-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HW3vt3YOlP2r4cHE27y5TjQaaVHfsCuU2G+luQYIYEIKiU9wu4rA33nCBA4PlBqo f3Eyx6WJnl54LqsndihrqA== 0001047469-99-001320.txt : 19990118 0001047469-99-001320.hdr.sgml : 19990118 ACCESSION NUMBER: 0001047469-99-001320 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19990115 GROUP MEMBERS: T16 ACQUISTION GROUP GROUP MEMBERS: TYCO INTERNATIONAL LTD /BER/ SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ALARMGUARD HOLDINGS INC CENTRAL INDEX KEY: 0000319250 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS RETAIL [5900] IRS NUMBER: 330318116 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-30530 FILM NUMBER: 99507129 BUSINESS ADDRESS: STREET 1: 125 FRONTAGE ROAD STREET 2: STE 1880 CITY: ORANGE STATE: CT ZIP: 06477 BUSINESS PHONE: 2037959000 MAIL ADDRESS: STREET 1: 125 FRONTAGE ROAD STREET 2: STE 1880 CITY: ORANGE STATE: CT ZIP: 06477 FORMER COMPANY: FORMER CONFORMED NAME: TRITON GROUP LTD DATE OF NAME CHANGE: 19950328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TYCO INTERNATIONAL LTD /BER/ CENTRAL INDEX KEY: 0000833444 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT, NEC [3569] IRS NUMBER: 000000000 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: THE GIBBONS BUILDING STREET 2: 10 QUEENS STREET SUITE 301 CITY: HAMILTON HM 12 BERMU STATE: D0 BUSINESS PHONE: 4412928674 MAIL ADDRESS: STREET 1: C/O TYCO INTERNATIONAL (US) INC STREET 2: ONE TYCO PARK CITY: EXETER STATE: NH ZIP: 03833 FORMER COMPANY: FORMER CONFORMED NAME: ADT LIMITED DATE OF NAME CHANGE: 19930601 SC 14D1 1 SCHEDULE 14D1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ALARMGUARD HOLDINGS, INC. (Name of Subject Company) TYCO INTERNATIONAL LTD. T16 ACQUISITION CORP. (Bidders) ------------------------ COMMON STOCK, PAR VALUE $.0001 PER SHARE (including the associated preferred stock purchase rights) (Title of class of securities) ------------------------ 011649100 (CUSIP number of class of securities) ------------------------ MARK H. SWARTZ, EXECUTIVE VICE PRESIDENT C/O TYCO INTERNATIONAL (US) INC. ONE TYCO PARK EXETER, NEW HAMPSHIRE 03833 (603) 778-9700 (Name, address and telephone number of person authorized to receive notices and communications on behalf of bidders) ------------------------ WITH A COPY TO: ABBE L. DIENSTAG, ESQ. KRAMER, LEVIN, NAFTALIS & FRANKEL LLP 919 THIRD AVENUE NEW YORK, NEW YORK 10022 TELEPHONE: (212) 715-9100 ------------------------ CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE** $62,576,296 $12,515.26
* For purposes of calculating fee only. Assumes purchase of 6,765,005 shares of Common Stock, par value $.0001 per share, including the associated preferred stock purchase rights, of Alarmguard Holdings, Inc. at $9.25 per share, representing 5,569,983 shares outstanding and 1,195,022 shares reserved for issuance pursuant to outstanding options and warrants. ** 1/50th of 1% of Transaction Valuation. / / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount previously paid: Not applicable Filing party: Not applicable. Form or registration no.: Not applicable. Date filed: Not applicable.
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit Index is located on Page 9 14D-1 Page 2 of 7 Pages 1 NAMES OF REPORTING PERSONS: TYCO INTERNATIONAL LTD. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)/ / (b)/ / 3 SEC USE ONLY 4 SOURCES OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / / PURSUANT TO ITEMS 2(e) OR 2(f) 6 CITIZENSHIP OR PLACE OF ORGANIZATION BERMUDA 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON NONE. SEE ITEM 6 AND ITEM 7 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES SEE ITEM 6 AND ITEM 7 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) SEE ITEM 6 AND ITEM 7 10 TYPE OF REPORTING PERSON CO
14D-1 Page 3 of 7 Pages 1 NAMES OF REPORTING PERSONS: T16 ACQUISITION CORP. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)/ / (b)/ / 3 SEC USE ONLY 4 SOURCES OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / / PURSUANT TO ITEMS 2(e) OR 2(f) 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON NONE. SEE ITEM 6 AND ITEM 7 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES SEE ITEM 6 AND ITEM 7 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) SEE ITEM 6 AND ITEM 7 10 TYPE OF REPORTING PERSON CO
This Statement relates to the offer by T16 Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company ("Tyco"), to purchase all outstanding shares of common stock, par value $.0001 per share, including the associated preferred stock purchase rights (the "Common Shares"), of Alarmguard Holdings, Inc., a Delaware corporation (the "Company"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 15, 1999, annexed hereto as Exhibit (a)(1) (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, constitute the "Offer"), at a purchase price of $9.25 per Common Share, net to each tendering stockholder in cash. The item numbers below and responses thereto are in accordance with the requirements of Schedule 14D-1. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Alarmguard Holdings, Inc., a Delaware corporation. The address of the Company's principal executive offices is 125 Frontage Road, Orange, CT 06477. (b) The securities to which this statement relates are the Common Shares. The information set forth in the Introduction of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Common Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(g) This Statement is being filed by Purchaser and Tyco (collectively, the "Reporting Persons"). Purchaser is an indirect wholly-owned subsidiary of Tyco. The information set forth in Section 9 ("Certain Information Concerning Tyco and Purchaser") and in Annex I and II of the Offer to Purchase is incorporated herein by reference. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introduction, Section 9 ("Certain Information Concerning Tyco and Purchaser"), Section 11 ("Contacts with the Company; Background of the Offer") and Section 13 ("The Merger Agreement; Preferred Stock Purchase Agreement") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The information set forth in Section 10 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (b)-(c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER. (a)-(g) The information set forth in the Introduction and Sections 7 ("Effects of the Offer on the Market for Common Shares; Stock Quotations; Registration Under the Exchange Act") and 12 ("Purpose of the Offer; Short Form Merger; Plans for the Company; Dissenters' Rights; Going Private Transactions") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. The information set forth in Sections 9 ("Certain Information Concerning Tyco and Purchaser") and 13 ("The Merger Agreement; Preferred Stock Purchase Agreement") of the Offer to Purchase is incorporated herein by reference. Page 4 of 7 Pages ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introduction and Sections 9 ("Certain Information Concerning Tyco and Purchaser"), 11 ("Contacts with the Company; Background of the Offer"), 12 ("Purpose of the Offer; Short Form Merger; Plans for the Company; Dissenters' Rights; Going Private Transactions") and 13 ("The Merger Agreement; Preferred Stock Purchase Agreement") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in Sections 17 ("Fees and Expenses") and 18 ("Miscellaneous") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 9 ("Certain Information Concerning Tyco and Purchaser") of the Offer to Purchase is incorporated herein by reference. The incorporation by reference herein of such financial information does not constitute an admission that such information is material to a decision by a stockholder of the Company whether to sell, tender or hold the Common Shares being sought in the Offer. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in Section 11 ("Contacts with the Company; Background of the Offer") and Section 13 ("The Merger Agreement; Preferred Stock Purchase Agreement") of the Offer to Purchase is incorporated herein by reference. (b)-(c) The information set forth in Section 16 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Sections 7 ("Effects of the Offer on the Market for Common Shares; Stock Quotations; Registration Under the Exchange Act") and 16 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (e) None (f) The information set forth in the Offer to Purchase and the related Letter of Transmittal, to the extent not otherwise set forth herein, is incorporated herein by reference. ITEM 11. MATERIALS TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase, dated January 15, 1999. (a)(2) Letter of Transmittal. (a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(4) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(5) Notice of Guaranteed Delivery. (a)(6) Text of Joint Press Release issued January 11, 1999. (a)(7) Form of Summary Advertisement, dated January 15, 1999. (a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (b) Not applicable. (c)(1) Confidentiality Agreement executed by Tyco International (US) Inc. in favor of the Company, dated November 5, 1998. Page 5 of 7 Pages (c)(2) Agreement and Plan of Merger, dated as of January 8, 1999, among the Purchaser, Tyco and the Company. (c)(3) Preferred Stock Purchase Agreement, dated as of January 8, 1999, among Tyco, the Purchaser and the individuals listed on the signature pages thereto. (d)-(f) Not applicable. SIGNATURE After due inquiry and to the best of the undersigned's knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. TYCO INTERNATIONAL LTD. Dated: January 15, 1999 By: /s/ MARK H. SWARTZ ----------------------------------------- Name: Mark H. Swartz Title: Executive Vice President and Chief Financial Officer
SIGNATURE After due inquiry and to the best of the undersigned's knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. T16 ACQUISITION CORP. Dated: January 15, 1999 By: /s/ MARK H. SWARTZ ----------------------------------------- Name: Mark H. Swartz Title: Vice President
Page 6 of 7 Pages EXHIBIT INDEX
EXHIBIT SEQUENTIALLY NO. DESCRIPTION NUMBERED PAGE - ----------- ---------------------------------------------------------------------------------------- ----------------- (a)(1) Offer to Purchase, dated January 15, 1999............................................... (a)(2) Letter of Transmittal................................................................... (a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.............. (a)(4) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.............................................................................. (a)(5) Notice of Guaranteed Delivery........................................................... (a)(6) Text of Joint Press Release issued January 11, 1999..................................... (a)(7) Form of Summary Advertisement, dated January 15, 1999................................... (a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9... (c)(1) Confidentiality Agreement executed by Tyco International (US) Inc. in favor of the Company, dated November 5, 1998....................................................... (c)(2) Agreement and Plan of Merger, dated as of January 8, 1999, among the Purchaser, Tyco and the Company........................................................................... (c)(3) Preferred Stock Purchase Agreement, dated as of January 8, 1999, among Tyco, the Purchaser and the individuals listed on the signature pages thereto...................
