or
approval in respect of such Shares, at any meeting of stockholders of the
Company or at any adjournment thereof or in any other circumstances upon which
such Stockholder's vote, consent or other approval is sought, against (i) any
merger agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization, joint
venture, recapitalization, dissolution, liquidation or winding up of or by the
Company and (ii) any amendment of the Company's Certificate of Incorporation or
bylaws or other proposal or transaction (including any consent solicitation to
remove or elect any directors of the Company) involving the Company or any of
its subsidiaries, which amendment or other proposal or transaction would in any
manner impede, frustrate, prevent or nullify, or result in a breach of any
covenant, representation or warranty or any other obligation or agreement of the
Company under or with respect to, the Offer, the Merger, the Merger Agreement or
any of the other transactions contemplated by the Merger Agreement.
REPRESENTATIONS, WARRANTIES, COVENANTS AND OTHER AGREEMENTS. The
Stockholder has made certain representations and warranties in the Stockholder
Agreement, including with respect to (i) ownership of the Shares, (ii) the
absence of liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances on or in
respect of its Shares, and (iii) an acknowledgement of Tyco's reliance upon such
Stockholder's execution of the Stockholder Agreement in entering into, and
causing the Purchaser to enter into, the Merger Agreement. In addition, the
Stockholder has agreed not to (i) transfer, or consent to any transfer of, any
or all of such Stockholder's Shares or any interest therein (except as
contemplated by the Stockholder Agreement), (ii) enter into any contract, option
or other agreement or understanding with respect to any transfer of any or all
of such Shares or any interest therein, (iii) grant any proxy, power-of-attorney
or other authorization or consent in or with respect to such Shares, (iv)
deposit such Shares into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares or (v) take any other action that would
in any way restrict, limit or interfere with the performance of its obligations
under the Stockholder Agreement or the transactions contemplated thereby. The
Stockholder has also agreed not to, directly or indirectly, (i) solicit,
initiate or encourage the submission of any Company Takeover Proposal or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Company Takeover Proposal, provided that the
foregoing restrictions shall not be applicable in any case to the extent that,
pursuant to the Merger Agreement, such restrictions would not be applicable to
the Company.
TERMINATION. The Stockholder Agreement, and all rights and obligations
thereunder and the proxy provided therein, shall terminate upon the earlier of
(i) the date upon which termination of the Merger Agreement is terminated in
accordance with its terms or (ii) the date that Tyco or the Purchaser shall have
purchased and paid for the Shares of the Stockholder pursuant to the terms of
the Stockholder Agreement.
28
<PAGE>
14. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that neither
the Company nor any of the Company Subsidiaries will (i) split, combine or
reclassify any shares of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (ii) declare, pay or set aside any dividend
or other distribution in respect of its capital stock, other than dividends or
distributions to the Company or a subsidiary of the Company by a direct or
indirect wholly-owned subsidiary of the Company to its parent or (iii) redeem,
purchase or otherwise acquire any shares of its capital stock or other
securities thereof.
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 Shares or its capitalization, (ii) acquire presently outstanding Shares or
otherwise cause a reduction in the number of outstanding 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 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 debentures issued prior to such date and other than the
issuance of up to 15,000 Shares in connection with an acquisition as permitted
by the Merger Agreement), then, without prejudice to the Purchaser's rights
under the Merger Agreement, the 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 Shares, payable or distributable to stockholders of record on a date prior
to the transfer to the name of the Purchaser or its nominees or transferees on
the Company's stock transfer records of the Shares purchased pursuant to the
Offer, then, without prejudice to the Purchaser's rights under the Merger
Agreement, (i) the price per Share payable by the Purchaser pursuant to the
Offer may, subject to the provisions of the Merger Agreement, in the sole
discretion of the Purchaser, be reduced by the amount of any such cash dividend
or distribution and (ii) any non-cash 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 the Purchaser and will be required to
be promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer or (b) at the direction of the Purchaser, be exercised
for the benefit of the Purchaser, in which case the proceeds of such exercise
will promptly be remitted to the Purchaser. Pending such remittance, the
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 the Purchaser in its sole
discretion.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer, the Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the Commission, including Rule
14e-1(c) promulgated under the Exchange Act (relating to the 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 condition that there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which represents at least 51% of the total number of Shares on a fully-
diluted basis shall not have been satisfied (the "Minimum Condition"), (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 Shares
(whether or not any Shares have theretofore been accepted for payment or paid
for pursuant to the Offer), any of the following conditions exists:
29
<PAGE>
(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, (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 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, (iii) imposes material
limitations on the ability of the Purchaser effectively to acquire or to
hold or to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by the Purchaser
on all matters properly presented to the stockholders of the Company, (iv)
imposes any material limitations on the ability of Tyco or any of 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 or the consummation of the Merger 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 Shares on The Nasdaq National
Market, (ii) any decline, measured from the date of the Merger Agreement, in
the Dow Jones Industrial Average or Standard & Poor's 500 Index by an amount
in excess of 15%, (iii) a declaration of a banking moratorium or any general
suspension of payments in respect of banks in the United States or (iv) 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 the Purchaser shall
amend the Offer to terminate the Offer or postpone the payment for 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 its initial twenty (20) business days period; 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
30
<PAGE>
(h) any corporation, entity or "group" (as defined in Section 13(d)(3)
of the Exchange Act) (a "person"), other than Tyco, the Purchaser and any
person identified in the Company's Proxy Statement dated April 30, 1997 and
who has executed a Stockholder Agreement (provided that such person has not
breached the terms of such Stockholder Agreement), shall have acquired
beneficial ownership of more than 20% of the outstanding Shares, or shall
have been granted any options or rights, conditional or otherwise, to
acquire a total of more than 20% of the outstanding Shares; (ii) any new
group shall have been formed which beneficially owns more than 20% of the
outstanding Shares; or (iii) any person (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 have a Material
Adverse Effect (as defined in the Merger Agreement) 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 two
business days.
The foregoing conditions are for the sole benefit of Tyco and the Purchaser
and may be asserted by Tyco or the Purchaser regardless of the circumstances
giving rise to any such condition and may be waived by Tyco or the Purchaser, in
whole or in part, at any time and from time to time, in the sole discretion of
Tyco and the Purchaser. The failure by Tyco or the 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.
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 the 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 the Purchaser's
acquisition of 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 Shares by
the 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 the
Purchaser does not currently intend to delay acceptance for payment of 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, the Purchaser may decline to accept for
payment or pay for any 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
31
<PAGE>
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 the Purchaser is an
"interested stockholder" pursuant to Section 203.
Neither Tyco nor the 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 the Purchaser has presently sought
to comply with any state takeover statute or regulation. Tyco and the 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 the Purchaser might be required to file
certain information with, or to receive approval from, the relevant state
authorities, and the Purchaser might be unable to accept for payment or pay for
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 U.S. Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The acquisition of Shares by the 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 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 January 6, 1998, 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 January
21, 1998, 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 Shares by
the 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
32
<PAGE>
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the transaction or seeking divestiture of the 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 the 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. The Purchaser has retained Morrow & Co., Inc. to act
as the Information Agent and ChaseMellon Shareholder Services, L.L.C. to act as
the Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telex, telecopy and personal interview and
may request brokers, dealers and other nominee stockholders to forward the Offer
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. The 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 the 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 Shares pursuant to the Offer. Brokers, dealers, commercial
banks and trust companies will, upon request, be reimbursed by the 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 Shares. The
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 the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
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, the 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 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 the 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, the 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 the 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).
T9 ACQUISITION CORP.
January 6, 1998
33
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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 has been Chairman of the
Board of Directors of Tyco (US) since
1993 and has been Chief Executive
Officer of Tyco (US) since 1992 and
President of Tyco (US) since 1989.
Michael A. Ashcroft................... P.O. Box 1598 Mr. Ashcroft has been non- executive
Director Belize City, Belize Chairman of BHI Corporation since
1987. 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 since 1985.
Richard S. Bodman,.................... 2 Wisconsin Circle Mr. Bodman has been Managing General
Director Suite 610 Partner of AT&T Ventures LLC since
Chevy Chase, MD 20815 1996. Previously, since 1990, he was
Senior Vice President, Corporate
Strategy and Development, of AT&T
Corporation.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------- --------------------------------- --------------------------------------
<S> <C> <C>
John F. Fort,......................... 2003 Milford Street Mr. Fort was Chairman of the Board and
Director Houston, TX 77098 Chief Executive Officer of Tyco (US)
from 1982 to 1992.
Stephen W. Foss,...................... 380 Lafayette Road Mr. Foss has been President of Foss
Director Hampton, NH 03842 Manufacturing Company, Inc. a
manufacturer of non-woven fabrics,
since 1969.
Richard A. Gilleland,................. 2829 Townsgate Road Mr. Gilleland was President and Chief
Director Suite 101 Executive Officer of Amsco
West Lake Village, CA 91361 International, Inc., a manufacturer of
infection control products, from 1995
to 1996 and Senior Vice President of
Tyco (US) from 1994 to 1995. From 1990
to 1994, he was President and Chief
Executive Officer of Kendall
International, Inc., a manufacturer of
medical products, which was acquired
by Tyco (US) in 1994.
Philip M. Hampton,.................... 399 Park Avenue Mr. Hampton has been Chairman of
Director 32nd Floor Metzler Corporation, an investment
New York, NY 10022 bank, since 1989.
James S. Pasman, Jr................... 29 The Trillium Mr. Pasman was President and Chief
Director Pittsburgh, PA 15238 Operating Officer of National
Intergroup, Inc., an industrial
holding company, from 1989 to 1991 and
was Chairman and Chief Executive
Officer of Kaiser Aluminum and
Chemical Corp. from 1987 to 1989.
W. Peter Slusser...................... One Citicorp Center Mr. Slusser has been the President of
Director Suite 5100 Slusser Associates, Inc., a private
153 East 53rd Street investment banking 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, a charitable
07962-1975 foundation, since 1996. Previously,
from 1982 to 1996, he was Chairman of
Wesray Capital Corporation.
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------- --------------------------------- --------------------------------------
<S> <C> <C>
Jerry R. Boggess,..................... Three Tyco Park Mr. Boggess has been Vice President of
Vice President of Tyco (US) Exeter, NH 03833 Tyco (US) since 1996 and President of
the Grinnell Fire Protection Division
of Tyco (US)'s Grinnell Corporation
subsidiary ("Grinnell") since 1993.
Previously, from 1989, he was
Executive Vice President of Grinnell.
