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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 28, 1997
HOLMES PROTECTION GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-24510 06-1070719
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
440 Ninth Avenue, New York, New York 10001-1695
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 760-0630
Not Applicable
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(Former name or former address, if changed from last report)
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Item 5. Other Events.
On December 28, 1997, Holmes Protection Group, Inc. (the "Company")
executed an Agreement and Plan of Merger (the "Merger Agreement") with Tyco
International Ltd., a Bermuda Company ("Tyco"), and T9 Acquisition Corp., a
Delaware corporation and an indirect wholly owned subsidiary of Tyco
("Purchaser"), pursuant to which, subject to the terms and conditions of the
Merger Agreement, (i) Purchaser will commence a tender offer (the "Offer") for
all of the outstanding shares of the common stock, par value $.01 per share, of
the Company (the "Common Stock") at a price of $17.00 per share in cash (net to
the seller) and (ii) following consummation of the Offer, Purchaser will merge
with and into the Company (the "Merger"), pursuant to which merger each share of
Common Stock will be converted into the right to receive $17.00 per share in
cash. Consummation of the Offer and the closing of the Merger are subject to the
satisfaction or waiver of certain conditions, including, among others, the
expiration or termination of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Consummation
of the Offer is also subject to the valid tender of at least 51% of the total
number of shares of Common Stock outstanding on a fully diluted basis. The
closing of the Merger is expected to occur as soon as practicable after the
satisfaction of the conditions thereto set forth in the Merger Agreement,
including Stockholder approval, if required. The description of the Merger
Agreement contained herein is qualified in its entirety by reference to the
Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and is
incorporated herein by reference.
In connection with the execution and delivery of the Merger Agreement,
HP Partners L.P. ("HP"), which, to the knowledge of the Company, beneficially
owns 2,201,600 shares of Common Stock, entered into a Stockholder Agreement with
Tyco, the Purchaser and the Company, pursuant to which, among other things, HP
has agreed to tender its Shares of Common Stock in the Offer and has granted to
Tyco a proxy, effective for as long as the Stockholder Agreement has not
terminated, to vote such shares, at any meeting or other proceeding of
stockholders of the Company, in opposition to any proposal by a third party
involving a merger, sale of assets or similar transaction with the Company. The
Stockholder Agreement will remain in effect for as long as the Merger Agreement
has not been terminated in accordance with its terms. The description of the
Stockholder Agreement contained herein is qualified in its entirety by reference
to the Stockholder Agreement, a copy of which is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
On December 29, 1997, Tyco and the Company issued a joint press release
relating to the execution of the Merger Agreement. A copy of the press release
is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
None.
(b) Pro forma financial information.
None.
(b) Exhibits.
2
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2.1 Agreement and Plan of Merger, dated as of December 28, 1997, by
and among Holmes Protection Group, Inc., a Delaware corporation
(the "Company"), Tyco International Ltd., a Bermuda company
("Tyco"), and T9 Acquisition Corp., a Delaware corporation and an
indirect wholly owned subsidiary of Tyco ("Purchaser").
99.1 Stockholder Agreement dated as of December 28, 1997 among Tyco,
Purchaser, HP Partners L.P. and the Company.
99.2 Joint Press Release of Tyco and the Company dated December 29,
1997.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOLMES PROTECTION GROUP, INC.
Dated: December 31, 1997 /s/ James L. Boehme
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Name: James L. Boehme
Title: Executive Vice President
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EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement and Plan of Merger, dated as of December 28, 1997, by
and among Holmes Protection Group, Inc., a Delaware corporation
(the "Company"), Tyco International Ltd., a Bermuda company
("Tyco"), and T9 Acquisition Corp., a Delaware corporation and an
indirect wholly owned subsidiary of Tyco ("Purchaser").
99.1 Stockholder Agreement dated as of December 28, 1997 among Tyco,
Purchaser, HP Partners L.P. and the Company.
99.2 Joint Press Release of Tyco and the Company dated December 29,
1997.
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HOLMES PROTECTION GROUP, INC.,
TYCO INTERNATIONAL LTD.
and
T9 ACQUISITION CORP.