Page 7 of 7 Pages EX-99.1(A) 2 EX. 99.1(A) OFFER TO PURCHASE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF ALARMGUARD HOLDINGS, INC. AT $9.25 NET PER SHARE BY T16 ACQUISITION CORP., AN INDIRECT WHOLLY OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 12, 1999, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.0001 PER SHARE, INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS (THE "COMMON SHARES"), OF ALARMGUARD HOLDINGS, INC., WHICH (1) WOULD CONSTITUTE 51% OF THE OUTSTANDING COMMON SHARES AND (2) TOGETHER WITH THE SHARES OF THE COMPANY'S SERIES A PREFERRED STOCK AND SERIES B PREFERRED STOCK, EACH PAR VALUE $.0001 PER SHARE (THE "PREFERRED SHARES"), SUBJECT TO THE PREFERRED STOCK PURCHASE AGREEMENT, DATED JANUARY 8, 1999 (THE "PREFERRED STOCK PURCHASE AGREEMENT"), AMONG T16 ACQUISITION CORP. AND THE HOLDERS OF THE PREFERRED SHARES, WOULD CONSTITUTE AT LEAST 51% OF THE TOTAL VOTING POWER OF THE COMPANY ON A FULLY DILUTED BASIS. STOCKHOLDERS OWNING 964,195 COMMON SHARES (CONSTITUTING 17.3% OF THE OUTSTANDING COMMON SHARES) AND ALL 40,700 OUTSTANDING PREFERRED SHARES (WHICH, TOGETHER WITH THE AFORESAID COMMON SHARES, CONSTITUTE 50.6% OF THE TOTAL VOTING POWER OF THE COMPANY ON A FULLY DILUTED BASIS) HAVE AGREED TO TENDER SUCH COMMON SHARES IN THE OFFER AND TO SELL SUCH PREFERRED SHARES TO PURCHASER PURSUANT TO THE PREFERRED STOCK PURCHASE AGREEMENT. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE MERGER (AS HEREINAFTER DEFINED) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT (AS HEREINAFTER DEFINED), THE OFFER AND THE MERGER AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR COMMON SHARES PURSUANT TO THE OFFER. ------------------------ IMPORTANT ANY STOCKHOLDER DESIRING TO TENDER ALL OR ANY PORTION OF SUCH STOCKHOLDER'S COMMON SHARES SHOULD EITHER (1) COMPLETE AND SIGN THE LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF TRANSMITTAL, MAIL OR DELIVER IT AND ANY OTHER REQUIRED DOCUMENTS TO THE DEPOSITARY AND EITHER DELIVER THE CERTIFICATE(S) FOR SUCH TENDERED COMMON SHARES TO THE DEPOSITARY ALONG WITH THE LETTER OF TRANSMITTAL OR TENDER SUCH COMMON SHARES PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER SET FORTH IN SECTION 2 OF THIS OFFER TO PURCHASE, OR (2) REQUEST SUCH STOCKHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE TRANSACTION FOR THE STOCKHOLDER. STOCKHOLDERS HAVING COMMON SHARES REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IF THEY DESIRE TO TENDER SUCH COMMON SHARES. A STOCKHOLDER WHO DESIRES TO TENDER COMMON SHARES AND WHOSE CERTIFICATE(S) FOR COMMON SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY WITH THE PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, MAY TENDER SUCH COMMON SHARES BY FOLLOWING THE PROCEDURES FOR GUARANTEED DELIVERY SET FORTH IN SECTION 2 OF THIS OFFER TO PURCHASE. QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION AGENT AT ITS ADDRESS AND TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS OFFER TO PURCHASE. REQUESTS FOR ADDITIONAL COPIES OF THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL AND THE NOTICE OF GUARANTEED DELIVERY MAY BE DIRECTED TO THE INFORMATION AGENT OR TO BROKERS, DEALERS, COMMERCIAL BANKS OR TRUST COMPANIES. ------------------------ THE INFORMATION AGENT FOR THE OFFER IS: [LOGO] January 15, 1999 TABLE OF CONTENTS
PAGE ----- Introduction...................................................................................................... 1 The Tender Offer.................................................................................................. 4 1. Terms of the Offer; Extension of Tender Period; Termination; Amendments................................ 4 2. Procedure for Tendering Common Shares.................................................................. 6 3. Withdrawal Rights...................................................................................... 8 4. Acceptance for Payment and Payment of Offer Price...................................................... 9 5. Certain Federal Income Tax Consequences................................................................ 10 6. Price Range of Common Shares; Dividends................................................................ 11 7. Effects of the Offer on the Market for Common Shares; Stock Quotations; Registration Under the Exchange Act.................................................................................................... 11 8. Certain Information Concerning the Company............................................................. 12 9. Certain Information Concerning Tyco and Purchaser...................................................... 14 10. Source and Amount of Funds............................................................................. 16 11. Contacts with the Company; Background of the Offer..................................................... 16 12. Purpose of the Offer; Short Form Merger; Plans for the Company; Dissenters' Rights; Going Private Transactions........................................................................................... 18 13. The Merger Agreement; Preferred Stock Purchase Agreement............................................... 20 14. Dividends and Distributions............................................................................ 32 15. Certain Conditions of the Offer........................................................................ 33 16. Certain Legal Matters.................................................................................. 35 17. Fees and Expenses...................................................................................... 36 18. Miscellaneous.......................................................................................... 37 Annex I Certain Information Concerning the Directors and Executive Officers of Tyco International Ltd............. 38 Annex II Certain Information Concerning the Directors and Executive Officers of Purchaser......................... 41
To The Holders of Common Stock of ALARMGUARD HOLDINGS, INC. INTRODUCTION T16 Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of Tyco International Ltd., a Bermuda company ("Tyco"), hereby offers to purchase all outstanding shares (the "Common Shares") of common stock (the "Common Stock"), par value $.0001 per share, of Alarmguard Holdings, Inc., a Delaware corporation (the "Company"), at $9.25 per Common Share, net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). All references in this Offer to Purchase to the Common Shares include the associated preferred stock purchase rights (the "Rights) issued pursuant to the Rights Agreement (the "Rights Agreement"), dated as of April 10, 1998, between the Company and American Stock Transfer & Trust Company, as Rights Agent. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Common Shares by Purchaser pursuant to the Offer. However, any tendering stockholder or other payee who fails to complete and sign the Substitute Form W-9 that is included in the Letter of Transmittal may be subject to a required backup federal income tax withholding of 31% of the gross proceeds payable to such stockholder or other payee pursuant to the Offer. See Section 2. The Purchaser will pay all charges and expenses of Morrow & Co., Inc., as Information Agent (the "Information Agent"), and American Stock Transfer & Trust Company, as Depositary (the "Depositary"), incurred in connection with the Offer. See Section 17. In connection with the Offer, Purchaser has entered into an agreement (the "Preferred Stock Purchase Agreement"), dated as of January 8, 1999, with the holders of all of the outstanding shares (the "Preferred Shares" and, together with the Common Shares, the "Shares") of the Company's Series A preferred stock (the "Series A Preferred Stock") and Series B preferred stock (the "Series B Preferred Stock" and, together with the Series A Preferred Stock, the "Preferred Stock"), each par value $.0001 per share, pursuant to which the holders of the Preferred Shares have agreed, among other things, to sell their Preferred Shares to Purchaser following consummation of the Offer at a price per Preferred Share of $1,400, together with all accrued but unpaid dividends to and including the date of purchase, and to tender in the Offer the Common Shares owned by them. THE OFFER IS SUBJECT TO THE CONDITION (THE "MINIMUM CONDITION"), AMONG OTHER THINGS, THAT THERE BE VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT NUMBER OF COMMON SHARES WHICH (1) WOULD CONSTITUTE 51% OF THE OUTSTANDING COMMON SHARES AND (2) TOGETHER WITH THE PREFERRED SHARES SUBJECT TO THE PREFERRED STOCK PURCHASE AGREEMENT, WOULD CONSTITUTE AT LEAST 51% OF THE TOTAL VOTING POWER OF THE COMPANY ON A FULLY DILUTED BASIS. STOCKHOLDERS OWNING 964,195 COMMON SHARES (CONSTITUTING 17.3% OF THE OUTSTANDING COMMON SHARES) AND ALL 40,700 OUTSTANDING PREFERRED SHARES (WHICH, TOGETHER WITH THE AFORESAID COMMON SHARES, CONSTITUTE 50.6% OF THE TOTAL VOTING POWER OF THE COMPANY ON A FULLY DILUTED BASIS) HAVE AGREED TO TENDER SUCH COMMON SHARES IN THE OFFER AND TO SELL SUCH PREFERRED SHARES TO PURCHASER PURSUANT TO THE PREFERRED STOCK PURCHASE AGREEMENT. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS SET FORTH IN SECTION 15. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of January 8, 1999 (the "Merger Agreement"), among Tyco, Purchaser and the Company. The Merger Agreement provides, among other things, that upon the terms and subject to the conditions therein, as soon as practicable after the consummation of the Offer, Purchaser will be merged with and into the Company (the "Merger"), with the Company being the corporation surviving the Merger (the "Surviving Corporation"). At the effective time of the Merger (the "Effective Time"), each outstanding Common Share (other than Common Shares with respect to which appraisal rights are properly exercised under the Delaware General Corporation Law (the "DGCL") ("Dissenting Shares")) not held in the treasury of the Company or owned by any subsidiary 1 of the Company, Tyco, Purchaser or any other subsidiary of Tyco, will be converted into and represent the right to receive $9.25 in cash or any higher price that may be paid per Common Share in the Offer (the "Common Per Share Amount"), without interest, and each issued and outstanding Preferred Share (other than Preferred Shares that are held by stockholders properly exercising dissenters' rights under the DGCL and Preferred Shares that are held in the treasury of the Company or owned by any subsidiary of the Company, Tyco, Purchaser or any other subsidiary of Tyco), if any, will be converted into and represent the right to receive $1,400 together with accrued and unpaid dividends to and including the date of purchase. See Section 13. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR COMMON SHARES PURSUANT TO THE OFFER. Donaldson, Lufkin & Jenrette Securities Corporation, the Company's financial advisor ("DLJ"), has delivered to the Company's Board of Directors its written opinion that the aggregate consideration to be received by the stockholders of the Company pursuant to the Merger Agreement and the Preferred Stock Purchase Agreement is fair to such stockholders from a financial point of view. A copy of such opinion is contained in the Company's Solicitation/Recommendation Statement on Schedule 14D-9 which is being distributed to the Company's stockholders herewith. The Merger Agreement provides that, promptly upon the purchase of Common Shares pursuant to the Offer, Tyco will be entitled to designate such number of Directors, rounded up to the next whole number, on the Board of Directors of the Company as will give Tyco, subject to compliance with Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), representation on the Board of Directors equal to the product of (a) the total number of directors on the Board of Directors and (b) the percentage that (i) the number of Common Shares and Preferred Shares beneficially owned by Tyco or any of its affiliates following consummation of the Offer bears to (ii) the total number of Common Shares and Preferred Shares outstanding. For this purpose, each Common Share will be counted as one share, and each Preferred Share will be counted as the number of Common Shares into which such Preferred Share is convertible. The Company shall, upon request by Tyco, promptly increase the size of the Board of Directors and/or exercise its reasonable best efforts to secure the resignations of such number of directors as is necessary to enable Tyco's designees to be elected to the Board of Directors and shall cause Tyco's designees to be so elected. See Section 13. The Company has informed Purchaser that as of December 23, 1998, (i) 5,569,983 shares of Common Stock were issued and outstanding, (ii) 35,700 shares of Series A Preferred Stock were issued and outstanding, (iii) 5,000 shares of Series B Preferred Stock were issued and outstanding, (iv) no shares of Common Stock or shares of Preferred Stock were issued and held in the treasury of the Company, (vi) no shares of Common Stock or Preferred Stock were held by subsidiaries of the Company, (vii) 4,972,434 shares of Common Stock were reserved for future issuance upon conversion of the outstanding shares of Preferred Stock, (viii) 849,083 shares of Common Stock were reserved for future issuance pursuant to outstanding options, and (ix) 345,939 shares of Common Stock were reserved for future issuance upon exercise of outstanding warrants. In accordance with the Preferred Stock Purchase Agreement, stockholders owning 964,195 Common Shares (constituting 17.3% of the outstanding Common Shares) and all 40,700 outstanding Preferred Shares (which, together with the aforesaid Common Shares, constitute 50.6% of the total voting power of the Company on a fully diluted basis) have agreed to tender such Common Shares in the Offer and to sell such Preferred Shares to Purchaser pursuant to the Preferred Stock Purchase Agreement. Each share of Series A Preferred Stock is convertible into, and has the voting power equal to, 121.21 shares of Common Stock. Each share of Series B Preferred Stock is convertible into, and has the voting power equal to, 129.03 shares of Common Stock. 2 If the Minimum Condition is satisfied, such that Purchaser acquires at least 51% of the Common Shares, it will have sufficient voting power, when taken together with the voting power of the Preferred Shares that it will acquire pursuant to the Preferred Stock Purchase Agreement, to approve the Merger, even if no other stockholder votes in favor of the Merger. Under the DGCL, if a parent corporation owns at least 90% of the shares of each class of shares of a subsidiary corporation, the parent can merge with the subsidiary in a "short form" merger without a vote of stockholders. Assuming that Purchaser acquires the Preferred Shares in accordance with the terms of the Preferred Stock Purchase Agreement and that Purchaser acquires 90% or more of the Common Shares, Purchaser would be able to effect the Merger pursuant to the short form merger provisions of the DGCL, without the action of any other stockholder of the Company. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 3 THE TENDER OFFER 1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will accept for payment and pay for all Common Shares which are validly tendered on or prior to the Expiration Date (as hereinafter defined) and not theretofore withdrawn as permitted by Section 3. The term "Expiration Date" means 12:00 Midnight, New York City time, on Friday, February 12, 1999, unless and until Purchaser (subject to the terms and conditions of the Merger Agreement) shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. The Offer is conditioned upon, among other things, the satisfaction of the Minimum Condition. Subject to the provisions of the Merger Agreement, Purchaser reserves the right (but shall not be obligated) to waive or reduce the Minimum Condition or to waive any or all of the other conditions of the Offer. If, by 12:00 Midnight, New York City time, on Friday, February 12, 1999, or any subsequent Expiration Date, any or all of such conditions have not been satisfied or waived, subject to the provisions of the Merger Agreement, Purchaser may elect to (i) terminate the Offer and return all tendered Common Shares to tendering stockholders, (ii) waive all of the unsatisfied conditions and, subject to any required extension, purchase all Common Shares validly tendered by the Expiration Date and not withdrawn, (iii) extend the Offer and, subject to the right of stockholders to withdraw Common Shares until the adjusted Expiration Date, retain the Common Shares that have been tendered until the expiration of the Offer as extended or (iv) delay acceptance for payment of, or payment for, the Common Shares, subject to complying with applicable law, until the satisfaction or waiver of the conditions of the Offer. Purchaser acknowledges that its reservation of the right to delay payment for Common Shares that it has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires Purchaser to pay the consideration offered or return the Common Shares tendered promptly after the termination or withdrawal of the Offer. See Section 15. Under the terms of the Merger Agreement, Purchaser may not, without the prior written consent of the Company, (i) impose conditions to the Offer in addition to the Offer Conditions (as defined below), (ii) modify or amend the Offer Conditions or any other term of the Offer in a manner adverse to the holders of Common Shares, (iii) waive or amend the Minimum Condition, (iv) reduce the number of Common Shares subject to the Offer, (v) reduce the Common Per Share Amount, (vi) except as provided in the following sentence, extend the Offer, if all of the Offer Conditions are satisfied or waived, or (vii) change the form of consideration payable in the Offer. Notwithstanding the foregoing, Purchaser may, without the consent of the Company, extend the Offer at any time, and from time to time, (i) if at the then scheduled expiration date of the Offer any of the conditions to Purchaser's obligation to accept for payment and pay for Common Shares (the "Offer Conditions") shall not have been satisfied or waived, until such time as such conditions are satisfied or waived; (ii) for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "Commission") or its staff applicable to the Offer; or (iii) if all Offer Conditions are satisfied or waived but the number of Common Shares tendered is less than 90% of the then outstanding number of Common Shares, for an aggregate period of not more than 10 business days (for all such extensions) beyond the latest expiration date that would be permitted under clause (i) or (ii) of this sentence. Subject to the applicable regulations of the Commission and the provisions of the Merger Agreement, Purchaser also expressly reserves the rights, in its sole discretion, at any time or from time to time, (i) to extend the Offer and adjust the Expiration Date, (ii) to terminate the Offer if any of the conditions referred to in Section 15 have not been satisfied or upon the occurrence of any of the events specified in Section 15 and (iii) to waive any condition or otherwise amend the Offer in any respect, in each case by giving oral or written notice of such extension, termination, waiver or amendment to the Depositary and by making a public announcement thereof. If Purchaser accepts for payment any Common Shares pursuant to 4 the terms of the Offer, it will accept for payment all Common Shares validly tendered prior to the Expiration Date and not withdrawn and, subject to clause (i) above, will promptly pay for all Common Shares so accepted for payment. Purchaser acknowledges that notwithstanding anything to the contrary contained in the Offer, Purchaser shall not be required to pay for the Common Shares and may terminate or amend the Offer only if, prior to the Expiration Date, any of the conditions referred to in Section 15 have not been satisfied or waived, or if any of the events specified in Section 15 have occurred. The rights reserved by Purchaser in the preceding paragraph are in addition to Purchaser's rights pursuant to Section 15. Any extension, delay, termination or amendment of the Offer will be followed as promptly as practicable by public announcement thereof, such announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date, in accordance with the public announcement requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that any material change in the information published, sent or given to stockholders in connection with the Offer be promptly disseminated to stockholders in a manner reasonably designed to inform stockholders of such change), and without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. If Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer (including, subject to the Merger Agreement, the Minimum Condition), Purchaser will disseminate additional tender offer materials (including by public announcement as set forth above) and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of the Offer, other than a change in price, percentage of securities sought or inclusion of or change to a dealer's soliciting fee, will depend upon the facts and circumstances, including the materiality, of the changes. In the Commission's view, an offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to stockholders, and, if material changes are made with respect to information that approaches the significance of price and share levels, a minimum of ten business days may be required to allow for adequate dissemination and investor response. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought or inclusion of or change to a dealer's soliciting fee, a minimum ten business day period from the date of such change is generally required to allow for adequate dissemination to stockholders. Accordingly, if, prior to the Expiration Date, Purchaser decreases the number of Common Shares being sought or increases or decreases the consideration offered pursuant to the Offer, and if the Offer is scheduled to expire at any time earlier than the period ending on the tenth business day from the date that notice of such increase or decrease is first published, sent or given to holders of Common Shares, the Offer will be extended at least until the expiration of such ten business day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or a federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. In connection with the Offer, the Company has provided or will provide Purchaser with the names and addresses of all record holders of Common Shares and security position listings of Common Shares held in stock depositories. This Offer to Purchase, the related Letter of Transmittal and other relevant materials will be mailed to registered holders of Common Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Common Shares. 5 2. PROCEDURE FOR TENDERING COMMON SHARES. Except as set forth below, in order for Common Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message (as hereinafter defined) in connection with a book-entry transfer of Common Shares, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, and either (i) certificates representing tendered Common Shares must be received by the Depositary, or such Common Shares must be tendered pursuant to the procedure for book-entry transfer set forth below (and confirmation of receipt of such delivery must be received by the Depositary), in each case on or prior to the Expiration Date, or (ii) the guaranteed delivery procedures set forth below must be complied with. No alternative, conditional or contingent tenders will be accepted. SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of Transmittal (i) if such Letter of Transmittal is signed by the registered holder of the Common Shares tendered therewith, unless such holder has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" in the Letter of Transmittal, or (ii) if Common Shares are tendered for the account of a firm that is a member in good standing of the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program (each being hereinafter referred to as an "Eligible Institution"). See Instruction 1 of the Letter of Transmittal. If a certificate representing Common Shares is registered in the name of a person other than the signatory of the Letter of Transmittal (or a facsimile thereof), or if payment is to be made, or Common Shares not accepted for payment or not tendered are to be returned to a person other than the registered holder, the certificate must be endorsed or accompanied by an appropriate stock power, in either case signed exactly as the name(s) of the registered holder(s) appears on the certificate, with the signature(s) on the certificate or stock power guaranteed by an Eligible Institution. If the Letter of Transmittal or stock powers are signed or any certificate is endorsed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by Purchaser, proper evidence satisfactory to Purchaser of their authority so to act must be submitted. See Instruction 5 of the Letter of Transmittal. BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect to the Common Shares at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Offer within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of the Common Shares by causing the Book-Entry Transfer Facility to transfer such Common Shares into the Depositary's account in accordance with the Book-Entry Transfer Facility's procedure for such transfer. However, although delivery of Common Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message and any other required documents, must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the guaranteed delivery procedures described below must be complied with. The term "Agent's Message" means a message transmitted through electronic means by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a book-entry confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Common Shares that such participant has received, and agrees to be bound by, the terms of the Letter of Transmittal. Delivery of documents to the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures does not constitute delivery to the Depositary. 6 GUARANTEED DELIVERY. If a stockholder desires to tender Common Shares pursuant to the Offer and such stockholder's certificates representing Common Shares are not immediately available (or the procedures for book-entry transfer cannot be completed on a timely basis) or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such Common Shares may nevertheless be tendered, provided that all of the following conditions are satisfied: (a) such tender is made by or through an Eligible Institution; (b) the Depositary receives, prior to the Expiration Date, a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser; and (c) the certificates representing all tendered Common Shares in proper form for transfer (or confirmation of a book-entry transfer of such Common Shares into the Depositary's account at the Book-Entry Transfer Facility), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message) and any other documents required by the Letter of Transmittal are received by the Depositary within three trading days after the date of such Notice of Guaranteed Delivery. A "trading day" is any day on which the American Stock Exchange (the "AMEX") is open for business. The Notice of Guaranteed Delivery may be delivered by hand, or may be transmitted by telegram, telex, facsimile transmission or mail, to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. In all cases, payment for Common Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing such Common Shares (or timely confirmation of a book-entry transfer of such Common Shares into the Depositary's account at the Book-Entry Transfer Facility), (ii) properly completed and duly executed Letter(s) of Transmittal (or facsimile(s) thereof), together with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message) and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when certificates representing Common Shares or confirmations of book-entry transfers of such Common Shares are actually received by the Depositary. The method of delivery of all documents, including certificates for Common Shares, is at the option and risk of the tendering stockholder, and the delivery will be deemed made only when actually received by the Depositary. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. DETERMINATION OF VALIDITY. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tendered Common Shares will be determined by Purchaser in its sole discretion, and its determination shall be final and binding on all parties. Purchaser reserves the absolute right to reject any or all tenders of any Common Shares that it determines are not in appropriate form or the acceptance for payment of or payment for which may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in any tender with respect to any particular Common Shares or any particular stockholder, and Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the Instructions thereto) will be final and binding on all parties. No tender of Common Shares will be deemed to have been validly made until all defects or irregularities relating thereto have been expressly waived or cured to the satisfaction of Purchaser. None of Purchaser, Tyco, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any such notification. OTHER REQUIREMENTS. By executing the Letter of Transmittal, a tendering stockholder irrevocably appoints designees of Purchaser as such stockholder's proxies, in the manner set forth in the Letter of 7 Transmittal, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Common Shares tendered by such stockholder and accepted for payment by Purchaser (and any and all other Common Shares or other securities or rights issued or issuable in respect of such Common Shares on or after January 15, 1999), effective if, when and to the extent that Purchaser accepts such Common Shares for payment pursuant to the Offer. Upon such acceptance for payment, all prior proxies given by such stockholder with respect to such Common Shares or other securities accepted for payment will, without further action, be revoked, and no subsequent proxies may be given by such stockholder nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). Such designees of Purchaser will, with respect to such Common Shares and other securities or rights issuable in respect thereof, be empowered to exercise all voting and other rights of such stockholder as they, in their sole discretion, may deem proper in respect of any annual, special or adjourned meeting of the Company's stockholders, action by written consent in lieu of any such meeting or otherwise. Purchaser reserves the right to require that, in order for Common Shares to be deemed validly tendered, immediately upon Purchaser's acceptance for payment of such Common Shares Purchaser must be able to exercise full voting rights with respect to such Common Shares. Purchaser's acceptance for payment of Common Shares tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering stockholder and Purchaser upon the terms and subject to the conditions of the Offer. To prevent backup withholding of federal income tax on payments made to stockholders with respect to Common Shares purchased pursuant to the Offer, each stockholder must provide the Depositary with his correct taxpayer identification number ("TIN") and certify that he is not subject to backup withholding of federal income tax by completing the Substitute Form W-9 included in the Letter of Transmittal. Non-United States holders must submit a completed Form W-8 to avoid backup withholding. This form may be obtained from the Depositary. See Instructions 10 and 11 of the Letter of Transmittal. 