David P. Brownell,.................... One Tyco Park Mr. Brownell has been Senior Vice
Senior Vice President Exeter, NH 03833 President of Tyco since July 1997. He
has been Senior Vice President of Tyco
(US) since 1993. Previously, he served
as Executive Vice President of the
Flow Control Division of Grinnell from
1991 to 1993.
Robert P. Mead,....................... Three Tyco Park Mr. Mead has been Vice President of
Vice President of Tyco (US) Exeter, NH 03833 Tyco (US) and President of Grinnell's
Flow Control Division since 1993. From
1992 to 1993, he was Executive Vice
President of Tyco (US)'s Allied Tube
and Conduit Corp. subsidiary. He
served as Managing Director of Tyco
(US)'s Asia-Pacific operations from
1991 to 1992.
Richard J. Meelia,.................... 15 Hampshire Street Mr. Meelia has been Vice President of
Vice President of Tyco (US) Mansfield, MA 02048 Tyco (US) since 1996 and President of
the Kendall Company (a Tyco (US)
subsidiary) since 1995. From 1991 to
1995, he was Group President of
Kendall Healthcare.
Barbara S. Miller,.................... One Tyco Park Ms. Miller has been Vice President and
Vice President and Treasurer Exeter, NH 03833 Treasurer of Tyco since July 1997. She
has been Vice President of Tyco (US)
since 1996 and Treasurer of Tyco (US)
since 1993. She was Assistant
Corporate Controller of Tyco (US) from
1989 to 1993.
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------- --------------------------------- --------------------------------------
<S> <C> <C>
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
Financial Officer of Tyco since July 1997. He has been
Vice President and Chief Financial
Officer of Tyco (US) since 1995. From
1993 to 1995, he was Tyco (US)'s
Director of Mergers and Acquisitions,
and previously since 1991 was
associated with Tyco (US) in other
capacities.
</TABLE>
37
<PAGE>
ANNEX II
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF THE 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
the 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>
L. Dennis Kozlowski,....................... One Tyco Park *
President Exeter, NH 03833
Mark H. Swartz,............................ One Tyco Park *
Director and Vice President Exeter, NH 03833
Barbara S. Miller,......................... One Tyco Park *
Director, Vice President and Treasurer Exeter, NH 03833
M. Brian Moroze,........................... One Tyco Park Mr. Moroze has been General Counsel of Tyco
Director, Vice President and Secretary Exeter, NH 03833 (US) since 1994 and served as Associate
General Counsel from 1986 to 1994.
Jerry R. Boggess,.......................... Three Tyco Park *
Vice President Exeter, NH 03833
</TABLE>
- ------------------------
* Please see the information set forth in Annex I.
38
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for 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:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY HAND OR
BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE:
ChaseMellon ChaseMellon (201) 329-8936
Shareholder Services, L.L.C. Shareholder Services, L.L.C. (For Eligible Institutions
Only)
P.O. Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271 CONFIRM BY TELEPHONE:
(201) 296-4209
</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]
909 Third Avenue
New York, New York 10022
(212) 754-8000 (call collect)
or
CALL TOLL-FREE (800) 566-9061
Bank and Brokerage Firms
Call (800) 662-5200
39
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
HOLMES PROTECTION GROUP, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 6, 1998
OF
T9 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 TUESDAY, FEBRUARY 3, 1998, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY HAND OR
BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE:
ChaseMellon ChaseMellon (201) 329-8936
Shareholder Services, L.L.C. Shareholder Services, L.L.C. (For Eligible Institutions Only)
P.O. Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271 CONFIRM BY TELEPHONE:
(201) 296-4860
</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 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
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 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 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 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: ___________________________________________________
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
CERTIFICATE(S) TENDERED
(ATTACH ADDITIONAL LISTS IF NECESSARY)
-------------------------------------------------
TOTAL NUMBER OF
SHARES
REPRESENTED NUMBER OF
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE BY SHARES
(PLEASE FILL IN, IF BLANK) NUMBER(S)* CERTIFICATE(S) TENDERED**
- ------------------------------------------------------------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all 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
Shares tendered hereby. The certificates and number of Shares that the
undersigned wishes to tender should be indicated in the appropriate boxes.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to T9 Acquisition Corp., a Delaware
corporation (the "Purchaser") and an indirect wholly-owned subsidiary of Tyco
International Ltd., a Bermuda company ("Tyco"), the above-described shares of
common stock, par value $.01 per share (the "Shares"), of Holmes Protection
Group, Inc., a Delaware corporation (the "Company"), pursuant to the Purchaser's
offer to purchase all of the outstanding Shares at a price of $17.00 per 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 6, 1998 (the "Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer"). The 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 Shares tendered
pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of and payment for
the 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, the Purchaser all right, title and interest in and to
all of the Shares that are being tendered hereby (and any and all other Shares
or other securities or rights issued or issuable in respect thereof on or after
January 6, 1998) and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares (and
any such other 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 Shares (and any such
other Shares or securities or rights), or transfer ownership of such Shares (and
any such other 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 the
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 Shares (and any such other 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
Shares (and any such other Shares or securities or rights), all in accordance
with the terms of the Offer.
The undersigned hereby irrevocably appoints Jeffrey D. Mattfolk and M. Brian
Moroze and each of them or any other designee of the 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 Shares tendered hereby which have been accepted
for payment by the Purchaser prior to the time of such vote or action (and any
and all other Shares or securities or rights issued or issuable in respect
thereof on or after January 6, 1998), 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
Shares tendered hereby and is irrevocable and is granted in consideration of,
and is effective upon, the acceptance for payment of such Shares (and any such
other Shares or securities or rights) by the 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 Shares (and any such
other 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 Shares to be deemed
validly tendered, immediately upon the acceptance for payment of such Shares,
the Purchaser or the Purchaser's designee must be able to exercise full voting
and other rights of a record and beneficial holder with respect to such Shares.
3
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or securities or rights issued or issuable
in respect thereof on or after January 6, 1998), and that, when the same are
accepted for payment by the Purchaser, the 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 the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares tendered hereby (and
any such other 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 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 the 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, the Purchaser may not be required to accept for payment
any of the 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 Shares not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates
representing Shares not tendered or accepted for payment (and accompanying
documents, as appropriate) to the registered holder(s) appearing under
"Description of 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
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 Shares by book entry transfer may request that any Shares
not accepted for payment be returned by crediting such account maintained at the
Book-Entry Transfer Facility as such stockholder may designate by making an
appropriate entry under "Special Payment Instructions." The undersigned
recognizes that the Purchaser has no obligation pursuant to the Special Payment
Instructions to transfer any Shares from the name of the registered holder(s)
thereof if the Purchaser does not accept for payment any of the Shares so
tendered hereby.
4
<PAGE>
- ------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates representing Shares not tendered or
not purchased and/or the check for the purchase price of Shares purchased
are to be issued in the name of someone other than the undersigned, or if
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 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 Shares not tendered or
not purchased and/or the check for the purchase price of 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 Shares Tendered."
Issue check and/or certificate(s) to:
Name:
--------------------------------------
(Please Print)
Address:
-------------------------------------
--------------------------------------------
--------------------------------------------
(Include Zip Code)
- -----------------------------------------------------
5
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Signature(s) of Holder(s) of Shares ____________________________________________
________________________________________________________________________________
Dated: ______________, 1998
(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)
<TABLE>
<S> <C>
(Area Code and Telephone No.) (Tax Identification or Social Security No.)
</TABLE>
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: ______________ , 1998
6
<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 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 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 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 Shares are to be forwarded herewith to the Depositary or, unless an
Agent's Message (as defined below) is utilized, if tenders of 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 Shares, or any book-entry confirmation of 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 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 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
the Purchaser, must be received by the Depositary on or prior to the Expiration
Date, and (iii) the certificates representing all tendered Shares, in proper
form for transfer, or Book-Entry Confirmation of 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 Nasdaq National Market 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 participant in the Book-Entry Transfer Facility tendering the 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 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 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 Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
7
<PAGE>
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER SHARES BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any
certificate submitted are to be tendered, fill in the number of Shares that are
to be tendered in the box entitled "Number of Shares Tendered." In such case,
new certificate(s) representing the remainder of the 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 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 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 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 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
Shares listed and tendered hereby, no endorsements of certificates or separate
stock powers are required, unless payment or certificates for 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
the 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 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, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased 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 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.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or certificates
representing 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 Shares by book-entry transfer may request that
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 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 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 the
Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion, in the case of any Shares tendered hereby.
8
<PAGE>
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 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. FOREIGN HOLDERS. Foreign 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 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.
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct 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 Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign 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 foreign
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.
9
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to 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 Shares. If the 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.
10
<PAGE>
<TABLE>
<CAPTION>
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT -------------------------
FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW SOCIAL SECURITY NUMBER
OR
------------------------
Employer identification
number
(If awaiting TIN write
"Applied For")
</TABLE>
<TABLE>
<C> <S>
PART 2--For Payees exempt from backup withholding, see the enclosed Taxpayer
Identification Number (TIN) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 and complete as instructed therein.
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
DEPARTMENT OF (1) The number shown on this form is my correct Taxpayer Identification
THE TREASURY Number (or a Taxpayer Identification Number has not been issued to me) and
INTERNAL REVENUE either (a) I have mailed or delivered an application to receive a
SERVICE 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
(2) I am not subject to backup withholding because (a) I am exempt from
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.
PAYER'S REQUEST FOR CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
TAXPAYER IDENTIFICATION notified by the IRS that you are currently subject to backup withholding because
NUMBER (TIN) AND you have failed to report all interest and dividends on your tax return. If
CERTIFICATION 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 , 1998
</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]
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HOLMES PROTECTION GROUP, INC.
AT
$17.00 NET PER SHARE
BY
T9 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 TUESDAY, FEBRUARY 3, 1998, UNLESS THE OFFER IS EXTENDED.
January 6, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been appointed by T9 Acquisition Corp. (the "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 the
Purchaser's offer to purchase all of the outstanding shares of common stock, par
value $.01 per share (the "Shares"), of Holmes Protection Group, Inc., a
Delaware corporation (the "Company"), at a price of $17.00 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated January 6, 1998 (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 December 28, 1997, among Tyco, the
Purchaser and the Company.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold 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 A NUMBER OF
SHARES REPRESENTING AT LEAST 51% OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF
THE COMPANY ON A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR
PAYMENT PURSUANT TO THE OFFER. HP PARTNERS L.P., WHICH OWNS 1,515,886 ISSUED AND
OUTSTANDING SHARES, CONSTITUTING APPROXIMATELY 18% OF THE SHARES ON A FULLY
DILUTED BASIS (APPROXIMATELY 26% OF THE SHARES ON A FULLY DILUTED BASIS
INCLUDING 685,714 SHARES ISSUABLE TO IT UPON THE EXERCISE OF WARRANTS), HAS
AGREED TO TENDER ITS SHARES IN THE OFFER.