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AGREEMENT AND PLAN OF MERGER
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Dated as of December 28, 1997
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================================================================================
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TABLE OF CONTENTS
Page
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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. Enviromental Matters......................................28
2.24. Insurance.................................................29
2.25. Customers.................................................29
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2.26. Interested Party Transactions.............................29
2.27. Alarm Contracts...........................................30
2.28. Finders and Investment Bankers............................30
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
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ARTICLE VII.
TERMINATION AND ABANDONMENT
7.1. Termination...............................................44
7.2. Effect of Termination and Abandonment.....................45
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
iii
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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.
(b) 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
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such extensions) beyond the latest expiration date that would be permitted under
clause (i) or (ii) of this sentence.
(c) The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") having only the conditions set forth in Annex
I hereto. As soon as practicable on the date the Offer is commenced, Purchaser
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto, the "Schedule 14D-1") with respect
to the Offer that will comply in all material respects with the provisions of,
and satisfy in all material respects the requirements of, such Schedule 14D-1
and all applicable federal securities laws and will contain (including as an
exhibit) or incorporate by reference the Offer to Purchase and forms of the
related letter of transmittal and summary advertisement (which documents,
together with any supplements or amendments thereto, and any other SEC schedule
or form which is filed in connection with the Offer and related transactions,
are referred to collectively herein as the "Offer Documents"). Each of Parent,
Purchaser and the Company agrees promptly to correct any information provided by
it for use in the Schedule 14D-1 or the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect and to supplement the information provided by it specifically for use in
the Schedule 14D-1 or the Offer Documents to include any information that shall
become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and Purchaser further
agrees to take all steps necessary to cause the Schedule 14D-1, as so corrected
or supplemented, to be filed with the SEC and the Offer Documents, as so
corrected or supplemented, to be disseminated to holders of 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.
(d) 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.
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
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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).
(b) The Company shall file with the SEC, as promptly
as practicable after the filing by Parent of the Schedule 14D-1 with respect to
the Offer, a Tender Offer Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements thereto, the "Schedule
14D-9") that will comply in all material respects with the provisions of all
applicable federal securities laws. The Company shall mail such Schedule 14D-9
to the Stockholders of the Company as promptly as practicable after the
commencement of the Offer. The Schedule 14D-9 and the Offer Documents shall
contain the recommendations of the Board of Directors of the Company described
in Section 1.2(a) hereof. The Company agrees promptly to correct the Schedule
14D-9 if and to the extent that it shall become false or misleading in any
material respect (and each of Parent and Purchaser, with respect to written
information supplied by it specifically for use in the Schedule 14D-9, shall
promptly notify the Company of any required corrections of such information and
cooperate with the Company with respect to correcting such information) and to
supplement the information contained in the Schedule 14D-9 to include any
information that shall become necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
the Company shall take all steps necessary to cause the Schedule 14D-9 as so
corrected or supplemented to be filed with the SEC and disseminated to holders
of 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.
(c) In connection with the Offer, the Company shall
promptly upon execution of this Agreement furnish Purchaser with mailing labels
containing the names and addresses of all record holders of 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.
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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 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
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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 specified below:
(a) 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
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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.
(b) 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.
(c) 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.
(b) Notwithstanding the provisions of Section 1.7(a)
hereof, if any holder of Shares who demands appraisal of his Shares under the
Delaware Code shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever occurs later, such holder's Shares shall
automatically be converted into and represent only the right to receive cash as
provided in Section 1.6 hereof, without interest thereon, upon surrender of the
certificate or certificates representing such Shares.
(c) The Company shall give Purchaser (i) prompt
notice of any written demands for appraisal or payment of the fair value of any
Shares, withdrawals of such demands and any other instruments served pursuant to
the Delaware Code received by the Company after the date hereof and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the Delaware Code. The Company shall not voluntarily make
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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 Exchange Agent that such tax either has been paid
or is not payable.
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(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
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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 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
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which such warrant was exercisable prior to such adjustment divided by the
number of Parent Shares for which such 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
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of Purchaser in effect at the Effective Time (subject to any subsequent
amendments).
1.11. Directors and Officers. At and after the Effective
Time, the directors of Purchaser immediately prior to the Effective Time shall
be the initial directors of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their successors are duly elected
or appointed and qualified.