3. WITHDRAWAL RIGHTS. Tenders of Common Shares made pursuant to the Offer will be irrevocable, except that Common Shares tendered may be withdrawn at any time prior to the Expiration Date, and, unless theretofore accepted for payment by Purchaser as provided herein, may also be withdrawn on or after March 16, 1999. For a withdrawal of Common Shares tendered to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Common Shares to be withdrawn, the number of Common Shares to be withdrawn and the name(s) in which the certificate(s) representing such Common Shares are registered, if different from that of the person who tendered such Common Shares. If certificates for Common Shares to be withdrawn have been delivered or otherwise identified to the Depositary, the name of the registered holder and the serial numbers shown on the particular certificates evidencing such Common Shares to be withdrawn must also be furnished to the Depositary prior to the physical release of the Common Shares to be withdrawn. The signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (except in the case of Common Shares tendered by an Eligible Institution). If Common Shares have been tendered pursuant to the procedures for book-entry transfer set forth in Section 2, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with such withdrawn Common Shares and must otherwise comply with the Book-Entry Transfer Facility's procedures. If Purchaser extends the Offer, is delayed in its acceptance for payment of any Common Shares tendered, or is unable to accept for payment or pay for Common Shares tendered pursuant to the Offer, for any reason whatsoever, then, without prejudice to Purchaser's rights set forth herein, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered Common Shares, and such Common Shares may not be withdrawn except to the extent that the tendering stockholder is entitled to and duly exercises withdrawal rights as described in this Section and as otherwise required by Rule 14e-1(c) under the 8 Exchange Act. Any such delay will be accompanied by an extension of the Offer to the extent required by law. Withdrawals of tenders of Common Shares may not be rescinded and Common Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Common Shares may be retendered by again following the procedures described in Section 2 at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by Purchaser, in its sole discretion, and its determination will be final and binding on all parties. None of Purchaser, Tyco, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal, nor shall any of them incur any liability for failure to give any such notification. 4. ACCEPTANCE FOR PAYMENT AND PAYMENT OF OFFER PRICE. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any extension or amendment), Purchaser will accept for payment and will pay for all Common Shares validly tendered prior to the Expiration Date (and not properly withdrawn in accordance with Section 3 above) as soon as practicable after the latest to occur of (a) the expiration or termination of the waiting period applicable to the acquisition of the Common Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (b) the Expiration Date, and (c) subject to compliance with Rule 14e-1(c) under the Exchange Act, the satisfaction or waiver of the conditions of the Offer set forth in Section 15. Any determination concerning the satisfaction of such terms and conditions shall be within the sole discretion of Purchaser, and such determination shall be final and binding on all tendering stockholders. See Section 15. Purchaser expressly reserves the right to delay acceptance for payment of, or payment for, Common Shares in order to comply in whole or in part with any applicable law. If Purchaser desires to delay payment for Common Shares accepted for payment pursuant to the Offer, and such delay would otherwise be in contravention of Rule 14e-1(c) of the Exchange Act, Purchaser will formally extend the Offer. See Section 15. In all cases, payment for Common Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing such Common Shares (or a timely confirmation of a book-entry transfer of such Common Shares into the Depositary's account at the Book-Entry Transfer Facility, as described in Section 2), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message), and (iii) any other documents required by the Letter of Transmittal. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, tendered Common Shares when, as and if Purchaser gives oral or written notice to the Depositary, as agent for the tendering stockholders, of Purchaser's acceptance for payment of such Common Shares. Payment for Common Shares so accepted for payment will be made by the deposit of the purchase price therefor with the Depositary, which will act as agent for the tendering stockholders for the purpose of receiving such payment from Purchaser and transmitting such payment to tendering stockholders. If, for any reason whatsoever, acceptance for payment of any Common Shares tendered pursuant to the Offer is delayed, or Purchaser is unable to accept for payment Common Shares tendered pursuant to the Offer, then, without prejudice to Purchaser's rights under Section 1, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered Common Shares, and such Common Shares may not be withdrawn, except to the extent that the tendering stockholders are entitled to withdrawal rights as described in Section 3 and as otherwise required by Rule 14e-1(c) under the Exchange Act. Under no circumstances will interest be paid on the purchase price by reason of any delay in making such payments. If any tendered Common Shares are not accepted for payment and paid for, certificates representing such Common Shares will be returned (or, in the case of Common Shares delivered by book-entry transfer with the Book-Entry Transfer Facility as permitted by Section 2, such Common Shares will be credited to 9 an account maintained with the Book-Entry Transfer Facility) without expense to the tendering stockholder as promptly as practicable following the expiration or termination of the Offer. If, prior to the Expiration Date, Purchaser increases the consideration to be paid for Common Shares pursuant to the Offer, Purchaser will pay such increased consideration for all Common Shares accepted for payment pursuant to the Offer, whether or not such Common Shares have been tendered or accepted for payment prior to such increase in the consideration. Purchaser reserves the right to transfer or assign in whole or in part to one or more affiliates of Purchaser or Tyco the right to purchase all or any portion of the Common Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Common Shares validly tendered and accepted for payment pursuant to the Offer. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Common Shares pursuant to the Offer (or in the Merger) will be a taxable transaction for United States federal income tax purposes (and may also be a taxable transaction under applicable state, local or other tax laws). In general, a stockholder will recognize gain or loss for such purposes equal to the difference between such stockholder's adjusted tax basis for the Common Shares such stockholder sells in such transaction and the amount of cash received therefor. Gain or loss must be determined separately for each block of Common Shares (i.e., Common Shares acquired at the same cost in a single transaction) sold pursuant to the Offer or converted to cash in the Merger. Such gain or loss will be capital gain or loss if the Common Shares are a capital asset in the hands of the stockholder and will be long term capital gain or loss if the Common Shares were held for more than one year on the date of sale (in the case of the Offer) or the effective time of the Merger (in the case of the Merger). The receipt of cash for Common Shares pursuant to the exercise of dissenters' rights, if any, will generally be taxed in the same manner as described above. Payments in connection with the Offer or the Merger may be subject to "backup withholding" at a rate of 31%. Backup withholding generally applies if the stockholder (a) fails to furnish such stockholder's social security number or TIN, (b) furnishes an incorrect TIN, or (c) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN provided is such stockholder's correct number and that such stockholder is not subject to backup withholding. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax. Certain persons generally are entitled to exemption from backup withholding, including corporations, non-United States persons and financial institutions. Certain penalties apply for failure to furnish correct information and for failure to include reportable payments in income. Each stockholder should consult with his own tax advisor as to such stockholder's qualification for exemption from backup withholding and the procedure for obtaining such exemption. Tendering stockholders may be able to prevent backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. The foregoing discussion may not be applicable to a stockholder who acquired Common Shares pursuant to the exercise of employee stock options or otherwise as compensation, or to a stockholder who is not a United States person for United States federal income tax purposes (including a stockholder who is not a citizen or resident of the United States) or who is otherwise subject to special tax treatment under the Internal Revenue Code. In addition, the foregoing discussion does not address the tax treatment of holders of options or warrants to acquire Common Shares or of securities convertible into Common Shares. The federal income tax discussion set forth above is included for general information only and is based upon present law. Stockholders are urged to consult their tax advisors with respect to the specific tax consequences of the Offer and the Merger to them, including the application and effect of the alternative minimum tax, and state, local or non-United States income and other tax laws. 10 6. PRICE RANGE OF COMMON SHARES; DIVIDENDS. Since April 16, 1997, the Common Shares have traded on the AMEX under the symbol "AGD." The following table sets forth, for the periods indicated, the high and low per Common Share sales prices on the AMEX as reported by published financial sources. The Company has not declared or paid any cash dividends with respect to the Common Shares for the periods indicated.
HIGH LOW --------- --------- FISCAL YEAR ENDED DECEMBER 31, 1997: First Quarter................................................................................... 10 6 7/8 Second Quarter.................................................................................. 9 7/16 5 13/16 Third Quarter................................................................................... 10 8 1/4 Fourth Quarter.................................................................................. 11 7 3/4 FISCAL YEAR ENDED DECEMBER 31, 1998: First Quarter................................................................................... 10 5/8 9 3/8 Second Quarter.................................................................................. 11 1/2 9 1/8 Third Quarter................................................................................... 10 5/8 6 1/8 Fourth Quarter.................................................................................. 8 13/16 6 7/16 FISCAL YEAR ENDING DECEMBER 31, 1999 First Quarter (through January 14, 1999)........................................................ 10 5/8 8
On January 8, 1999, the last trading day prior to the public announcement of the terms of the Offer and the Merger, the closing per Common Share sales price on AMEX was $9 3/4. On January 14, 1999, the last trading day prior to commencement of the Offer, the closing per Common Share sales price on the AMEX was $9 3/16. Stockholders are urged to obtain a current market quotation for the Common Shares. 7. EFFECTS OF THE OFFER ON THE MARKET FOR COMMON SHARES; STOCK QUOTATIONS; REGISTRATION UNDER THE EXCHANGE ACT. The purchase of Common Shares pursuant to the Offer will reduce the number of holders of Common Shares and the number of Common Shares that might otherwise trade publicly. Consequently, depending upon the number of Common Shares purchased and the number of remaining holders of Common Shares, the purchase of Common Shares pursuant to the Offer may adversely affect the liquidity and market value of the remaining Common Shares held by the public. Purchaser cannot predict whether the reduction in the number of Common Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Common Shares or whether it would cause future market prices to be greater or less than the Offer price. The Common Shares are currently listed and traded on the AMEX, which constitutes the principal trading market for the Common Shares. Depending upon the number of Common Shares purchased pursuant to the Offer, the Common Shares may no longer meet the requirements of the AMEX for continued listing and may, therefore, be delisted from such exchange. According to the AMEX's published guidelines, the AMEX could consider delisting the Common Shares if, among other things, the number of publicly-held Common Shares (excluding Common Shares held by officers, directors, their immediate families and concentrated holdings of 5% or more) were fewer than 200,000, there were fewer than 300 public holders of at least 100 Common Shares each or the aggregate market value of the publicly-held Common Shares were less than $1 million. If, as a result of the purchase of Common Shares pursuant to the Offer, the Common Shares no longer meet the requirements of the AMEX for continued listing and the listing of Common Shares on such exchange is discontinued, the market for the Common Shares could be adversely affected. In the event that the AMEX delists the Common Shares, it is possible that the Common Shares would continue to trade in the over-the-counter market and that price quotations would be reported by other sources. The extent of the public market for the Common Shares and the availability of such quotations would, however, depend upon the number of holders of Common Shares remaining at such time, the 11 interests in maintaining a market in Common Shares on the part of securities firms, the possible termination of registration of the Common Shares under the Exchange Act, as described below, and other factors. The Common Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of the Company to the Commission if such Common Shares are not listed on a national securities exchange and there are fewer than 300 holders of record of the Common Shares. The termination of the registration of the Common Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and to the Commission, and would make certain of the provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) and the requirement of furnishing a proxy statement in connection with stockholders' meetings and the related requirement of an annual report to stockholders, and the requirements of Rule 13e-3 with respect to going private transactions, no longer applicable with respect to the Common Shares or to the Company. Furthermore, if registration of the Common Shares under the Exchange Act were terminated, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, may be impaired or, with respect to certain persons, eliminated. According to the Company, as of January 14, 1999, there were 332 holders of record of the Common Shares and another 823 holders of record of shares of Triton Group, Ltd. that have not yet been exchanged for Common Shares. The Common Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on such Common Shares as collateral. Depending on factors similar to those described above regarding listing and market quotations, it is possible the Common Shares would no longer constitute "margin securities" for purposes of the Federal Reserve Board's margin regulations and therefore could no longer be used as collateral for loans made by brokers. If registration of the Common Shares under the Exchange Act were terminated, the Common Shares would no longer be "margin securities." 8. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set forth herein, the information concerning the Company contained in this Offer to Purchase, including financial information, has been furnished by the Company or has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. Although neither Purchaser nor Tyco has any knowledge that would indicate that the statements contained herein based on such information are untrue, neither Purchaser nor Tyco takes any responsibility for the accuracy or completeness of the information concerning the Company furnished by the Company or contained in such documents and records or for any failure by the Company to disclose events or information which may have occurred or may affect the significance or accuracy of any such information but which are unknown to Purchaser or Tyco. The Company was incorporated in the State of Delaware in December 1991 under the name Security Systems Holdings Inc. The Company's principal executive offices are located at 125 Frontage Road, Orange, Connecticut 06477 and its telephone number is (203) 795-9000. The following description of the Company's business has been taken from the Company's Annual Report on Form 10-K for the year ended December 31, 1997. "[The Company] sells and installs burglar and fire systems and provides security monitoring, repair and maintenance services for residential and business subscribers located primarily in the Northeast and Mid-Atlantic regions of the United States. [The Company] provides such security alarm systems and services primarily under its trademark "Alarmguard." [The Company] also sells, installs and services Sonitrol audio-based security systems in New Haven County, Connecticut as a Sonitrol franchisee." 12 Set forth below is a summary of certain consolidated financial information with respect to the Company and its consolidated subsidiaries, excerpted or derived from the information contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 1998. More comprehensive financial information is included in such reports and other documents filed by the Company with the Commission. The financial information summary set forth below is qualified in its entirety by reference to such reports and other documents filed with the Commission and all of the financial information and related notes contained therein. Such reports and other documents may be inspected and copies may be obtained from the offices of the Commission in the manner set forth below. SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS FISCAL YEAR ENDED ENDED SEPTEMBER 30 DECEMBER 31 ---------------------- ---------------------- 1998 1997 1997 1996 ---------- ---------- ---------- ---------- (UNAUDITED) STATEMENT OF OPERATIONS: Total revenues........................................... $ 37,561 $ 24,611 $ 34,260 $ 24,152 Operating loss........................................... (8,278) (5,806) (7,795) (5,937) Net loss................................................. (12,613) (9,857) (13,149) (8,988) Loss applicable to common shares......................... (23,098) (10,057) (13,349) (9,673) Loss per common share.................................... (4.13) (2.23 (1) (2.78 (1) (3.12)(1) BALANCE SHEET DATA: Working capital deficit.................................. $ (5,411) (9,741) $ (9,493) $ (7,052) Total assets............................................. 116,956 74,164 69,850 39,131 Long term liabilities.................................... 70,577 52,842 51,959 34,403 Preferred Stock.......................................... 38,793 0 0 16,273 Stockholders' deficiency................................. (17,694) (1,244) (3,197) (24,898)
- ------------------------ (1) The loss per Common Share for the years ended December 31, 1996 and 1997 as well as the nine months ended September 30, 1997 give effect to the conversion of all common and preferred stock of Security Systems Holdings, Inc. (the predecessor company) to Common Shares of the Company, as if such conversion occurred on January 1, 1996. OTHER INFORMATION. The Common Shares are registered under the Exchange Act. Accordingly, the Company is subject to the informational filing requirements of the Exchange Act and, in accordance therewith, is obligated to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be disclosed in such proxy statements and distributed to the Company's stockholders and filed with the Commission. Such reports, proxy statements and other information should be available for inspection at the public reference facilities at the Commission's principal office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the regional offices of the Commission located at 7 World Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The Commission maintains a site on the World Wide Web, and the reports, proxy statements and other information filed by the Company with the Commission may be accessed electronically on the Web at http://www.sec.gov. Copies of such material may also be obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. 13 9. CERTAIN INFORMATION CONCERNING TYCO AND THE PURCHASER. Purchaser is a newly formed Delaware corporation and an indirect wholly-owned subsidiary of Tyco. To date, Purchaser has not conducted any business other than incident to its formation, the execution and delivery of the Merger Agreement and the commencement of the Offer. Until immediately prior to the time that Purchaser purchases Common Shares pursuant to the Offer and Preferred Shares pursuant to the Preferred Stock Purchase Agreement, it is not anticipated that Purchaser will have any significant assets or liabilities or engage in activities other than those incident to its formation and capitalization and the transactions contemplated by the Offer, the Preferred Stock Purchase Agreement and the Merger. Since Purchaser is newly formed and has minimal assets and capitalization, no meaningful financial information is available. The address of the principal office of Purchaser is One Tyco Park, Exeter, New Hampshire 03833. Tyco is a diversified manufacturing and service company that, through its subsidiaries, operates in four segments: (i) the design, manufacture, installation and service of fire detection and suppression systems, and the installation, monitoring and maintenance of electronic security systems; (ii) the design, manufacture and distribution of disposable medical supplies and other specialty products, and the conduct of vehicle auctions and related services; (iii) the design, manufacture and distribution of flow control products; and (iv) the design, manufacture and distribution of electrical and electronic components, and the design, manufacture, installation and service of undersea cable communication systems. On November 22, 1998, a subsidiary of Tyco entered into a definitive merger agreement for the acquisition of AMP Incorporated, which designs, manufactures, and markets electronic, electrical, and electro-optic connection devices and associated application tools and machines. The AMP acquisition is subject to various conditions. On July 2, 1997, a wholly-owned subsidiary of what was formerly called ADT Limited ("ADT") merged with Tyco International Ltd., a Massachusetts corporation ("Former Tyco"). Upon consummation of the merger, ADT (the continuing public company) changed its name to Tyco International Ltd., and Former Tyco changed its name to Tyco International (US) Inc. Tyco is a Bermuda company. Its registered and principal executive offices are located at The Gibbons Building, 10 Queen Street, Suite 301, Hamilton HM11 Bermuda, and its telephone number is (441) 292-8674. The executive offices of Tyco's principal United States subsidiary, Tyco International (US) Inc., are located at One Tyco Park, Exeter, New Hampshire 03833, and its telephone number is (603) 778-9700. The following table has been derived from Tyco's audited supplemental consolidated financial statements for the year ended September 30, 1998, the nine months ended September 30, 1997 and the year ended December 31, 1996. The following financial information reflects the combined results of operations and financial position of Tyco and United States Surgical Corporation ("US Surgical"), which was acquired by Tyco on October 1, 1998, restated for all periods presented pursuant to the pooling of interests method of accounting. More comprehensive financial information is included in Tyco's Annual Report on Form 10-K for the fiscal year ended September 30, 1998, its Current Reports on Forms 8-K and 8-K/A filed December 10, and December 11, 1998, respectively, and other documents filed by Tyco with the Commission. The following summary is qualified in its entirety by reference to such reports and other documents and the financial information (including any related notes) contained therein. Such reports and other documents should be available for inspection and copies thereof should be obtainable in the manner set forth in Section 8. Such reports and other documents should also be available for inspection at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005, where the common shares of Tyco are listed for trading. 14 SELECTED SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA OF TYCO
YEAR ENDED NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, 1998 (1) 1997(1) 1996 (2) ------------- ------------------ ------------ (IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS) CONSOLIDATED STATEMENTS OF OPERATIONS DATA: Net sales....................................................... $ 13,537.2 $8,457.8 $ 9,216.4 Operating income (loss)(3)(4)(5)................................ 1,625.2 (376.0 ) 131.9 Income (loss) from continuing operations........................ 965.1 (697.7 ) (187.6 ) Income (loss) from continuing operations per common share(6): Basic......................................................... 1.54 (1.23 ) (0.40 ) Diluted....................................................... 1.50 (1.23 ) (0.40 ) Cash dividends per common share(6)(7)........................... 0.10 See (7) below. CONSOLIDATED BALANCE SHEET DATA: Total assets.................................................... $ 18,722.6 $12,141.6 $ 9,986.1 Long-term debt.................................................. 5,254.3 2,613.2 2,020.8 Shareholders' equity............................................ 7,199.6 4,659.3 4,342.4
- ------------------------ (1) In September 1997, Tyco changed its fiscal year end from December 31 to September 30. Accordingly, the nine-month transition period ended September 30, 1997 and the year ended September 30, 1998 is presented. (2) On July 2, 1997, Tyco (formerly ADT) merged with Former Tyco. On August 27, 1997, August 29, 1997, and October 1, 1998, Tyco merged with INBRAND Corporation ("INBRAND"), Keystone International, Inc. ("Keystone"), and US Surgical, respectively. These four combinations are more fully described in Notes 1 and 2 to the Supplemental Consolidated Financial Statements contained in Tyco's Current Report on Form 8-K filed on December 10, 1998. Prior to their respective mergers, ADT, Keystone and US Surgical had a December 31 fiscal year end and Former Tyco had a June 30 fiscal year end. The historical results have been combined using a December 31 fiscal year end for ADT, Keystone, Former Tyco and US Surgical for the year ended December 31, 1996. (3) Operating income in the fiscal year ended September 30, 1998 includes certain charges of $80.5 million, including $9.6 million of merger costs and $70.9 million of costs to exit certain businesses in US Surgical's operations, and restructuring charges of $12.0 million related to severance costs, facility disposals and asset write-downs as part of US Surgical's cost cutting objectives. See Note 15 to the Supplemental Consolidated Financial Statements contained in Tyco's Form 8-K filed on December 10, 1998. (4) Operating loss in the nine months ended September 30, 1997 includes charges related to merger, restructuring and other non-recurring costs of $917.8 million and impairment of long-lived assets of $148.4 million primarily related to the mergers and integration of ADT, Former Tyco, Keystone and INBRAND and charges of $24.3 million for litigation and other related costs and $5.8 million for restructuring charges in US Surgical's operations. See Notes 11 and 15 to the Supplemental Consolidated Financial Statements contained in Tyco's Form 8-K filed on December 10, 1998. The results for the nine months ended September 30, 1997 also include a charge of $361.0 million for the write-off of purchased in-process research and development related to the acquisition of the submarine systems business of AT&T Corp. (5) Operating loss in 1996 includes non-recurring charges of $744.7 million related to the adoption of Statement of Financial Accounting Standards No. 121, $237.3 million related principally to the restructuring of ADT's electronic security services business in the United States and United Kingdom and $8.8 million of fees and expenses related to ADT's acquisition of Automated Security (Holdings) 15 plc, a United Kingdom company. See Notes 11 and 15 to the Supplemental Consolidated Financial Statements contained in Tyco's Form 8-K filed on December 10, 1998. (6) Per share amounts for all periods presented have been restated to give effect to the mergers with Former Tyco, Keystone, INBRAND and US Surgical, a 0.48133 reverse stock split effected on July 2, 1997, and two-for-one stock split distributed on October 22, 1997, effected in the form of a stock dividend. (7) Tyco has paid a quarterly dividend of $0.025 per common share since July 2, 1997, the date of the Former Tyco/ADT merger. ADT had not paid any dividends on its common shares since 1992. Prior to the merger with ADT, Former Tyco paid a quarterly cash dividend of $0.025 per share of common stock since January 1992. Prior to its merger with Tyco, Keystone paid quarterly dividends of $0.19 per share since January 1994. US Surgical paid quarterly dividends of $0.04 per share in the year ended September 30, 1998 and the nine months ended September 30, 1997 and aggregate dividends of $0.08 per share in 1996. The payment of dividends by Tyco in the future will be determined by Tyco's Board of Directors and will depend on business conditions, Tyco's financial condition and earnings and other factors. Except as set forth in this Offer to Purchase, none of Tyco, Purchaser or, to the best of their knowledge, any of the persons listed in Annex I or Annex II hereto, (a) has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss, or the giving or withholding of proxies, (b) has engaged in contacts, negotiations or transactions with the Company or its affiliates concerning a merger, consolidation, acquisition, tender offer or other acquisition of securities, election of directors or a sale or other transfer of a material amount of assets or (c) has had any other transaction with the Company or any of its executive officers, directors or affiliates that would require disclosure under the rules and regulations of the Commission applicable to the Offer. 10. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by Tyco and Purchaser to purchase all Common Shares pursuant to the Offer and the Merger, (including amounts payable upon exercise to optionholders and warrantholders), to purchase the Preferred Shares pursuant to the Preferred Stock Purchase Agreement and to pay related fees and expenses, is estimated to be approximately $114.5 million. Purchaser will obtain all such funds from Tyco or its affiliates. Tyco has sufficient financial resources to satisfy its and Purchaser's obligations under the Offer, the Preferred Stock Purchase Agreement and the Merger Agreement. This Offer is not conditioned upon any financing arrangements. 11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER. Certain information in this Section on the background of the Offer regarding the deliberations of the Company's Board and the actions of the Company's management and financial advisor is based upon information furnished by the Company to Purchaser. In October 1998, DLJ, the Company's financial advisors, contacted Tyco concerning a possible acquisition of the Company. On November 3, 1998, representatives of the Company, including its Chief Executive Officer and President, Mr. Russell MacDonnell, and DLJ met with representatives of Tyco, including Mr. Dennis Kozlowski, Chairman and Chief Executive Officer of Tyco, to discuss the matter further. The Tyco representatives expressed a preliminary interest in such an acquisition, subject to the opportunity to perform a due diligence investigation of the Company. On November 5, 1998, Tyco International (US) Inc. executed a confidentiality letter in favor of the Company. Beginning on December 1, 1998 and continuing through the end of December, Tyco conducted an extensive due diligence investigation of the Company. In the course of this investigation, Tyco personnel reviewed documentation and conducted discussions with the Company's management and other Company 16 representatives concerning the Company's financial condition, monitoring facility, operations, environmental compliance, corporate history and other business and legal matters. Tyco operating personnel also visited the Company's monitoring facility during this period. Based upon Tyco's valuation analysis, on December 8, 1998, Mr. Kozlowski orally delivered to Mr. MacDonnell an offer to acquire all the outstanding common and preferred equity of the Company, including amounts payable to optionholders and warrantholders, for aggregate consideration of approximately $114 million. Later that day, Tyco made a written proposal embodying this aggregate consideration pursuant to which Tyco would acquire the Common Shares at a price of $10 per share and the Preferred Shares at a price of $1,300 per share. The proposal stated that it was subject to completion of Tyco's diligence investigation and contingent upon consummation of the transaction not later than January 30, 1999. The January 30, 1999 date was selected because of Tyco's understanding that holders of the Preferred Shares would be entitled to receive a redemption price of $1,300 per share if a change of control transaction, such as Tyco's acquisition proposal, occurred on or before February 1, 1999, but the holders would be entitled to $1,500 per share if such a transaction were to occur thereafter. Following meetings of the Company's Board of Directors on December 8, and December 9, 1998, Mr. MacDonnell indicated to representatives of Tyco that the Company was interested in pursuing Tyco's proposal, without specifying, however, the per share prices for the Common Shares and Preferred Shares that the Company's Board would approve. Tyco advised that the aggregate consideration that it was prepared to pay in an acquisition transaction was limited as previously discussed, but that it was agreeable to offsetting changes in the per share prices for the respective classes of Company stock within this limitation. Tyco also indicated that, so long as the limitation on aggregate consideration were observed, Tyco would not require that the transaction be consummated by January 30, 1999. The Company informed Tyco that it would be seeking to execute confidentiality agreements with certain holders of the Preferred Shares, so that it could discuss with them a possible transaction with Tyco. Thereafter, Tyco's counsel circulated a first draft of the Merger Agreement. At a regular meeting of the Tyco Board of Directors on December 14, 1998, the Tyco Board considered the proposed acquisition of the Company. Representatives of Tyco's management made a presentation concerning the progress of Tyco's diligence investigation, a review of the Company's operating results and anticipated synergies with Tyco's existing security service operations. The Tyco Board then approved the acquisition of the Company based upon the aggregate transactional value communicated to the Company by Mr. Kozlowski. The Company's Board of Directors held special meetings on December 16, and December 17, 1998 at which Tyco's proposal and the terms of the draft Merger Agreement, as well as possible other strategic alternatives available to the Company, were discussed. DLJ and management of the Company also conducted discussions about this time with holders of the Preferred Stock that had executed confidentiality agreements. Following these meetings and discussions, management of the Company indicated to Tyco its belief that a transaction at a price of $9.34 per share for the Common Shares and $1,400 per share for the Preferred Shares would be acceptable to the Company's Board and the holders of the Preferred Shares. On December 21, 1998, Tyco's counsel circulated a first draft of the Preferred Stock Purchase Agreement. Over the next several days, counsel for Tyco and the Company negotiated the terms of the Merger Agreement, and counsel for Tyco and certain holders of the Preferred Shares negotiated the terms of the Preferred Stock Purchase Agreement. At this time, holders of the Series A Preferred Stock indicated to Tyco and the Company that they were unwilling to forego the payment of accrued dividends through the date of the purchase of their shares, to which they were entitled under the terms of the Preferred Shares. Tyco indicated to the Company and such holders that payment of the dividends would effectively increase Tyco's purchase price for the Company and that, based upon Tyco's valuation analysis, it was not in a position to increase its total offer price for the Company. On December 23, 1998, the Company's Board again met to consider the Tyco acquisition. The Board was advised, among other things, of the proposed payment in the acquisition of $9.34 per Common Share 17 and $1,400 per Preferred Share and of the unresolved issue of the dividend payments on the Series A Preferred Stock. At this meeting, DLJ indicated that it believed that it would be in a position to opine that the aggregate consideration offered under the Tyco proposal was fair to the Company's stockholders from a financial point of view, assuming no significant change in the proposed terms. Although no formal action was taken, members of the Company's Board indicated that they would support a transaction with Tyco on the proposed terms. On January 5, 1999, the Company's Board held a special meeting to receive a report on the status of the transaction. Management reported that the disagreement between Tyco and the holders of the Series A Preferred Stock regarding the payment of dividends persisted. Management also stated that if the per share price payable to the holders of Common Shares were $9.25, Tyco should not object to the payment of dividends on the Series A Preferred Stock, since the aggregate cost of the transaction would not exceed the aggregate purchase price that Tyco was prepared to pay. Although no formal action was taken at the meeting, members of the Company's Board indicated that they would be prepared to approve a transaction on this basis and instructed management to so inform Tyco. Thereafter, Mr. MacDonnell called Mr. Kozlowski to propose a purchase price of $9.25 per Common Share and $1,400 per Preferred Share, provided Tyco agreed that accrued dividends would be paid on the Series A Preferred Stock. Mr. Kozlowski agreed to this proposal. Tyco also agreed to make certain changes to the Preferred Stock Purchase Agreement at the request of the holders of Preferred Shares. Between January 5, and January 8, 1999, counsel for Tyco and the Company finalized the terms of the Merger Agreement and counsel for Tyco and the holders of the Preferred Shares finalized the terms of the Preferred Stock Purchase Agreement. On January 8, 1999, the Company's Board met to consider the revised acquisition proposal. At the meeting, the Company's Board reviewed the transaction with management, outside legal counsel and representatives of DLJ. DLJ then delivered its oral opinion, subsequently confirmed in writing, that as of such date, the aggregate consideration to be received by the Company's stockholders pursuant to the Merger Agreement and the Preferred Stock Purchase Agreement was fair to such stockholders from a financial point of view. After discussion, the Company's Board unanimously approved the Merger Agreement, the Preferred Stock Purchase Agreement and the transactions contemplated by each of them, including the Offer and the Merger, and determined to recommend that the holders of the Common Shares tender their shares pursuant to the Offer. Also on January 8, 1999, the holders of more than 75% of the Preferred Stock delivered the certificates representing their shares to the escrow agent under the Preferred Stock Purchase Agreement and delivered to Tyco's counsel their signature pages to the Preferred Stock Purchase Agreement. Following approval of the Merger Agreement by the Company's Board, Tyco and the Company entered into the Merger Agreement. The Merger Agreement was publicly announced by joint press release made prior to the opening of the U.S. financial markets on January 11, 1999. 12. PURPOSE OF THE OFFER; SHORT FORM MERGER; PLANS FOR THE COMPANY; DISSENTERS' RIGHTS; GOING PRIVATE TRANSACTIONS. PURPOSE OF THE OFFER. The purpose of the Offer and the purchase of the Preferred Shares pursuant to the Preferred Stock Purchase Agreement is for Purchaser to acquire control of, and a majority equity interest in, the Company. The purpose of the Merger is to acquire the remaining equity interest. The acquisition of the entire common equity interest in the Company has been structured as a cash tender offer followed by a cash merger in order to provide a prompt and orderly transfer of ownership of the common equity of the Company from the public stockholders to Tyco and to provide public stockholders with cash for all of their Common Shares. Pursuant to the Preferred Stock Purchase Agreement, Purchaser will pay for and acquire all of the outstanding preferred equity promptly following the purchase of Common Shares in the Offer. Accordingly, upon consummation of the transactions contemplated by the Merger Agreement and the Preferred Stock Purchase Agreement, Tyco will own the entire equity interest in the Company. 18 Under the DGCL and the Company's Certificate of Incorporation, the approval of the Board of Directors of the Company and the affirmative vote of a majority of the holders of outstanding Common Shares and Preferred Shares, voting as a single class, are required to approve and adopt the Merger Agreement and the Merger. The Board of Directors of the Company has approved the Offer, the Merger and the Merger Agreement and the transactions contemplated thereby, and, unless the Merger is consummated pursuant to the short-form merger provisions under the DGCL described below, the only remaining required corporate action of the Company is the approval and adoption of the Merger Agreement and the Merger by the affirmative vote of the holders of a majority of the outstanding voting power of the Company. If the Minimum Condition is satisfied, Purchaser will have sufficient voting power to cause the approval and adoption of the Merger Agreement and the Merger without the affirmative vote of any other stockholder. The Merger Agreement provides that, if approval of the Merger by the stockholders of the Company is required by law, the Company will, as soon as possible following payment for Common Shares in the Offer, duly call and hold a meeting of stockholders for the purpose of obtaining stockholder approval of the Merger, and the Company, through its Board of Directors, will recommend to stockholders that such approval be given. SHORT FORM MERGER. Under the DGCL, if Purchaser acquires at least 90% of the outstanding Shares of each class, Purchaser will be able to approve the Merger without a vote of the Company's other stockholders. The Merger Agreement provides that if Purchaser, or any other direct or indirect subsidiary of Tyco, acquires at least 90% of each outstanding class of Shares, Tyco, Purchaser and the Company will take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the expiration of the Offer without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL. Pursuant to the Preferred Stock Purchase Agreement, Purchaser should acquire all of the outstanding Preferred Shares. If Purchaser acquires at least 90% of the Common Shares in the Offer, it will be able to effect the Merger under Section 253 of the DGCL. In the event that all of the conditions to Purchaser's obligation to purchase Common Shares in the Offer are satisfied or waived and the number of Common Shares tendered is less than 90% of the outstanding Common Shares, Purchaser may, subject to the limitations set forth in the Merger Agreement, extend the Offer for an aggregate period of not more than 10 business days (for all such extensions) without the consent of the Company. See Section 1. If Purchaser does not acquire at least 90% of the outstanding Common Shares, a significantly longer period of time may be required to effect the Merger, because a vote of the Company's stockholders would be required under the DGCL. PLANS FOR THE COMPANY. Except as otherwise set forth in this Offer to