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 Shares.
3. A letter to stockholders of the Company from George V. Flagg,
President and Chief Executive Officer 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.
<PAGE>
4. A printed form of letter which may be sent to your clients for whose
account you hold 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 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 ChaseMellon Shareholder Services,
L.L.C., as Depositary.
Your attention is directed to the following:
1. The tender price is $17.00 per 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 COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Tuesday, February 3, 1998, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Shares. The Offer
is conditioned upon, among other things, there being validly tendered and
not withdrawn prior to the expiration of the Offer a number of Shares
representing at least 51% of the total number of outstanding Shares of the
Company on a fully diluted basis as of the date the Shares are accepted for
payment pursuant to the Offer. HP Partners L.P., which owns 1,515,886 issued
and outstanding Shares, constituting approximately 18% of the Shares on a
fully diluted basis (approximately 26% of the Shares on a fully diluted
basis including 685,714 Shares issuable to it upon the exercise of
warrants), has agreed to tender its Shares in the Offer.
5. Stockholders who tender 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 Shares by the
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), the Purchaser will accept for payment and pay for all 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 Shares
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates representing such Shares (or a
timely confirmation of a book-entry transfer of such 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 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.
2
<PAGE>
The 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 Shares pursuant to the Offer. The Purchaser will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding the enclosed materials to your clients. The
Purchaser will pay or cause to be paid any transfer taxes payable on the
transfer of 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 TUESDAY, FEBRUARY 3, 1998,
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 THE 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
OF
HOLMES PROTECTION GROUP, INC.
AT
$17.00 NET PER SHARE
BY
T9 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 TUESDAY, FEBRUARY 3, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated January 6,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by T9 Acquisition Corp.,
a Delaware corporation (the "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 $.01 per share (the "Shares"), of
Holmes Protection Group, Inc., a Delaware corporation (the "Company"), at a
price of $17.00 per 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 December 28, 1997, among
Tyco, the Purchaser and the Company.
WE ARE THE HOLDER OF RECORD OF SHARES FOR YOUR ACCOUNT. A TENDER OF SUCH
SHARES CAN BE MADE ONLY BY US 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 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 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 $17.00 per 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 COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Tuesday, February 3, 1998, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Shares. The Offer is
conditioned upon, among other things, there being validly tendered and not
withdrawn prior to the expiration of the Offer a number of Shares representing
at least 51% of the total number of outstanding Shares of the Company on a fully
diluted basis as of the date the Shares are accepted for payment pursuant to the
Offer. HP Partners L.P., which owns 1,515,886 issued and outstanding Shares,
constituting approximately 18% of the Shares on a fully diluted basis
(approximately 26% of the Shares on a fully diluted basis including 685,714
Shares issuable to it upon the exercise of warrants), has agreed to tender its
Shares in the Offer.
<PAGE>
5. Stockholders who tender 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 Shares by Purchaser pursuant to
the Offer.
If you wish to have us tender any or all of your 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 Shares, all
such 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 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. The 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 the Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, the 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, the
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 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 the Purchaser by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HOLMES PROTECTION GROUP, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated January 6, 1998, and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by T9 Acquisition Corp.
(the "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 $.01 per share (the "Shares"), of
Holmes Protection Group, Inc., a Delaware corporation, at a price of $17.00 per
Share, net to the seller in cash.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all 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 Shares to be Tendered:* SIGN HERE
Shares Signature(s)
Account Number: Please print name(s) and address(es) here
Dated: , 1998 Area Code and Telephone Number(s)
Tax Identification or Social Security Number
</TABLE>
- ------------------------
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
HOLMES PROTECTION GROUP, INC.
TO
T9 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 $.01 per share (the "Shares"), of Holmes Protection Group,
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:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY HAND OR
BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE:
ChaseMellon ChaseMellon (201) 329-8936
Shareholder Services, L.L.C. Shareholder Services, L.L.C. (For Eligible Institutions
Only)
P.O. Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271 CONFIRM BY TELEPHONE:
(201) 296-4860
</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 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 T9 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 6, 1998, (the "Offer to Purchase") and the
related Letter of Transmittal (which together constitute the "Offer"), receipt
of which is hereby acknowledged, the number of Shares specified below pursuant
to the guaranteed delivery procedures set forth in Section 2 of the Offer to
Purchase.
<TABLE>
<S> <C>
Number of Shares ------------------ Name(s) of Record Holder(s)
Certificate No(s). (if available)
- -------
-----------------------------------------------------
(Please Type or Print)
Address(es)
- -----------------------------------
-----------------------------------------------------
/ / CHECK BOX IF SHARES WILL BE
TENDERED BY BOOK-ENTRY TRANSFER. -----------------------------------------------------
(Zip Code)
Name of Tendering Institution: Area Code and Tel. No(s).
- ----------------------------------- -----------------------------------------------------
Account Number ------------------- Signature(s)
Dated -----------, 1998
-----------------------------------------------------
-----------------------------------------------------
</TABLE>
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 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
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 Shares tendered hereby in proper form for
transfer, or confirmation of book-entry transfer of such 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 Nasdaq National Market trading days after the date hereof.
<TABLE>
<S> <C>
-------------------------------------------- --------------------------------------------
(Name of Firm) (Authorized Signature)
-------------------------------------------- --------------------------------------------
(Address) (Title)
-------------------------------------------- Name --------------------------------------
(Zip Code) (Please Type or Print)
-------------------------------------------- Date ---------------------------------, 1998
(Area Code and Tel. No.)
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES REPRESENTING SHARES SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99(a)(6)
TYCO INTERNATIONAL TO ACQUIRE HOLMES PROTECTION; ACQUISITION TO EXPAND TYCO'S
COMMERCIAL SECURITY PRESENCE
HAMILTON, Bermuda, and NEW YORK, Dec. 29 /PRNewswire/ -- Tyco
International Ltd. (NYSE: TYC; LSE: TYI) (Tyco), a diversified manufacturing
and service company, and Holmes Protection Group, Inc. (Nasdaq: HLMS
(Holmes), a provider of electronic security systems, announced today that they
have entered into a definitive merger agreement pursuant to which Tyco will
purchase, for cash, all of the outstanding common stock of Holmes for
$17.00 per share.
Holmes, headquartered in New York, NY, has revenues of $70 million and
provides electronic security systems to over 65,000 commercial and residential
customers throughout the United States with a strong presence in the
Northeast. Over 50 percent of its revenues are from monitoring services,
which provide a strong base of recurring revenue. Holmes will be integrated
with Tyco's ADT Security Services.
"Holmes is an excellent addition to our growing electronic security
business. Their emphasis on industrial, commercial and institutional
customers will enhance ADT's current position in this important market," said
L. Dennis Kozlowski, Tyco's Chairman and Chief Executive Officer. "We will
continue to grow our presence in the electronic security industry with a
combination of internal growth coupled with acquisitions that are immediately
accretive to our shareholders," he concluded.
Under the agreement, a subsidiary of Tyco will commence a tender offer to
purchase all of Holmes' approximately 6.3 million shares of common stock
outstanding for cash of $17.00 per share. The tender offer will be followed
by a merger in which each of the remaining shares of Holmes will be exchanged
for $17.00 in cash.
The offer will be made pursuant to definitive offering documents which
will 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 on a fully diluted basis, as well as certain other conditions.
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 in North America and the
United Kingdom and has strong leadership positions in disposable medical
products, packaging materials, flow control products, electrical and
electronic components and underwater telecommunications systems. The Company
operates in more than 50 countries around the world and will have annual
revenues of in excess of $12 billion.
FORWARD LOOKING INFORMATION
Certain statements in this release are "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. All
forward looking statements involve risks and uncertainties. In particular,
any statements contained herein regarding the consummation and benefits of
future acquisitions, as well as expectations with respect to future sales,
operating efficiencies and product expansion, are subject to known and unknown
risks, uncertainties and contingencies, many of which are beyond the control
of the Company, which may cause actual results, performance or achievements to
differ materially from anticipated results, performance or achievements.
Factors that might affect such forward looking statements include, among other
things, overall economic and business conditions, the demand for the Company's
goods and services, competitive factors in the industries in which the Company
competes, changes in government regulation and the timing, impact and other
uncertainties of future acquisitions.
CONTACT: David P. Brownell of Tyco International Ltd.,
603-778-9700 or George V. Flagg of Holmes Protection Group, Inc.,
212-629-1213
<PAGE>
EXHIBIT 99(a)(7)
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
6, 1998, 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 THE
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
OF
HOLMES PROTECTION GROUP, INC.
AT
$17.00 NET PER SHARE
BY
T9 ACQUISITION CORP.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
TYCO INTERNATIONAL LTD.
T9 Acquisition Corp., a Delaware corporation (the "Purchaser") and an
indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company
("Tyco"), is offering to purchase all outstanding shares of common stock, par
value $.01 per share (the "Shares"), of Holmes Protection Group, Inc., a
Delaware corporation (the "Company"), at $17.00 per 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 6, 1998, and in the related Letter of
Transmittal (which together constitute the "Offer").
<PAGE>
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, FEBRUARY 3, 1998, UNLESS 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 which would constitute 51% of the outstanding Shares on a fully
diluted basis (the "Minimum Condition"). HP Partners L.P., which beneficially
owns 1,515,886 issued and outstanding Shares, constituting approximately 18% of
the Shares on a fully diluted basis (approximately 26% of the Shares on a fully
diluted basis including 685,714 Shares issuable to it upon the exercise of
warrants), has agreed to tender its Shares in the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 28, 1997 (the "Merger Agreement"), among Tyco, the Purchaser and
the Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the 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, the Purchaser or any
other wholly-owned subsidiary 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, 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 COMPANY"S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
ChaseMellon Shareholder Services L.L.C. (the "Depositary") of the Purchaser"s
acceptance for payment of such Shares. Upon the terms and subject to the Offer,
payment for 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 the Purchaser
and transmitting payment to tendering stockholders. In all cases, payment for
Shares purchased pursuant to the Offer will be made only after timely receipt by
the Depositary of (i) certificates for such Shares or timely confirmation of
book-entry transfer of such 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, (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees and (iii) any other documents required by the
Letter of Transmittal. Under no circumstances will interest be paid by the
Purchaser on the purchase price of the Shares, regardless of any delay in making
payment for the Shares.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Tuesday, February 3, 1998, unless and until the 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 the Purchaser, shall expire. The 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 the 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 Shares, by giving oral or
written notice of such extension to the Depositary. The Purchaser shall not have
any obligation to pay interest on the purchase price for tendered Shares in the
event the Purchaser exercises its right to extend the period of time during
which the Offer is open. There can be no assurance that the 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 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 Shares.