1.12. Other Effects of Merger. The Merger shall have all
further effects as specified in the applicable provisions of the Delaware Code.
1.13. Proxy Statement. (a) Following the consummation of the
Offer and if required by the Securities Exchange Act because of action by the
Company's Stockholders necessary in order to consummate the Merger, the Company
shall prepare and file with the SEC and, when cleared by the SEC, shall mail to
Stockholders, a proxy statement in connection with a meeting of the Company's
Stockholders to vote upon the adoption of this Agreement and the Merger and the
transactions contemplated hereby and thereby (the "Company Proposals"), or an
information statement, as appropriate, satisfying all requirements of the
Securities Exchange Act (such proxy or information statement in the form mailed
by the Company to its Stockholders, together with any and all amendments or
supplements thereto, is herein referred to as the "Proxy Statement").
(b) Parent will furnish the Company with such
information concerning Parent and its subsidiaries as is necessary in order to
cause the Proxy Statement, insofar as it relates to Parent and its subsidiaries,
to comply with applicable Law. Parent agrees promptly to advise the Company if,
at any time prior to the meeting of Stockholders of the Company referenced
herein, any Parent Information (as defined) in the Proxy Statement is or becomes
incorrect or incomplete in any material respect and to provide the Company with
the information needed to correct such inaccuracy or omission. Parent will
furnish the Company with such supplemental information as may be necessary in
order to cause the Proxy Statement, insofar as it relates to Parent and its
subsidiaries, to comply with applicable Law after the mailing thereof to the
Stockholders of the Company.
(c) The Company and Parent agree to cooperate in
making any preliminary filings of the Proxy Statement with the SEC, as promptly
as practicable, pursuant to Rule 14a-6 under the Securities Exchange Act.
(d) The Company shall provide Parent for its review a
copy of the Proxy Statement prior to each filing thereof, with reasonable time
and opportunity for such review. Parent authorizes the Company to utilize in the
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Proxy Statement the information concerning Parent and its subsidiaries provided
to the Company in connection with, or contained in, the Proxy Statement.
1.14. Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Purchaser or the Company or otherwise to carry
out this Agreement, the officers and directors of the Company and Purchaser
shall be authorized to execute and deliver, in the name and on behalf of
Purchaser or the Company, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of Purchaser or the
Company, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
1.15. Merger Without Meeting of Stockholders. Notwithstanding
the foregoing provisions of this Article I, in the event that Purchaser, or any
other direct or indirect subsidiary of Parent, shall acquire at least 90 percent
of the outstanding Shares of 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
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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"):
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
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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 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
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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 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
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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.
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.
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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 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
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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 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
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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 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
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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 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
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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 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,
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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 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
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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
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
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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, 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
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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
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information relating to the Company or its affiliates provided by or on behalf
of the Company specifically for inclusion in the Schedule 14D-1 or the Offer
Documents will, at the respective times the Schedule 14D-9, the Schedule 14D-1
and the Offer Documents are filed with the SEC and are first published, sent or
given to Stockholders of the Company, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
2.19. Labor Matters. Except as set forth in the Company
Securities Filings, (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
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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 (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
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the ordinary course of business of the Company, on an arms-length basis, with
terms no less favorable to the Company than would reasonably be expected in a
similar transaction with an unaffiliated third party.
2.27. Alarm Contracts. The Chief Executive Officer and the
Chief Financial Officer of the Company believe, following reasonable inquiry,
that no more than 20% of accounts for alarm system monitoring and/or service
owned by the Company or any Company Subsidiary are not evidenced by a written
contract.
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.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and
warrant to the Company that:
3.1. Organization and Good Standing. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
3.2. Authorization; Binding Agreement. Parent and Purchaser
have all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, including, but not limited to, the Merger, have been duly
and validly authorized by the respective Boards of Directors of Parent and
Purchaser, as appropriate, and no other corporate proceedings on the part of
Parent, Purchaser or any other subsidiary of Parent are necessary to authorize
the execution and delivery of this Agreement or to consummate the transactions
contemplated hereby (other than the requisite approval by the sole Stockholder
of Purchaser of this Agreement and the Merger). This Agreement has been duly and
validly executed and delivered by each of Parent and Purchaser and constitutes
the legal, valid and binding agreement of Parent and Purchaser, enforceable
against each of Parent and Purchaser in accordance with its terms, subject to
the Enforceability Exceptions.