Purchase, it is expected that, initially following the Merger, the business and operations of the Company will be continued by the Surviving Corporation substantially as they are currently being conducted, but within Tyco's ADT security services unit. The directors of Purchaser will be the initial directors of the Surviving Corporation, and the officers of the Company and such other persons as are designated by Tyco will be the initial officers of the Surviving Corporation. Upon completion of the Offer, Tyco intends to conduct a detailed review of the Company and its assets, corporate structure, capitalization, operations, policies, management and personnel. After such review, Tyco will determine what actions or changes, if any, would be desirable in light of the circumstances which then exist, and reserves the right to effect such actions or changes. Except as described in this Offer to Purchase, neither Tyco nor Purchaser has any present plans or proposals that would relate to or result in (i) any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries, (ii) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries, (iii) any change in the Company's Board of Directors or management, (iv) any material change in the Company's capitalization or dividend policy, (v) any other material change in the Company's corporate structure or business, (vi) a class of securities of the Company being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, or (vii) a class 19 of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g) of the Exchange Act. DISSENTERS' RIGHTS. No dissenters' rights are available in connection with the Offer. However, if the Merger is consummated, stockholders of the Company may have certain rights under the DGCL to dissent, and demand appraisal of, and to obtain payment for the fair value of their Common Shares. Such rights, if the statutory procedures were complied with, could lead to a judicial determination of the fair value of the Common Shares (excluding any element of value arising from the accomplishment or expectation of the Merger) to be required to be paid in cash to such dissenting holders for their Common Shares. In addition, such dissenting stockholders would be entitled to receive payment of a fair rate of interest from the date of consummation of the Merger on the amount determined to be the fair value of their Common Shares. In determining the fair value of the Common Shares, a Delaware court would be required to take into account all relevant factors. Accordingly, such determination could be based upon considerations other than, or in addition to, the market value of the Common Shares, including, among other things, asset value and earning capacity. In WEINBERGER V. UOP, INC., the Delaware Supreme Court stated, among other things, that "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered in an appraisal proceeding. Therefore, the value so determined in any appraisal proceeding could be different from the price being paid in the Offer. GOING PRIVATE TRANSACTIONS. The Merger would have to comply with any applicable Federal law operative at the time. The Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger or another business combination following the purchase of Common Shares pursuant to the Offer in which Purchaser or Tyco seeks to acquire the remaining Common Shares not held by it. Purchaser believes, however, that Rule 13e-3 will not be applicable to the Merger. If applicable, Rule 13e-3 requires, among other things, that certain financial information concerning the Company and certain information relating to the fairness of such transaction and the consideration offered to minority stockholders in such transaction be filed with the Commission and disclosed to stockholders prior to the consummation of such transaction. 13. THE MERGER AGREEMENT; PREFERRED STOCK PURCHASE AGREEMENT. THE MERGER AGREEMENT The following summary of certain provisions of the Merger Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 referred to in Section 18, is qualified in its entirety by reference to the text of the Merger Agreement. Capitalized terms used in the following summary and not otherwise defined in this Offer to Purchase shall have the meanings set forth in the Merger Agreement. THE OFFER. The Merger Agreement provides that Purchaser will commence the Offer and that, upon the terms and subject to the prior satisfaction or waiver of the conditions of the Offer, Purchaser will purchase all Common Shares (which is defined as the shares of common stock together with the associated Rights) validly tendered pursuant to the Offer. The Merger Agreement provides that, without the written consent of the Company, Purchaser will not (i) decrease the Common Per Share Amount or change the form of consideration payable in the Offer, (ii) decrease the number of Common Shares sought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition or (iv) impose additional conditions to the Offer or amend any other term of the Offer in any manner adverse to the holders of Common Shares, except that if on the initially scheduled Expiration Date all conditions to the Offer shall not have been satisfied or waived, Purchaser may, from time to time, in its sole discretion, extend the Expiration Date. The Merger Agreement provides that if, immediately prior to the Expiration Date, as it may be extended, the Common Shares tendered and not withdrawn pursuant to the Offer equal less than 90% of the outstanding Common Shares, Purchaser may extend the Offer for a period not to exceed 10 business days. 20 THE MERGER. The Merger Agreement provides that, following the consummation of the Offer and subject to the terms and conditions thereof, at the effective time of the Merger (the "Effective Time") Purchaser shall be merged with and into the Company and, as a result of the Merger, the separate corporate existence of Purchaser shall cease, and the Company shall continue as the Surviving Corporation and an indirect subsidiary of Tyco. The respective obligations of Tyco and Purchaser, on the one hand, and the Company, on the other hand, to effect the Merger are subject to the satisfaction at or prior to the Effective Time of each of the following conditions; (i) Tyco or Purchaser or their affiliates shall have consummated the Offer, unless such failure to purchase is a result of a breach of Tyco's or Purchaser's obligations under the Merger Agreement, (ii) the Merger, the Merger Agreement and the transactions contemplated thereby shall have been approved by the requisite vote of the stockholders, if required by applicable law, in order to consummate the Merger, (iii) no order, statute, rule, regulation, executive order, stay, decree, judgment or injunction shall have been enacted, entered, promulgated or enforced by any court or other governmental authority which prohibits or prevents the consummation of the Merger which has not been vacated, dismissed or withdrawn prior to the Effective Time, and (iv) all consents of any governmental authority required for the consummation of the Merger and the transactions contemplated by the Merger Agreement shall have been obtained other than those consents the failure to obtain which is not reasonably likely to have a material adverse effect on the business, assets, condition (financial or other), liabilities or results of operations of the Surviving Corporation and its subsidiaries taken as a whole. At the Effective Time of the Merger, (i) each issued and outstanding Common Share (other than Common Shares that are held by stockholders properly exercising dissenters' rights under the DGCL and Common Shares to be cancelled pursuant to clause (iii) below) will be canceled and extinguished and be converted into the right to receive the Common Per Share Amount in cash payable to the holder thereof, without interest, (ii) each issued and outstanding Preferred Share (other than Preferred Shares that are held by stockholders properly exercising dissenters' rights under the DGCL and Preferred Shares to be cancelled as provided in clause (iii) below) will be cancelled and extinguished and converted into the right to receive $1,400 per Preferred Share plus accrued and unpaid dividends to and including the date of purchase (the "Preferred Per Share Amount"), (iii) each Share held in the treasury of the Company and each Share owned by Tyco or any direct or indirect wholly owned subsidiary of Tyco immediately before the Effective Time shall be canceled and extinguished, and no payment or other consideration shall be made with respect thereto and (iv) the shares of Purchaser common stock outstanding immediately prior to the Merger will be converted into 1,000 shares of the common stock of the Surviving Corporation, which shares will constitute all of the issued and outstanding capital stock of the Surviving Corporation. THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that promptly upon the purchase by Tyco of Common Shares pursuant to the Offer (and provided that the Minimum Condition has been satisfied), Tyco shall be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as will give Tyco, subject to compliance with Section 14(f) of the Exchange Act, representation on the Board of Directors of the Company equal to at least that number of directors which equals the product of the total number of directors on the Board of Directors of the Company (giving effect to the directors appointed or elected pursuant to this sentence and including current directors serving as officers of the Company) multiplied by the percentage that the aggregate number of Shares beneficially owned by Tyco or any affiliate of Tyco (including such Common Shares as are accepted for payment pursuant to the Offer, but excluding Common Shares held by the Company) bears to the number of Shares outstanding. For this purpose, each Common Share shall be counted as one Share, and each Preferred Share shall be counted as the number of Common Shares into which such Preferred Share is convertible. At such time, if requested by Tyco, the Company will also cause each committee of the Board of Directors of the Company to include persons designated by Tyco constituting the same percentage of each such committee as Tyco's designees are of the Board of Directors of the Company. The Company shall, upon request by Tyco, promptly increase the size of the Board of Directors of the Company or exercise reasonable best efforts to secure the resignations of such number of 21 directors as is necessary to enable Tyco's designees to be elected to the Board of Directors of the Company in accordance with terms of this section and to cause Tyco's designees so to be elected. Notwithstanding the foregoing provisions, until the Effective Time the Board of Directors of the Company shall have at least two directors who are directors on the date of the Merger Agreement and each of whom is neither an officer of the Company nor a designee, shareholder, affiliate or associate (within the meaning of the federal securities laws) of Tyco (such directors, the "Independent Directors"). Each Independent Director shall be designated by the Company, unless (i) the Company is then required to comply with Section VIII.2(j) of the Preferred Stock Purchase Agreement dated as of February 2, 1998 between the Company and the holders on January 8, 1999 of the Preferred Stock (the "Current Preferred Holders") (which section permits Advance Capital Offshore Partners, L.P. ("Advance") to designate one director (the "Advance Director") so long as Advance owns any Preferred Shares and at least 20% of the Preferred Shares remain outstanding), in which case one Independent Director shall be an Advance Director and the other Independent Director shall be designated by the Company, or (ii) the Company is not then required to comply with the aforementioned Section VIII.2(j) but the Current Preferred Holders continue to own at least 10% of the outstanding Preferred Shares (the "Current Preferred Director Condition"), in which case one Independent Director shall be designated by Current Preferred Holders holding a majority of the outstanding Preferred Shares at such time excluding any Preferred Shares then held by Tyco or Purchaser (the "Majority of Current Preferred") and the other Independent Director shall be designated by the Company. If no Independent Directors remain, persons shall be designated to fill the vacancies by the Company or, if the Current Preferred Director Condition is satisfied, one such person shall be designated by the Company and one by the Majority of Current Preferred. In any event, each person so designated shall be neither an officer of the Company nor a designee, shareholder, affiliate or associate of Tyco, and each such person shall be deemed to be an Independent Director for purposes of the Merger Agreement. Notwithstanding anything in the Merger Agreement to the contrary, prior to the Effective Time, the unanimous vote of the Independent Directors shall be required to (i) amend or terminate the Merger Agreement on behalf of the Company, (ii) exercise or waive any of the Company's rights or remedies thereunder, (iii) extend the time for performance of Tyco's obligations thereunder, (iv) take any other action by the Company in connection with the Merger Agreement required to be taken by the Board of Directors of the Company or (v) amend the Company's Certificate of Incorporation or the Company's Bylaws, each as in effect on January 8, 1999. STOCKHOLDERS' MEETING. Pursuant to the Merger Agreement, the Company will, if required by applicable law in order to consummate the Merger, duly call, give notice of, convene and hold a special meeting of its stockholders as promptly as practicable following the consummation of the Offer for the purpose of voting upon the Merger and related transactions. The Merger Agreement provides that the Company will, if required by applicable law in order to consummate the Merger, prepare and file with the Commission and, when cleared by the Commission, will mail to stockholders a proxy statement in connection with a meeting of the Company's stockholders to vote upon the Merger and related transactions, or an information statement, as appropriate, satisfying all requirements of the Exchange Act. If Purchaser acquires at least a majority of the Common Shares, it will have sufficient voting power, when taken together with the voting power of the Preferred Shares that it will acquire pursuant to the Preferred Stock Purchase Agreement, to approve the Merger, even if no other stockholder votes in favor of the Merger. The Merger Agreement provides that in the event that Tyco or Purchaser acquires at least 90% of each class of Shares, pursuant to the Offer, the Preferred Stock Purchase Agreement or otherwise, Tyco, Purchaser and the Company will take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL. OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES. The Merger Agreement provides that each of the Company and Tyco shall take all reasonable actions necessary to provide that all then outstanding options to purchase Common Shares, whether or not then exercisable or vested ("Company Options"), shall 22 become fully exercisable and vested upon the consummation of the Offer. Holders of Company Options that have become fully exercisable and vested upon the consummation of the Offer in accordance with the provisions of the preceding sentence will have a period of sixty days