<PAGE>
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
12:00 Midnight, New York City time, on Tuesday, February 3, 1998 (or, if the
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 the Purchaser,
shall expire) and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time on or after
March 8, 1998. For a withdrawal to be effective, a written telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Deposita ry 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 Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certifica tes for 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 Shares have been tendered by an
Eligible Institution (as defined in the Offer to Purchase), the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
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 withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
Book-Entry Transfer Facility"s procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn 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 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 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 the Purchaser"s expense.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
January 6, 1998
<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 The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Custodian account of The minor(2)
a minor
(Uniform Gift to
Minors Act)
4. a. The usual The grantor-
revocable savings trustee(1)
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)
6. A valid trust, The legal entity(4)
estate, or pension
trust
- -----------------------------------------------------
<CAPTION>
GIVE THE NAME AND
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
<S> <C> <C>
- -----------------------------------------------------
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 The broker or
registered 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 a 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>
[JP MORGAN LETTERHEAD]
October 14, 1997
Mr. Jeffrey D. Mattfolk
Director Mergers & Acquisitions
Tyco International (US) Inc.
One Tyco Park
Exeter, NH 03833
Dear Mr. Mattfolk:
Holmes Protection Group, Inc. (the "Company") has engaged J.P. Morgan Securities
Inc. ("J.P. Morgan") to advise the Company with respect to one or more possible
transactions with you concerning your possible purchase from the Company of all
or a portion of the stock, assets, or business of the Company, or any related
transactions as may be mutually agreed between you and the Company (each, a
"Transaction"). In connection with your consideration of a Transaction with the
Company, the Company is prepared to furnish you with certain confidential and
proprietary information concerning the business and properties of the Company.
All such information is herein collectively referred to as the "Evaluation
Material".
To maintain the confidentiality of the Evaluation Material, you and each
individual or entity with access to the Evaluation Material agree: (a) not to
use any Evaluation Material or notes, summaries, or other material derived
therefrom (such notes, summaries or other material collectively referred to
herein as the "Notes") except to determine whether you wish to propose to enter
into a Transaction with the Company and the terms thereof; (b) not to disclose
any Evaluation Material or Notes other than to those of your and your affiliated
companies officers, directors, employees, advisors and representatives
(collectively, "Representatives") with a need to know the information contained
therein; PROVIDED, that such Representatives shall have agreed to be bound by
the terms of this Agreement; PROVIDED, FURTHER, that you agree to be responsible
for any breach of this Agreement by any of your Representatives; and (c) not to
disclose that the Evaluation Material has been made available, that you or your
Representatives have inspected any Evaluation Material, or that you and the
Company may be considering a Transaction or have had, are having or propose to
have any discussions with respect thereto.
The Company (directly or through J.P. Morgan) may elect at any time to terminate
further access by you to Evaluation Material. You agree that upon any such
termination, you will promptly (and in any case within 7 days of the Company's
or J.P. Morgan's request) return to J.P. Morgan or the Company all Evaluation
Material except Notes, cause all Notes to be destroyed, and confirm in writing
to the Company that all such material has been returned or destroyed in
compliance with this Agreement. No such termination will affect your
obligations hereunder or those of your Representatives, all of which obligations
shall continue in effect for the term of this Agreement.
<PAGE>
-2-
This Agreement shall be inoperative as to particular portions of the Evaluation
Material if such information (i) becomes generally available to the public other
than as a result of a disclosure by you or your Representatives in violation of
this Agreement, (ii) was available to you on a non-confidential basis prior to
its disclosure to you by the Company or its representatives and you so notify
the Company thereof in writing within 30 days of receipt of the information from
the Company, or (iii) becomes available to you on a non-confidential basis from
a source other than the Company or its representatives when such source is
entitled, to the best of your knowledge, to make such disclosure. You agree to
keep the Evaluation Material confidential even after this Agreement is
terminated so long as such information does not fall within categories (i), (ii)
or (iii) above.
If you or your Representatives are requested or required (by oral questions,
interrogatories, requests for information, subpoena, civil investigative demand,
or similar process) to disclose any Evaluation Material or Notes, it is agreed
that you will provide the Company with prompt written notice of such request(s)
so that the Company may seek an appropriate protective order and/or waive your
compliance with the provisions of this Agreement. If, failing the entry of a
protective order or the receipt of a waiver hereunder, you or your
Representatives are, in the opinion of your or your Representatives' counsel, as
the case may be, compelled to disclose Evaluation Material or Notes under pain
of liability for contempt or other censure or penalty, you may disclose only
that portion of such information as is legally required without liability
hereunder; PROVIDED, that you agree to exercise your best efforts to obtain
assurance that confidential treatment will be accorded such information.
You acknowledge that, in your examination of the Evaluation Material, you will
have access to material non-public information concerning the Company. You
agree that, for a period of two years following the date hereof, you will not
(and you will ensure that your affiliates (and any person acting on behalf of or
in concert with you or any affiliate) will not), without the prior written
approval of the Board of Directors of the Company, purchase or otherwise acquire
(or enter into any agreement or make any proposal to purchase or otherwise
acquire) any securities of the Company, any warrant or option to purchase such
securities, any security convertible into any such securities, or any other
right to acquire such securities. Notwithstanding the foregoing, if an
unaffiliated third party seeks to acquire or assists, advises or encourages any
other persons in seeking to acquire, directly or indirectly, a majority interest
in the Company during the two-year period from the date hereof, then you will be
permitted hereunder to take any such actions.
For a period of two years following the date hereof, you agree not to initiate
or maintain contact (except for those contacts made in the ordinary course of
business) with any officer, director, employee, agent or other representative of
the Company regarding the business, operations or prospects of the Company,
except with the express written consent of J.P. Morgan. It is understood that
J.P. Morgan will arrange for appropriate contacts for due diligence purposes.
Unless otherwise agreed to by J.P. Morgan, all (i) communications regarding any
possible Transaction, (ii) requests for additional information, (iii) requests
for facility tours or management meetings, and (iv) discussions or questions
regarding procedures
<PAGE>
-3-
in connection with any possible Transaction, will be submitted or directed
exclusively to J.P. Morgan.
For a period of two years following the date hereof, you will not, directly or
indirectly, solicit for employment or hire any officer, director, or employee of
the Company or any of its subsidiaries or divisions with whom you have had
contact or who became known to you in connection with your consideration of the
Transaction, except that you shall not be precluded from hiring any such
employee who (i) initiates discussions regarding such employment without any
direct or indirect solicitation by you, (ii) responds to any public
advertisement placed by you, or (iii) has been terminated by the Company or its
subsidiaries prior to commencement of employment discussions between you and
such officer, director, or employee.
You understand and agree that none of the Company, J.P. Morgan, or their
respective affiliates or representatives make any representations or warranties,
express or implied, with respect to any of the Evaluation Material. You also
agree that none of the Company, J.P. Morgan, or their respective affiliates or
representatives shall assume any responsibility or have any liability to you or
your Representatives resulting from the selection or use of the Evaluation
Material by you or your Representatives.
You agree that no contract or agreement providing for any Transaction shall be
deemed to exist between you and the Company unless and until you and the Company
execute and deliver a final definitive agreement relating thereto (a
"Transaction Agreement"), and you hereby waive, in advance, any claims
(including, without limitation, breach of contract) in connection with any
Transaction unless and until you and the Company shall have executed and
delivered a Transaction Agreement. You also agree that unless and until you and
the Company shall have executed and delivered a Transaction Agreement, neither
you nor the Company will be under any legal obligation of any kind whatsoever
with respect to a Transaction by virtue of this Agreement except for the matters
specifically agreed to herein. You further acknowledge and agree that the
Company reserves the right, in its sole discretion, to reject any and all
proposals made by you or your Representatives with regard to a Transaction, and
to terminate discussions and negotiations with you at any time. You further
understand that the Company shall be free to establish and change any process or
procedure with respect to a Transaction as the Company in its sole discretion
shall determine (including, without limitation, negotiating with any other
interested party and entering into a final definitive agreement relating to a
Transaction with any other party without prior notice to you or any other
person).
It is further understood and agreed that money damages would not be a sufficient
remedy for any breach of this Agreement and that 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 any requirement for the security
or posting of any bond in connection with such remedy. Such remedy shall not be
deemed to be the exclusive remedy for breach of this Agreement but shall be in
addition to all other remedies available at law or equity to the Company.
<PAGE>
-4-
This Agreement shall terminate three years from the date hereof and be
governed by New York law.
Very truly yours,
J.P. MORGAN SECURITIES INC.,
as agent for
HOLMES PROTECTION GROUP, INC.
By: /s/ Donna Hitscherich
----------------------------
Name: Donna Hitscherich
Title: Vice President
Accepted as of the
date first above written:
TYCO INTERNATIONAL (US) INC.
By: /s/ Jeffrey D. Mattfolk
---------------------------
Name: Jeffrey D. Mattfolk
Title: Director of Mergers & Acquisitions
<PAGE>
HOLMES PROTECTION GROUP, INC.,
TYCO INTERNATIONAL LTD.
and
T9 ACQUISITION CORP.
___________________________________________
___________________________________________
AGREEMENT AND PLAN OF MERGER
______________________________
______________________________
___________________________________________
___________________________________________
Dated as of December 28, 1997
_________________________________________________________
_________________________________________________________
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I.