3.3. Governmental Approvals. No Consent from or with any
Governmental Authority on the part of Parent or Purchaser is required in
connection with the execution or delivery by Parent and Purchaser of this
Agreement or the consummation by Parent and Purchaser of the transactions
contemplated hereby other than (i) filings with the SEC and (ii) filings under
the HSR Act.
3.4. No Violations. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent or Purchaser with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the 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
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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") 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
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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:
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
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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
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
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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 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.
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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 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
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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.
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
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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.
(b) Except as set forth in this Section 4.8, neither
the Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or indicate publicly its intention to withdraw or modify, in
a manner adverse to Parent, the approval or recommendation by such Board of
Directors or such committee of the Offer or the Company Proposals, (ii) approve
or recommend, or indicate publicly its intention to approve or recommend, any
Company Takeover Proposal or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
(each, a "Company Acquisition Agreement") related to any Company Takeover
Proposal. Notwithstanding the foregoing, in the event that prior to the
Effective Time the Board of Directors of the Company determines in good faith,
with the advice of outside counsel, that the failure to do so could reasonably
be determined to be a breach of its fiduciary duties to the Company's
Stockholders under applicable law, the Board of Directors of the Company may
(subject to this and the following sentences) (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
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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).
(c) 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).
(d) Nothing contained in this Section 4.8 shall
prohibit the Company from taking and disclosing to its Stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Securities Exchange Act or
from making any disclosure to the Company's Stockholders if, in the good faith
judgment of the Board of Directors of the Company, with the advice of outside
counsel, failure so to disclose could be determined to be a breach of its
fiduciary duties to the Company's Stockholders under applicable law; provided,
however, that neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 4.8(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.
(e) The Company shall advise its officers and
directors and any investment banker or attorney retained by the Company in
connection with the transactions contemplated by this Agreement of the
restrictions set forth in this Section 4.8.
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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.
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
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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.
5.4. Employee Benefit Plans.
(a) 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 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.
(b) 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
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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.
(b) In addition, Parent will provide, or cause the
Surviving Corporation to provide, for a period of not less than six years after
the Effective Time, the Company's current directors and officers an insurance
and indemnification policy that provides coverage for events occurring or
arising at or prior to the 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.
(c) This Section 5.5 is intended to benefit the
Indemnified Parties and shall be binding on all successors and assigns of
Parent, Purchaser, the Company and the Surviving Corporation. Parent hereby
guarantees the performance by the Surviving Corporation of the indemnified
obligations pursuant to this Section 5.5, which guaranty is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the bankruptcy or insolvency of the Surviving Corporation or any other
person. The Indemnified Parties shall be intended third-party beneficiaries of
this Section 5.5.
5.6. Voting of Shares. At any meeting of the Company's
Stockholders held for the purpose of voting upon the Company Proposals, all of
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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, 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.
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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 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;
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(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 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.
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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 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.
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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
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8.6. Binding Effect; Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the Company, in the case of a proposed assignment by
Parent or Purchaser, or by Parent, in the case of a proposed assignment by the
Company, except that Purchaser may assign its rights, interest and obligations
hereunder to any other wholly-owned direct or indirect subsidiary of Parent,
provided that the provisions of Section 5.7 hereof shall apply to such other
subsidiary.
8.7. Expenses. (a) Except as provided in Section 8.7(b) or
8.7(c) hereof, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs or expenses.
(b) The Company agrees that if this Agreement is terminated
pursuant to
(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);
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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 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
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"person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability Company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity, (ii)
unless otherwise specified herein, the term "affiliate," with respect to any
person, shall mean and include any person controlling, controlled by or under
common control with such person and (iii) the term "subsidiary" of any specified
person shall mean any corporation 50 percent or more of the outstanding voting
power of which, or any partnership, joint venture, limited liability Company or
other entity 50 percent or more of the total equity interest of which, is
directly or indirectly owned by such specified person.