TENDER OFFER AND MERGER
1.1. The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2. Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.3. Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.4. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.5. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.6. Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.7. Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.8. Surrender of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.9. Options, Warrants and Convertible Securities . . . . . . . . . . . . . .9
1.10. Certificate of Incorporation and Bylaws. . . . . . . . . . . . . . . . 11
1.11. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . 12
1.12. Other Effects of Merger. . . . . . . . . . . . . . . . . . . . . . . . 12
1.13. Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.14. Additional Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.15. Merger Without Meeting of Stockholders.. . . . . . . . . . . . . . . . 13
1.16. Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . 13
1.17. Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . 14
2.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.3. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.4. Authorization; Binding Agreement . . . . . . . . . . . . . . . . . . . 16
2.5. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 16
2.6. No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.7. Securities Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.8. Company Financial Statements . . . . . . . . . . . . . . . . . . . . . 18
2.9. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . 18
2.10. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . 18
2.11. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.12. Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.13. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.14. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.15. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 20
2.16. Taxes and Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.17. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . 25
2.18. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.19. Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.20. Limitation on Business Conduct . . . . . . . . . . . . . . . . . . . . 27
2.21. Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.22. Leased Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.23. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . 28
2.24. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.25. Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.26. Interested Party Transactions. . . . . . . . . . . . . . . . . . . . . 29
2.27. Alarm Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.28. Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . 30
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2.29. Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.30. Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.31. Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
3.1. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . 31
3.2. Authorization; Binding Agreement . . . . . . . . . . . . . . . . . . . 31
3.3. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4. No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.5. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.6. Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . 32
3.7. Financing Arrangements.. . . . . . . . . . . . . . . . . . . . . . . . 32
3.8. No Prior Activities. . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV.
ADDITIONAL COVENANTS OF THE COMPANY
4.1. Conduct of Business of the Company and the Company Subsidiaries . 33
4.2. Notification of Certain Matters. . . . . . . . . . . . . . . . . . . . 36
4.3. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . 36
4.4. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.5. Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . 37
4.6. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.7. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.8. No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.9. SEC and Stockholder Filings. . . . . . . . . . . . . . . . . . . . . . 40
4.10. Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V.
ADDITIONAL COVENANTS OF PURCHASER AND PARENT
5.1. Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . 40
5.2. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.3. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.4. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 41
5.5. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.6. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.7. Guarantee of Parent. . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VI.
MERGER CONDITIONS
6.1. Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.3. No Injunction or Action. . . . . . . . . . . . . . . . . . . . . . . . 43
6.4. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VII.
TERMINATION AND ABANDONMENT
7.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.2. Effect of Termination and Abandonment. . . . . . . . . . . . . . . . . 45
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ARTICLE VIII.
MISCELLANEOUS
8.1. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.2. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . 47
8.3. Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . 47
8.4. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.5. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.6. Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . 49
8.7. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.8. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.10. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.13. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.14. Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.15. Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Annex I
Glossary of Defined Terms
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<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is made and
entered into as of December 28, 1997, by and among HOLMES PROTECTION GROUP,
INC., a Delaware corporation (the "COMPANY"), TYCO INTERNATIONAL LTD., a Bermuda
company ("PARENT"), and T9 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 ("SHARES") of common stock, $.01 par value, of the Company
("COMPANY STOCK"), for $17.00 per Share, or such higher price as may be paid in
the Offer (the "PER SHARE AMOUNT"), in each case 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
such Shares and to recommend that the holders of such Shares accept the Offer
and 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:
<PAGE>
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 Shares tendered shall be subject to the satisfaction of only those
conditions set forth in ANNEX I hereto. The Per Share Amount 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 Shares held by the Company (or any of its direct or
indirect subsidiaries) will be tendered pursuant to the Offer.
Without the prior written consent of the Company, Purchaser shall
not (i) decrease the Per Share Amount or change the form of consideration
payable in the Offer, (ii) decrease the number of 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 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, (x) 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 Shares
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 "SEC")
or its staff applicable to the Offer; or (iii) if all conditions to Purchaser's
obligation to accept for payment and pay for Shares are satisfied or waived but
the number of Shares tendered is less than 90% of the then outstanding number of
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.
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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 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.
Upon the terms and subject to the conditions of the Offer,
Purchaser shall accept for payment and pay for Shares as soon as permitted under
the terms of the Offer and applicable law.
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<PAGE>
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 December 26, 1997, 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
Shares pursuant to the Offer and approve this Agreement and the transactions
contemplated hereby, including the Merger, and determined that this 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 J.P. Morgan Securities Inc. (the "FINANCIAL ADVISOR") that the
proposed consideration to be received by the holders of 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).
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 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.
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<PAGE>
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 Shares and security position
listings of 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 Shares.
1.3. DIRECTORS. Promptly upon the purchase by Parent of 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. 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 if no Independent Directors remain, the other directors
shall designate one person to fill one of the vacancies who shall be neither an
officer of the Company nor a designee, shareholder, affiliate or associate of
Parent, and 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
-5-
<PAGE>
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 affirmative vote of a majority 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 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
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<PAGE>
specified below:
Each Share issued and outstanding immediately before the Effective
Time (other than any Dissenting Shares (as hereinafter defined) and Shares to be
canceled pursuant to SECTION 1.6(B)) shall be canceled and extinguished and be
converted into the right to receive the Per Share Amount in cash payable to the
holder thereof, without interest, upon surrender of the certificate representing
such Share in accordance with SECTION 1.8 hereof. From and after the Effective
Time, the holders of certificates evidencing ownership of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided for herein or by applicable
Law.
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.
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 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.
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.
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
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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 Parent, settle or offer to settle any such demands.
1.8. SURRENDER OF SHARES. (a) Prior to the Effective Time,
Purchaser shall appoint Chase Mellon Shareholder Services 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 SECTION 1.6(A) 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 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
SECTION 1.6(A) 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 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
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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 SECTION 1.6(A).
(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 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.
(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, WARRANTS AND CONVERTIBLE SECURITIES. (a) Each of the
Company and Parent shall take all reasonable actions necessary to provide that
all then outstanding options to purchase Shares, whether or not then exercisable
or vested (I) under the Company's 1996 Stock Incentive Plan and (II) if and to
the extent required by the terms of the Company Option Plans (as hereinafter
defined) other than the Company's 1996 Stock Incentive Plan, under such other
Company Option Plans, shall become fully exercisable and vested upon the
consummation of the Offer. Holders of options under the Company Option Plans
("COMPANY OPTIONS") that 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 (i) the aggregate value of the Shares underlying the options,
based on the Per Share Amount, over (ii) the aggregate exercise price for the
Shares underlying the options. Each of the Company and Parent shall take all
reasonable actions necessary to provide that, upon consummation of the Merger,
all then outstanding
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Company Options, whether or not then exercisable or vested if and to the extent
so provided in the applicable Company Option Plan, shall be converted into the
right to receive, at the election of the holder, either (1) in cash, the
aggregate value of the Shares underlying the options, based on the Per Share
Amount, less the aggregate exercise price for the Shares underlying the options,
or (2) options, exercisable on the same terms and conditions as the surrendered
options (except that the option received in exchange shall be immediately
exercisable) to acquire that number of common shares, par value $.20, of Parent
("PARENT SHARES") determined by multiplying, in the case of each option, (A) the
number of Shares for which the surrendered option was exercisable immediately
prior to the Effective Time by (B) a fraction, the numerator of which is the Per
Share Amount and the denominator of which is the closing price per Parent Share
on the New York Stock Exchange on the trading day immediately preceding the
Closing Date. The exercise price per Parent Share for each new option issued
pursuant to the foregoing clause (2) shall be an amount equal to the aggregate
exercise price for the Shares underlying the surrendered option divided by the
number of Parent Shares for which such new option is exercisable. "COMPANY
OPTION PLANS" shall mean the Company's Amended and Restated Senior Executives'
Option Plan, the Company's 1992 Directors' Option Plan and the Company's 1996
Stock Incentive Plan.
(b) Each of the Company and Parent shall take all reasonable actions
necessary so that the Warrants expiring August 30, 2002 (except as otherwise
provided therein) to purchase 166,666 shares of Company Stock at a price of
$9.75 per share, subject to adjustment (the "BANK WARRANTS"), shall be
exercisable, from and after the Effective Time, for an amount of cash equal in
the aggregate to the Per Share Amount multiplied by the number of Shares for
which such warrants were exercisable immediately prior to the Effective Time.
Each of the Company and Parent shall take all reasonable actions necessary so
that the Warrants expiring August 13, 2002 to purchase 203,033 shares of Company
Stock at a price of $10.17 per share, subject to adjustment, and the Warrants
expiring August 1 2004 to purchase 685,714 shares of Company Stock at a price of
$4.58 per share, subject to adjustment (collectively, the "OTHER WARRANTS" and,
with the Bank Warrants, the "COMPANY WARRANTS"), shall be exercisable, from and
after the Effective, at the election of the holder as provided in the applicable
Other Warrant, for either (i) an amount of cash equal in the aggregate to the
Per Share Amount multiplied by the number of Shares for which such warrants were
exercisable immediately prior to the Effective Time or (ii) a number of Parent
Shares equal to the product of (I) the number of Shares for which such warrants
were exercisable immediately prior to the Effective Time and (II) a fraction,
the numerator of which is the Per Share Amount and the denominator of which is
the Current Market Price (as defined in the applicable Other Warrant) of the
Parent Shares on the trading day immediately preceding the Closing Date. The
exercise price per Parent Share under each Other Warrant, as adjusted pursuant
to the foregoing clause (ii), shall be an amount equal to the aggregate exercise
price for the Shares for which such warrant was exercisable prior to such
adjustment divided by the number of Parent Shares for which such
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warrant is exercisable as a result of such adjustment. In addition, the Company
shall deliver to the holders of the applicable Other Warrants notice of the
Merger, and the Parent shall deliver to the holders of the applicable Other
Warrants the instruments of assumption and legal opinions required to be
delivered, pursuant to the terms of the applicable Other Warrants, in connection
with the Merger. Notwithstanding the forgoing provisions of this SECTION 1.9(B),
any holder exercising a Company Warrant for cash in accordance with the
provisions of this Section 1.9(b) shall not be required to pay the exercise
price thereof and instead may receive in the aggregate upon exercise the
difference between (A) the Per Share Amount multiplied by the number of Shares
for which such warrants were exercisable immediately prior to the Effective Time
and (B) the aggregate exercise price for the Shares underlying such warrants.
(c) Each of the Company and Parent shall take all reasonable actions
necessary so that the Company's Subordinated Convertible Debentures convertible
into 24,810 shares of Company Stock, subject to adjustment (the "COMPANY
DEBENTURES"), shall be convertible, from and after the Effective Time, into an
amount of cash equal to the product of the number of Shares into which such
Company Debentures were convertible immediately prior to the Effective Time
multiplied by the Per Share Amount. The Company shall deliver to the holders of
the Company Debentures notice of the Merger.
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 Fourth 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
Fifth shall be amended and 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; (iii) Article Sixth shall be amended by
deleting the second sentence thereof; (iv) Article Seventh shall be amended by
deleting the second sentence thereof; and (v) Article Eighth shall be deleted;
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.
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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").
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) 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.
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.
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. 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,
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<PAGE>
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 Company Stock, 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 of its 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 its subsidiaries or Parent and its subsidiaries, as the
case may be, in each case taken as a whole. 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"):
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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) 12,000,000 shares of Company Stock, and (b)
1,000,000 shares of undesignated preferred stock, par value $1.00 per share. As
of November 14, 1997, (a) 6,317,291 shares of Company Stock were issued and
outstanding, (b) no shares of preferred stock were issued and outstanding and
(c) 7,142 shares of Company Stock were issued and held in the treasury of the
Company. As of November 14, 1997, (i) no shares of Company Stock or preferred
stock were held by subsidiaries of the Company, (ii) 2,087,734 shares of Company
Stock were reserved for future issuance pursuant to outstanding stock options
granted under the Company Option Plans, (iii) 1,055,413 shares of Company Stock
were reserved for future issuance upon exercise of Company Warrants and (iv)
24,810 shares of Company Stock were reserved for issuance upon conversion of the
Company Debentures. No material change in the capitalization of the Company has
occurred between November 14, 1997 and the date hereof. No other capital stock
of the Company is authorized or issued. All 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) 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, there are no obligations, contingent or other, of
the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any shares of Common Stock or the capital stock of any subsidiary or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any such subsidiary or any other entity, other
than pursuant to intercompany agreements, the Credit Agreement (as
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defined in the Company Disclosure Letter), and guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. The Company has
in effect no shareholder rights plan or any similar plan or arrangement pursuant
to which the Company's stockholders have or may obtain the right to acquire
capital stock of the Company at a price below the market price thereof.
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, 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 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 the adoption of
this Agreement by the stockholders holding a majority of the outstanding
shares of Company Stock of the Company in accordance with the Delaware Code).
This Agreement has been duly and
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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 its subsidiaries and (v) 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 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.
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2.7. SECURITIES FILINGS. The Company has made available to
Parent true and complete copies of (i) its Annual Reports on Form 10-K, as
amended, for the years ended December 31, 1994, 1995 and 1996, 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,
1995, 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, 1997. 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." 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 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 its 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, since December 31, 1996, through the date
of this Agreement, there has not been: (i) any event that has had or would
reasonably be expected to have a 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
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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, neither the Company nor any of its subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise), except
liabilities (a) in the aggregate adequately provided for in the Company's
audited balance sheet (including any related notes thereto) for the fiscal
year ended December 31, 1996 included in the Company's 1996 Annual Report on
Form 10-K (the "1996 BALANCE SHEET"), (b) incurred in the ordinary course of
business and not required under generally accepted accounting principles to
be reflected on the 1996 Balance Sheet, (c) incurred since December 31, 1996
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. (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 of its subsidiaries 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, 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 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 of its subsidiaries 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, since December 31, 1996, and prior to or on the date hereof, there
have been no actions, suits or proceedings made or pending against the
Company or any of its subsidiaries 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
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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 of its
subsidiaries, 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 2.14 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.
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 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
(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, all such Company
Material Contracts are valid and binding and are in full force and effect and
enforceable against the Company or such subsidiary in accordance with their
respective terms, subject to the Enforceability Exceptions. Neither the
Company nor any of its subsidiaries 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 its 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 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 (or any of
their beneficiaries) of the Company or any other entity (whether or not
incorporated) which is a member of a
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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
subsidiary of the Company with respect to which the Company has or could have
any current (actual or contingent) liability, as well as each plan with respect
to which the Company or an ERISA Affiliate could incur liability under Title IV
of ERISA or Section 412 of the Code (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 most recent actuarial valuation for each Employee Plan subject to Title IV
of ERISA, (iv) the latest reports which have been filed with the Department of
Labor with respect to each Employee Plan required to make such filing and (v)
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, 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 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 may by their terms be amended and/or terminated at
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any time subject to applicable law and any applicable collective bargaining
agreement; and the Company and each of its subsidiaries have performed all
obligations required to be performed by them under, are not in default under or
violation of 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 Section 412 of the Code, or the terms of the Employee
Plan or any collective bargaining agreement, have been made on or before their
due dates; (vii) with respect to each Employee Plan, no "reportable event"
within the meaning of Section 4043 of ERISA (excluding any such event for which
the 30-day notice requirement has been waived under the regulations to Section
4043 of ERISA) or any event described in Section 4062, 4063 or 4041 of ERISA has
occurred for which there is any outstanding liability to the Company or any
ERISA Affiliate, except where such liability would not reasonably be expected to
result in a Material Adverse Effect, nor would the consummation of the
transaction contemplated hereby (including the execution of this Agreement)
constitute a reportable event for which the 30-day requirement has not been
waived; and (viii) neither the Company nor any ERISA Affiliate has incurred or
reasonably expects to incur any liability under Title IV of ERISA (other than
liability for premium payments to the Pension Benefit Guaranty Corporation (the
"PBGC") arising in the ordinary course), except where such liability would not
reasonably be expected to result in a Material Adverse Effect.
(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 of its subsidiaries who holds (i) any option to purchase
Company Stock as of the date hereof, together with the number of shares of
Company 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 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 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, except as otherwise disclosed in Section 2.15 of the Company
Disclosure Letter. 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
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employment agreements with officers of the Company or any of its subsidiaries;
(ii) all agreements with consultants who are individuals obligating the Company
or any of its subsidiaries to make annual cash payments in an amount exceeding
$100,000; (iii) all agreements with respect to the services of independent
contractors or leased employees whether or not they participate in any of the
Employee Plans; (iv) all officers of the Company or any of its subsidiaries who
have executed a non-competition agreement with the Company or any of its
subsidiaries; (v) all severance agreements, programs and policies of the Company
or any of its subsidiaries with or relating to its employees, in each case with
outstanding commitments exceeding $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) The PBGC has not instituted proceedings to terminate any Employee
Benefit Plan that is subject to Title IV of ERISA (each, a "DEFINED BENEFIT
PLAN"). The Defined Benefit Plans have no accumulated or waived funding
deficiencies within the meaning of Section 412 of the Code nor have any
extensions of any amortization period within the meaning of Section 412 of the
Code or 302 of ERISA been applied for with respect thereto. The most recent
actuarial valuation with respect to any of the Company's Defined Benefit Plans
made available to Parent is true and correct in all material respects and there
has been no change since the date of such valuation that would reasonably be
expected to result in a Material Adverse Effect. All applicable premiums
required to be paid to the PBGC with respect to the Defined Benefit Plans have
been paid. No facts or circumstances exist with respect to any Defined Benefit
Plan which would give rise to a Lien on the assets of the Company under Section
4068 of ERISA or otherwise. All the assets of the Defined Benefit Plans are
readily marketable securities or insurance contracts.
(f) (i) The Company does not currently maintain an employee stock
ownership plan (within the meaning of Section 4975(e)(7) of the Code) or any
other Employee Plan that 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 disclosed in SECTION 1.9 hereof 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.
(g) The Company maintains no Employee Plan covering
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non-U.S. employees.
(h) 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 has paid,
collected or withheld, or caused to be paid, collected or withheld, all material
amounts of Taxes (as hereinafter defined) required to be paid, collected or
withheld, other than such Taxes for which adequate reserves in the Company
Financial Statements have been established or which are being contested in good
faith. There are no material claims or assessments pending against the Company
or any of its 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 its 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). Neither the Company nor any of its subsidiaries has
executed any waivers or extensions of any applicable statute of limitations to
assess any material amount of Taxes. There are no outstanding requests by the
Company or any of its subsidiaries for any extension of time within which to
file any material Tax Return or within which to pay any material amounts of
Taxes shown to be due on any Tax Return. To the best knowledge of the Company,
there are no liens for material amounts of Taxes on the assets of the Company or
any of its subsidiaries except for statutory liens for current Taxes not yet due
and payable.
(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) Neither the Company nor any of its subsidiaries has ever 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 its subsidiaries; (ii) other than with respect to
the Company and its subsidiaries, neither the Company nor any of its
subsidiaries is liable for Taxes of any other Person, or is
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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 its subsidiaries with respect to Taxes; (iii) neither the
Company nor any of its 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 its
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 its
subsidiaries has agreed or is required, as a result of a 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 its 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 its 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 its 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 its 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 its
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; PROVIDED that each of the statements made in clauses (i) through (x)
above 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.
(d) The amount of net operating losses (as defined in Section 172 of
the Code) of the Company and its subsidiaries as of the end of the fiscal year
ended December 31, 1996, and any limitation on the use of such losses as a
result of an ownership change within the meaning of Section 382(g) of the Code
occurring on or prior to December 31, 1996, is as set forth in the Company's
financial statements for such year.
2.17. INTELLECTUAL PROPERTY. The Company or its 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,
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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 its 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 its
subsidiaries infringes on any copyright, patent, trademark, service mark or
trade secret; (ii) against the use by the Company or any of its 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 its 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 therefor owned by
the Company or any of its 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 its
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, 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 its 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
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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, (i) there are no controversies pending or, to the knowledge of the
Company or any of its subsidiaries, threatened, between the Company or any of
its 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 its subsidiaries is a party to any material collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or its subsidiaries, nor, as of the date of this
Agreement, does the Company or any of its subsidiaries know of any activities or
proceedings of any labor union to organize any such employees; and (iii) neither
the Company nor any of its 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 its 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, neither the Company nor any of its 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 its
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, each of the Company and each of its 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 its subsidiaries' ownership or use of such
properties or assets, Liens for taxes not yet due and Liens securing
obligations under the Credit Agreement. With respect to the property and
assets it leases, the Company , its 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 its 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 its subsidiaries include all rights,
properties and assets necessary to permit the Company and its subsidiaries to
conduct their business in all material respects in the same manner as their
businesses have been conducted prior to the date hereof.
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2.22. LEASED PREMISES. Neither the Company nor any of its
subsidiaries owns any real property. Each of the buildings, structures and
premises leased by the Company or any of its 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, the Company and its subsidiaries are in material
compliance with the Environmental Laws (as hereinafter defined), which
compliance includes the possession by the Company and its subsidiaries of all
material permits and governmental authorizations required under applicable
Environmental Laws, and compliance in all material 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 its 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 its 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) There are no Environmental Claims (as hereinafter defined),
including claims based on "arranger liability," pending or, to the best
knowledge of the Company, threatened against the Company or any of its
subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained or
assumed 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) 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 its
subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries have retained or
assumed 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) The Company is in compliance in all material respects with
Environment Laws as they relate to any on-site or off-site locations where the
Company or any of its 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 its subsidiaries. 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 its subsidiaries. No
polychlorinated biphenyls
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(PCB's) or PCB-containing items are used or stored at any property owned or
leased by the Company or any of its subsidiaries.