8.11. Entire Agreement. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Annex(es)
attached hereto and the 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.
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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 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
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(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) (i) 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
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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
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>
<CAPTION>
<S> <C> <C> <C>
1996 Balance Sheet.............................18 Exchange Agent..................................8
Affiliate......................................51 Fairness Opinion................................4
Agreement.......................................1 Financial Advisor...............................4
Bank Warrants..................................10 Governmental Authority.........................16
Certificate of Merger...........................6 HSR Act........................................16
Change in Control..............................41 Indemnified Parties............................42
Change in Control Agreements...................41 Independent Directors...........................5
Closing.........................................6 IRS ...........................................21
Closing Date....................................6 ISO ...........................................22
Code...........................................20 Law ...........................................17
Company.........................................1 Liens..........................................27
Company Acquisition Agreement..................38 Litigation.....................................19
Company Debentures.............................11 Material Adverse Effect........................13
Company Disclosure Letter......................14 Materials of Environmental Concern.............29
Company Financial Statements...................18 Merger..........................................1
Company Intellectual Property Rights...........26 Minimum Condition...............................1
Company Material Contracts.....................20 Offer...........................................1
Company Option Plans...........................10 Offer Documents.................................3
Company Options.................................9 Offer to Purchase...............................3
Company Permits................................19 Other Warrants.................................10
Company Proposals..............................12 Parent..........................................1
Company Securities Filings.....................17 Parent Benefit Plan............................41
Company Stock...................................1 Parent Expenses................................50
Company Subsidiary.............................14 Parent Information.............................32
Company Superior Proposal......................39 Parent Shares..................................10
Company Takeover Proposal......................38 PBGC...........................................22
Company Warrants...............................10 Per Share Amount................................1
Consent........................................16 Person.........................................51
D&O Insurance..................................42 Proxy Statement................................12
Defined Benefit Plan...........................23 Purchaser.......................................1
Delaware Code...................................6 Schedule 14D-1..................................3
Dissenting Shares...............................7 Schedule 14D-9..................................4
Effective Time..................................6 SEC ............................................2
Employee Plans.................................20 Securities Act.................................17
Enforceability Exceptions......................16 Securities Exchange Act.........................2
Environmental Claim............................29 Shares..........................................1
Environmental Laws.............................29 Subsidiary.....................................51
ERISA..........................................20 Surviving Corporation...........................6
ERISA Affiliate................................20 Surviving Corporation Common Stock..............7
Takeover Statute...............................40
Tax 24
Tax Return.....................................24
</TABLE>
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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
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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:
(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
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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").
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
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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
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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.
(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
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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.
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: Vice President and Chief Financial
Officer
T9 ACQUISITION CORP.
By: /s/ Mark H. Swartz
-----------------------------------------
Name: Mark H. Swartz
Title: Vice President
HP PARTNERS L.P.
By: /s/ David Mitchell
-----------------------------------------
Name: David Mitchell
Title: General Partner
ACKNOWLEDGED AND AGREED
TO AS TO SECTION 6:
HOLMES PROTECTION GROUP, INC.
By: /s/ George V. Flagg
- ------------------------------------
Name: George V. Flagg
Title: President
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Schedule A
Number of Shares of
Name and Address of Stockholder Common Stock Owned
- ------------------------------- ------------------
HP Partners L.P. 2,201,600
c/o HP Management, Inc.
444 Madison Avenue, 38th Floor
New York, New York 10022
<PAGE>
Tyco International Ltd.
Cedar House
41 Cedar Avenue
Hamilton HM 12, Bermuda
(441) 292-2033
NEWS
FOR IMMEDIATE RELEASE
CONTACT: CONTACT:
David P. Brownell George V. Flagg
Tyco International Ltd. Holmes Protection Group, Inc.
(603) 778-9700 (212) 629-1213
TYCO INTERNATIONAL TO ACQUIRE HOLMES PROTECTION
ACQUISITION TO EXPAND TYCO'S COMMERCIAL SECURITY PRESENCE
Hamilton, Bermuda, and New York, New York, December 29, 1997 -- 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.
<PAGE>
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.