(e) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (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 its 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.
2.24. INSURANCE. The Company maintains insurance that provides
adequate coverage for normal risks incident to the business of the Company
and its 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% of the revenues of the Company and its subsidiaries for the fiscal
year ended December 31, 1996.
2.26. INTERESTED PARTY TRANSACTIONS. Except as set forth in the
Company Securities Filings, since the date of the Company's proxy statement
dated April 30, 1997, 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.
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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.
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
J.P. Morgan Securities Inc., the terms of which have been disclosed to Parent.
2.29. FAIRNESS OPINION. The Company's Board of Directors has
received from its financial advisor, J.P. Morgan Securities Inc., 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 furnished or to be furnished by the Company or its 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.
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.
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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 Certificate
of Incorporation or Bylaws 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) 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")
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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 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.
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 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:
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4.1. CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY
SUBSIDIARIES. (a) Unless Parent shall otherwise agree in writing 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, or conversion of the Company Debentures,
outstanding on the date of this Agreement in accordance with their present
terms and (c) the issuance of not more than an aggregate of 15,000 shares
of Company Stock to the sellers under the agreements pursuant to which the
Company acquired Certified Systems, Inc., Certified Systems Central
Station, Inc. and Security Solutions, Inc. to the extent required pursuant
to the terms of such agreements;
(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 or distributions to the Company
or a subsidiary of the Company, or directly or indirectly redeem, purchase
or otherwise acquire or offer to acquire any shares of its capital stock or
other securities;
(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 paragraph (E) (b)
below);
(E) other than in the ordinary course of business
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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 (it being understood
that the acquisition of the stock or substantially all the assets of any
other person shall not be deemed a "capital expenditures" for these
purposes) 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
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 and other than arrangements with new employees (other than
employees who will be officers of the Company) hired in the ordinary course
of business 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 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 material 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
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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 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 NASD or any
securities exchange) in connection with the transactions contemplated by this
Agreement; (iii) the occurrence of an event which would be reasonably likely to
(A) have a Material Adverse Effect or (B) 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 its 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 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
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give, and shall direct its accountants 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 its 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 its 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 its subsidiaries pursuant to the requirements of
applicable securities laws or the NASD.
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, in which case
the Company, prior to making such announcement, will consult with Parent
regarding the same.
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4.7. COMPLIANCE. In consummating the transactions contemplated
hereby, the Company shall comply in all material respects with the provisions
of the Securities Exchange 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, and shall cause its
officers, directors, employees, representatives and agents to, immediately cease
any discussions or negotiations with any parties that may be ongoing with
respect to a Company Takeover Proposal (as hereinafter defined). The Company
shall not, nor shall it permit any of its subsidiaries to, nor shall it
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Company Takeover Proposal or
(ii) participate in any discussions or negotiations regarding any Company
Takeover Proposal; PROVIDED, HOWEVER, that if, at any time 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 Company many (and may authorize or permit
any of the other persons referred to above in this SECTION 4.8 to), in response
to a Company Takeover Proposal, and subject to compliance with SECTION 4.8(C),
(x) furnish information with respect to the Company or its subsidiaries to any
person pursuant to a confidentiality agreement similar in form to that between
an affiliate of Parent and the Company and (y) participate in discussions or
negotiations regarding such Company Takeover Proposal. "COMPANY TAKEOVER
PROPOSAL" means any inquiry, proposal or offer, in each case not solicited in
violation of this Agreement, from any person or persons relating to any direct
or indirect acquisition or purchase of a substantial amount of the assets of the
Company and its subsidiaries or 10% or more of any class of equity securities of
the Company or any Company Subsidiary, any tender offer or exchange offer that
if consummated would result in any person or group of related persons
beneficially owning 10% or more of any class of equity securities of the Company
or any Company Subsidiary or any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any Company Subsidiary, other than the transactions
contemplated by this Agreement.
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
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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) (x) withdraw or
modify its approval or recommendation of the Offer or the Company Proposals or
(y) approve or recommend a Company Superior Proposal (as hereinafter defined) or
terminate this 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 Company Superior Proposal), but in each of the cases set
forth in this clause (y), 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 Company Superior Proposal and, in the
case of any previously received Company Superior Proposal that has been
materially modified or amended, such modification or amendment and specifying
the material terms and conditions of such Company Superior Proposal,
modification or amendment (PROVIDED that such material terms shall not be deemed
to include the identity of the person or persons making such Company Superior
Proposal). For purposes of this Agreement, a "COMPANY SUPERIOR PROPOSAL" means
any bona fide proposal, not solicited in violation of this Agreement, made by a
third party or third parties to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the Shares then outstanding or all or substantially all
the assets of the Company and otherwise on terms which the Board of Directors of
the Company determines in its good faith judgment (based on the advice of its
advisors) to be more favorable to the Company's stockholders than the Offer and
the Merger (taking into account 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).
In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this SECTION 4.8, the Company shall promptly advise
Parent orally and in writing of any request for information, or for access to
information, or of any Company Takeover Proposal and the material terms and
conditions of such request or Company Takeover Proposal or any amendment or
modification thereto (PROVIDED that such material terms shall not be deemed to
include the identity of the person or persons making such request or Company
Takeover Proposal).
Nothing contained in this SECTION 4.8 shall prohibit the Company
from taking and
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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(B), 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.
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.
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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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, Purchaser 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, Parent
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.
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
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 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 its subsidiaries to comply or to be in compliance, in all
material respects, with all other applicable Laws.
EMPLOYEE BENEFIT PLANS.
5.4. BENEFIT PLANS. 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 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
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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 participants shall receive
full credit for years of service with the Company or any of its 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) and, to the extent not
duplicative of benefits received under such Employee Plan, the amount of
benefits, (ii) such participants shall participate in the Parent Benefit Plans
on terms no less favorable than those offered by Parent to similarly situated
employees of Parent and (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 participants and
their eligible dependents.
CHANGE IN CONTROL PROVISIONS. 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 its
subsidiaries, listed in SECTION 5.4(B) of the Company Disclosure Letter (such
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 its
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.
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
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current directors and officers an insurance and indemnification policy that
provides coverage for events occurring or arising at or prior to the Effecting
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.
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 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 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 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,
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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 or 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 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 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
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the Company of any of its covenants or agreements under this Agreement;
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 Common Stock pursuant to the Offer;
(d) by Parent if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to Parent
its approval or recommendation of the Offer or any of the Company Proposals or
shall have approved or recommended any Company Takeover Proposal or (ii) the
Board of Directors of the Company or any committee thereof shall have resolved
to take any of the foregoing actions;
(e) by either Parent or the Company if the Offer shall have expired
or been terminated without any Shares being purchased thereunder by Purchaser as
a result of the occurrence of any of the events set forth in ANNEX I hereto;
(f) by either the Company or Parent if either (x) 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 or
(y) the Offer shall not have been consummated on or before March 31, 1998,
PROVIDED that the right to terminate this 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(B) 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
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Agreement (other than SECTIONS 7.2, 8.1, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.10,
8.11, 8.12, 8.13, 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 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, any 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 shall be kept strictly confidential by
the Company, Parent and their respective officers, directors, employees and
agents. Prior to any disclosure 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
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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 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):
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(i) if to the Company, to:
Holmes Protection Group, Inc.
440 Ninth Avenue
New York, New York 10001
Attention: George V. Flagg, President
Telecopy: (212) 629-6763
with a copy to:
Dennis M. Stern, Esq.
Senior Vice President and General Counsel
Holmes Protection Group, Inc.
440 Ninth Avenue
New York, New York 10001
Telecopy: (212) 563-0129
and to
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Cornelius T. Finnegan, III, Esq.
Telecopy: (212) 821-8111
and
(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
with a copy to:
Tyco International (US) Inc.
One Tyco Park
Exeter, New Hampshire 03833
Attention: Mark H. Swartz
Telecopy: (603) 778-7700
and to
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Abbe L. Dienstag, Esq.
Telecopy: (212) 715-8000
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
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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
(i) Section 7.1(d);
(ii) Section 7.1(h); or
(iii) SECTION 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 Exchange Act) (other than Parent or any of its affiliates
or any person identified in the Company's Proxy Statement dated April 30,
1997 and who has executed a Stockholder Agreement of even date herewith
with Parent and Purchaser, provided that such person has not breached the
terms of such Stockholder Agreement) shall have become the beneficial owner
of more than 20% 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 Stock of at least $17.00 (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) $3.5 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
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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 $350,000 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)
within one year from the date of termination of this Agreement, the
sum of $3.5 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.
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
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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 Disclosure Letter referred to herein, which Annex(es)
and Disclosure 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 October 14, 1997 between
Tyco International (US) Inc. and J.P. Morgan Securities Inc., as agent for
the Company, shall remain in effect in accordance with their terms.
8.12. SEVERABILITY. 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.
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.
8.15. DISCLOSURE LETTER. Parent acknowledges that the Company
Disclosure Letter (i) relates to certain matters concerning the disclosures
required and transactions contemplated
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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 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.
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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 H. Swartz
------------------
Name: Mark H. Swartz
Title: Vice President and Chief
Financial Officer
T9 ACQUISITION CORP.
By:/s/ Mark H. Swartz
------------------
Name: Mark H. Swartz
Title: Vice President
HOLMES PROTECTION GROUP, INC.
By:/s/ George V. Flagg
-------------------
Name: George V. Flagg
Title: President
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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 condition that there shall be validly tendered and not withdrawn prior
to the expiration of the Offer a number of Shares which represents at least 51%
of the total number of Shares on a fully-diluted basis shall not 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 Shares (whether or not any 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, (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 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, (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 the Shares purchased by Purchaser on all
matters properly presented to the stockholders of the Company, or (iv) imposes
any material limitations on the ability of Parent or any of 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 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
<PAGE>
(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 or the consummation of the Merger 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 Shares on the NASDAQ National Market
System, (ii) any decline, measured from the date of this Agreement, in the
Dow Jones Industrial Average or Standard & Poor's 500 Index by an amount in
excess of 15%, (iii) a declaration of a banking moratorium or any general
suspension of payments in respect of banks in the United States or (iv) 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 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 future 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) any corporation, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) ("PERSON"), other than Parent and Purchaser and
any person identified in the Company's Proxy Statement dated April 30, 1997
and who has executed a Stockholder Agreement of even date herewith with
Parent and Purchaser, provided that such person has not breached the terms of
such Stockholder Agreement, shall have acquired beneficial ownership of more
than 20% of the outstanding Shares, or shall have been granted any options or
rights, conditional or
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otherwise, to acquire a total of more than 20% of the outstanding Shares; (ii)
any new group shall have been formed which beneficially owns more than 20% of
the outstanding Shares; or (iii) any person (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.
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 Shares not theretofore accepted for payment shall forthwith be returned
by the Exchange Agent to the tendering stockholders.
A-3
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<S> <C>
1996 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Bank Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certificate of Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Change in Control Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Company Acquisition Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Company Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Company Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Company Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Company Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . 26
Company Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Company Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Company Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Company Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Company Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Company Securities Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Company Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Company Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Company Superior Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Company Takeover Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Company Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
D&O Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Defined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Delaware Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Enforceability Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Environmental Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ERISA Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Financial Advisor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Independent Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ISO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Materials of Environmental Concern . . . . . . . . . . . . . . . . . . . . . . . . 29
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Minimum Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Offer Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Offer to Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Other Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Parent Benefit Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Parent Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Parent Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Parent Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Per Share Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Schedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Securities Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Surviving Corporation Common Stock . . . . . . . . . . . . . . . . . . . . . . . . .7
Takeover Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
<PAGE>
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT is made and entered into as of this 28th day of
December 1997, among TYCO INTERNATIONAL LTD., a Bermuda company ("PARENT"), T9
ACQUISITION CORP., a Delaware corporation and an indirect, wholly owned
subsidiary of Parent ("PURCHASER"), and the other parties signatory hereto
(each, a "STOCKHOLDER").
WHEREAS each Stockholder desires that HOLMES PROTECTION GROUP, INC., a
Delaware corporation (the "COMPANY"), Parent and Purchaser enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended or supplemented, the "MERGER AGREEMENT") with respect to the merger of
Purchaser with and into the Company (the "MERGER"); and
WHEREAS each Stockholder is executing this Agreement as an inducement to
Parent to enter into and execute, and to cause Purchaser to enter into and
execute, the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Parent
and Purchaser of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES. Each Stockholder severally,
and not jointly, represents and warrants to Parent and Purchaser as follows:
(a) Such Stockholder (individually or together with such other
Stockholders as indicated on SCHEDULE A hereto) has voting and dispositive power
over the number of shares of Common Stock, par value $.01 per share, of the
Company (the "COMPANY COMMON STOCK"), set forth opposite such Stockholder's
name in SCHEDULE A hereto (as may be adjusted from time to time pursuant to
Section 5, such Stockholder's "SHARES"). Except for such Stockholder's Shares
and any other shares of Company Common Stock subject hereto, such Stockholder
does not have dispositive or voting power over any other shares of Company
Common Stock.
(b) Such Stockholder's Shares and the certificates representing such
Shares are now and at all times during the term hereof will be held by such
Stockholder, or by a nominee or custodian for the benefit of such Stockholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
(c) Such Stockholder understands and acknowledges that Parent is
entering into, and causing Purchaser to enter into, the Merger Agreement in
reliance upon such Stockholder's execution and delivery of this Agreement. Such
Stockholder acknowledges that the irrevocable proxy set forth in Section 4 is
granted in consideration for the execution and delivery of the Merger Agreement
by Parent and Purchaser.
SECTION 2. AGREEMENT TO TENDER. Each Stockholder hereby severally
agrees that it shall tender its Shares into the Offer (as defined in the Merger
Agreement) and that it shall not withdraw any Shares so tendered unless the
Offer (i) is withdrawn in accordance with the terms of the Merger Agreement or
(ii) expires and the conditions set forth in Annex I to the Merger Agreement
shall not have been satisfied or waived by Parent or Purchaser.
SECTION 3. COVENANTS. Each Stockholder severally, and not jointly,
agrees with, and covenants to, Parent and Purchaser as follows:
<PAGE>
(a) Such Stockholder shall not, except as contemplated by the
terms of this Agreement, (i) transfer (the term "TRANSFER" shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition), or consent to any transfer of, any or all of such
Stockholder's Shares or any interest therein, (ii) enter into any contract,
option or other agreement or understanding with respect to any transfer of any
or all of such Shares or any interest therein, (iii) grant any proxy, power-of-
attorney or other authorization or consent in or with respect to such Shares,
(iv) deposit such Shares into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares or (v) take any other action that would
in any way restrict, limit or interfere with the performance of its obligations
hereunder or the transactions contemplated hereby.
(b) Such Stockholder shall not, nor shall it permit any investment
banker, attorney or other adviser or representative of such Stockholder acting
on its behalf to, directly or indirectly, (i) solicit, initiate or encourage the
submission of, any Company Takeover Proposal (as defined in the Merger
Agreement) or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Company Takeover Proposal, provided
that the foregoing restrictions shall not be applicable in any case to the
extent that, pursuant to the Merger Agreement, such restrictions would not be
applicable to the Company.
SECTION 4. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY.
(a) Each Stockholder hereby irrevocably (except in accordance
with the provisions of Section 8) grants to, and appoints, Parent and Jeff
Mattfolk, Brian Moroze and any other individual who shall hereafter be
designated by Parent, such Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Shares, or grant a consent or approval
in respect of such Shares, at any meeting of stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, against (i) any merger agreement or merger
(other than the Merger Agreement and the Merger), consolidation, combination,
sale of substantial assets, reorganization, joint venture, recapitalization,
dissolution, liquidation or winding up of or by the Company and (ii) any
amendment of the Company's Articles of Incorporation or By-laws or other
proposal or transaction (including any consent solicitation to remove or elect
any directors of the Company) involving the Company or any of its subsidiaries
which amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify, or result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under or with respect to, the Offer, the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement (each of the
foregoing in clause (ii) or (iii) above, a "COMPETING TRANSACTION").
(b) Such Stockholder represents that any proxies heretofore
given in respect of such Stockholder's Shares are not irrevocable, and that any
such proxies are hereby revoked.
(c) Such Stockholder hereby affirms that the irrevocable proxy
set forth in this Section 4 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Stockholder under this Agreement. Such
Stockholder hereby further affirms that the irrevocable proxy is coupled with an
interest and may under no circumstances be revoked (except in accordance with
the provisions of Section 8). Such Stockholder hereby ratifies and confirms all
that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 212 of the Delaware General
Corporation Law (the "DGCL").
2
<PAGE>
SECTION 5. CERTAIN EVENTS. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or otherwise,
including without limitation such Stockholder's heirs, guardians, administrators
or successors. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of the
Company affecting the Company Common Stock, or the acquisition of additional
shares of Company Common Stock or other securities or rights of the Company by
any Stockholder, the number of Shares listed on Schedule A beside the name of
such Stockholder shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Company Common
Stock or other securities or rights of the Company issued to or acquired by such
Stockholder.
SECTION 6. STOP TRANSFER. The Company agrees with, and covenants to,
Parent that the Company shall not register the transfer of any certificate
representing any Stockholder's Shares, unless such transfer is made to Parent or
Purchaser or otherwise in compliance with this Agreement. Each Stockholder
acknowledges that its Shares will be placed by the Company on the "stop-transfer
list" maintained by the Company's transfer agent until this Agreement is
terminated pursuant to its terms.
SECTION 7. FURTHER ASSURANCES. Each Stockholder shall, upon request of
Parent or Purchaser execute and deliver any additional documents and take such
further actions as may reasonably be deemed by Parent or Purchaser to be
necessary or desirable to carry out the provisions hereof and to vest the power
to vote such Stockholder's Shares as contemplated by Section 4 in Parent and the
other irrevocable proxies described therein.
SECTION 8. TERMINATION. This Agreement, and all rights and obligations
of the parties hereunder and the proxy provided in Section 4, shall terminate
upon the earlier of (a) the date upon which the Merger Agreement is terminated
in accordance with its terms or (b) the date that Parent or Purchaser shall have
purchased and paid for the Shares of each Stockholder pursuant to Section 2.
SECTION 9. MISCELLANEOUS.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to such terms in the
Merger Agreement.
(b) All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice): (i) if to Parent or Purchaser, to the
address set forth in Section 8.5 of the Merger Agreement; and (ii) if to a
Stockholder, to the address set forth on Schedule A hereto, or such other
address as may be specified in writing by such Stockholder.
(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) This Agreement may be executed in two or more counterparts, all
of which shall be considered one and the same agreement, and shall become
effective (even without the signature of any other Stockholder) as to any
Stockholder when one or more counterparts have been signed by each of Parent,
Purchaser and such Stockholder and delivered to Parent, Purchaser and such
Stockholder.
3
<PAGE>
(e) This Agreement (including the documents and instruments referred
to herein) constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the state of New York and, to the extent expressly provided
herein, the DGCL, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties, except by laws of descent. Any assignment in
violation of the foregoing shall be void.
(h) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any event, be held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions herein and the application
thereof to any other circumstances, shall remain in full force and effect, shall
not in any way be affected, impaired or invalidated, and shall be enforced to
the fullest extent permitted by law.
(i) Each Stockholder agrees that irreparable damage would occur and
that Parent and Purchaser would not have any adequate remedy at law in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that Parent and Purchaser shall be entitled to an injunction or injunctions to
prevent breaches by any Stockholder of this Agreement and to enforce
specifically the terms and provisions of this Agreement. Each of the parties
hereto (i) consents to submit such party to the personal jurisdiction of any
Federal court located in the State of New York in the event any dispute arises
out of this Agreement or any of the transactions contemplated hereby, (ii)
agrees that such party will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agrees that such party will not bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than a Federal
court located in the State of New York. The prevailing party in any judicial
action shall be entitled to receive from the other party reimbursement for the
prevailing party's reasonable attorneys' fees and disbursements, and court
costs.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
4
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be duly executed and delivered as of the date first written
above.
TYCO INTERNATIONAL LTD.
By:/s/ Mark H. Swartz
--------------------------------
Name: Mark H. Swartz
Title: Executive Vice President and
Chief Financial Officer
T9 ACQUISITION CORP.
By:/s/ Mark H. Swartz
--------------------------------
Name: Mark H. Swartz
Title: Vice President
ACKNOWLEDGED AND AGREED
TO AS TO SECTION 6:
HOLMES PROTECTION GROUP, INC.
By:/s/ George V. Flagg
---------------------------
Name: George V. Flagg
Title: President
5
<PAGE>
SCHEDULE A
NUMBER OF SHARES OF
NAME, ADDRESS AND SIGNATURE OF STOCKHOLDER COMMON STOCK OWNED
- ------------------------------------------ ------------------
HP Partners L.P. 2,201,600
c/o HP Management, Inc.
444 Madison Avenue
38th Floor
New York, NY 10022
6