following the consummation of the Offer to surrender their options to the Company in exchange for cash equal to the excess of (A) the aggregate value of the Common Shares underlying such options, based on the Common Per Share Amount, over (B) the aggregate exercise price for the Common Shares underlying such options. Each of the Company and Tyco shall take all reasonable actions necessary to provide that, upon consummation of the Merger, all then outstanding Company Options shall be converted into the right to receive cash equal to the excess of (i) the aggregate value of the Common Shares underlying such options, based on the Common Per Share Amount, over (ii) the aggregate exercise price for the Common Shares underlying such options. The Merger Agreement provides that each of the Company and Tyco shall take all reasonable actions necessary so that each of the warrants to purchase 50,000 Common Shares at a price of $5.00 per share, subject to adjustment, the warrants to purchase 80,000 Common Shares at a price of $8.66 per share, subject to adjustment, and the warrants to purchase 215,939 Common Shares at a price of $11.11 per share, subject to adjustment (collectively, the "Company Warrants"), shall be exercisable, from and after the Effective Time, for an amount of cash equal in the aggregate to the Common Per Share Amount multiplied by the number of Common Shares for which such warrant was exercisable immediately prior to the Effective Time. Otherwise, the exercise of any Company Warrant shall remain subject to all terms and conditions provided in the applicable Company Warrant and/or the applicable warrant agreement. INTERIM OPERATIONS; COVENANTS. Pursuant to the Merger Agreement, the Company has agreed that, except as expressly contemplated or provided by the Merger Agreement or in the Company Disclosure Letter delivered by the Company to Tyco and Purchaser in connection with the Merger Agreement or consented to in writing by Tyco (which consent shall not be unreasonably denied), after January 8, 1999, and prior to the Effective Time, (i) the Company shall conduct, and it shall cause its subsidiaries to conduct, its or their businesses in the ordinary course and consistent with past practice, and the Company shall, and it shall cause its subsidiaries to, use its or their reasonable best efforts to preserve substantially intact its business organization, to keep available the services of its present officers and employees and to preserve the present commercial relationships of the Company and its subsidiaries with persons with whom the Company or its subsidiaries do significant business and (ii) without limiting the generality of the foregoing, neither the Company nor any of its subsidiaries will: (A) amend or propose to amend its Certificate of Incorporation or Bylaws in any material respect; (B) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any shares of, or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any shares of, the capital stock or other securities of the Company or any of its subsidiaries, including, but not limited to, any securities convertible into or exchangeable for shares of stock of any class of the Company or any of its subsidiaries, except for (a) the issuance of shares pursuant to the exercise of Company Options outstanding on the date of the Merger Agreement in accordance with their present terms, (b) the issuance of shares upon the exercise of Company Warrants outstanding on the date of the Merger Agreement in accordance with their present terms and (c) the issuance of shares upon the conversion of Preferred Shares outstanding on January 8, 1999 in accordance with the present terms of the Preferred Stock; (C) split, combine or reclassify any shares of its capital stock or declare, pay or set aside any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, other than dividends to the holders of Preferred Shares in accordance with the present terms of the Preferred Stock and dividends or distributions to the Company or one of its subsidiaries, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any shares of its capital stock or other securities; 23 (D) create, incur or assume any indebtedness for borrowed money or issue any debt securities, except pursuant to the Company's bank credit agreement, or make any loans (except as provided in clause (b) of paragraph (E) below); (E) other than in the ordinary course of business consistent with past practice, (a) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for the obligations of any person (other than the Company or one of its subsidiaries); (b) make any capital expenditures or make any advances or capital contributions to, or investments in, any other person (other than to a subsidiary of the Company); (c) voluntarily incur any material liability or obligation (absolute, accrued, contingent or otherwise); or (d) sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any assets or properties, real, personal or mixed, material to the Company and its subsidiaries taken as a whole other than to secure debt permitted under paragraph (D); (F) increase in any manner the compensation of any of its officers or employees (other than, except with respect to employees who are executive officers or directors, in the ordinary course of business reasonably consistent with past practice) or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any stockholder, officer, director, employee, consultant or affiliate other than, in any such case referred to above, as may be required by law or as required pursuant to the terms of agreements in effect on the date of the Merger Agreement or in the ordinary course of business reasonably consistent with past practice and other than arrangements with new employees (other than employees who will be officers of the Company) hired in the ordinary course of business reasonably consistent with past practice and providing for compensation (other than equity-based compensation) and other benefits consistent with those provided for similarly situated employees of the Company as of the date of the Merger Agreement; (G) alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any subsidiary or the Company; (H) except as may be required as a result of a change in law or as required by the Commission, change any of the accounting principles or practices used by it; (I) make any tax election or settle or compromise any material income tax liability; (J) pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in, or contemplated by, the financial statements (or the notes thereto) of the Company or incurred in the ordinary course of business consistent with past practice; (K) except to the extent necessary for the exercise of its fiduciary duties by the Board of Directors of the Company as set forth in, and consistent with the provisions of the Merger Agreement described below under "No Solicitation," waive, amend or allow to lapse any term or condition of any confidentiality or "standstill" agreement to which the Company or any subsidiary is a party; or (L) take, or agree in writing or otherwise to take, any of the foregoing actions or any action which would make any of the representations or warranties of the Company contained in the Merger Agreement untrue or incorrect in any material respect at or prior to the Effective Time. 24 NO SOLICITATION. The Merger Agreement provides that the Company shall not, directly or indirectly, through any officer, director, employee, representative or agent of the Company or any of its subsidiaries, solicit or encourage the initiation of (including by way of furnishing information) any inquiries or proposals regarding any merger, sale of assets, sale of shares of capital stock (including without limitation by way of a tender offer) or similar transactions involving the Company or any of its subsidiaries that if consummated would constitute an Alternative Transaction (as defined below) (any of the foregoing inquiries or proposals being referred to herein as a "Company Takeover Proposal"). Nothing contained in the Merger Agreement shall prevent the Board of Directors of the Company from (i) furnishing information to a third party which has made a BONA FIDE Company Takeover Proposal that is a Superior Proposal (as defined below) not solicited in violation of the Merger Agreement, PROVIDED that such third party has executed an agreement with confidentiality provisions substantially similar to those then in effect between the Company and Tyco or (ii) subject to compliance with the other terms of this section, considering and negotiating a BONA FIDE Company Takeover Proposal that is a Superior Proposal not solicited in violation of the Merger Agreement; PROVIDED that, as to each of clauses (i) and (ii), the Board of Directors of the Company reasonably determines in good faith (after due consultation with independent counsel, which may be Latham & Watkins) that it is or is reasonably likely to be required to do so in order to discharge properly its fiduciary duties. For purposes of the Merger Agreement, a "Superior Proposal" means any proposal made by a third party to acquire, directly or indirectly, for consideration consisting of cash and/or securities, all of the equity securities of the Company entitled to vote generally in the election of directors or all or substantially all the assets of the Company, on terms which the Board of Directors of the Company reasonably believes (after consultation with a financial advisor of nationally recognized reputation) to be more favorable from a financial point of view to its stockholders than the Offer and the Merger taking into account at the time of determination all factors relating to such proposed transaction deemed relevant by the Board of Directors of the Company, including, without limitation, the financing thereof, the proposed timing thereof and all other conditions thereto and any changes to the financial terms of the Merger Agreement proposed by Tyco and Purchaser. "Alternative Transaction" means any of (i) a transaction pursuant to which any person (or group of persons) other than Tyco or its affiliates (a "Third Party") acquires or would acquire more than 20% of the outstanding shares of any class of equity securities of the Company, whether from the Company or pursuant to a tender offer or exchange offer or otherwise, (ii) a merger or other business combination involving the Company pursuant to which any Third Party acquires more than 20% of the outstanding equity securities of the Company or the entity surviving such merger or business combination; (iii) any transaction pursuant to which any Third Party acquires or would acquire control of assets (including for this purpose the outstanding equity securities of subsidiaries of the Company and securities of the entity surviving any merger or business combination including any of the subsidiaries of the Company) of the Company or any of its subsidiaries having a fair market value (as determined by the Board of Directors of the Company in good faith) equal to more than 20% of the fair market value of all the assets of the Company and its subsidiaries, taken as a whole, immediately prior to such transaction, or (iv) any other consolidation, business combination, recapitalization or similar transaction involving the Company or any of its subsidiaries, other than the transactions contemplated by the Merger Agreement; PROVIDED, HOWEVER, that the term Alternative Transaction shall not include any acquisition of securities by a broker dealer in connection with a BONA FIDE public offering of such securities. Notwithstanding anything to the contrary contained in the Merger Agreement, prior to the Effective Time, the Company may, in connection with a possible Company Takeover Proposal, refer any third party to the provisions of the Merger Agreement described in this section and, below, under the caption "Termination; Fees" and make a copy of such provisions available to a third party. The Company shall immediately notify Tyco and Purchaser after receipt of any Company Takeover Proposal, or any modification of or amendment to any Company Takeover Proposal, or any request for nonpublic information relating to the Company or any of its subsidiaries in connection with a Company Takeover Proposal or for access to the properties, books or records of the Company or any subsidiary by any person or entity that informs the Board of Directors of the Company or such subsidiary that it is 25 considering making, or has made, a Company Takeover Proposal. Such notice to Tyco and Purchaser shall be made orally and in writing, and shall indicate the identity of the person making the Company Takeover Proposal or intending to make the Company Takeover Proposal or requesting non-public information or access to the books and records of the Company, the terms of any such Company Takeover Proposal or modification or amendment to a Company Takeover Proposal, and whether the Company is providing or intends to provide the person making the Company Takeover Proposal with access to information concerning the Company as provided in the preceding paragraph. The Company shall also immediately notify Tyco and Purchaser, orally and in writing, if it enters into negotiations concerning any Company Takeover Proposal. Except as set forth in this section, neither the Board of Directors of the Company nor any committee thereof shall (i) withdraw or modify, or indicate publicly its intention to withdraw or modify, in a manner adverse to Tyco, the approval or recommendation by such Board of Directors or such committee of the Offer or the Merger and related transactions, (ii) approve or recommend, or indicate publicly its intention to approve or recommend, any Company Takeover Proposal or (iii) cause the Company to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, a "Company Acquisition Agreement") related to any Company Takeover Proposal. Notwithstanding the foregoing, in the event that prior to the Effective Time the Board of Directors of the Company determines in good faith, with the advice of outside counsel, that the failure to do so could reasonably be determined to be a breach of its fiduciary duties to the Company's stockholders under applicable law, the Board of Directors of the Company may (subject to this and the following sentences) approve or recommend a Superior Proposal and, in connection therewith, withdraw or modify its approval or recommendation of the Offer or the Merger and related transactions and/or terminate the Merger Agreement (and concurrently with or after such termination, if it so chooses, cause the Company to enter into any Company Acquisition Agreement with respect to any Superior Proposal), but only at a time that is after the third business day following Tyco's receipt of written notice advising Tyco that the Board of Directors of the Company has received a Superior Proposal and, in the case of any previously received Superior Proposal that has been materially modified or amended, such modification or amendment and specifying the material terms and conditions of such Superior Proposal, modification or amendment. Nothing in the foregoing provisions shall prohibit the Company from taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure to the Company's stockholders if, in the good faith judgment of the Board of Directors of the Company, with the advice of outside counsel, failure so to disclose could be determined to be a breach of its fiduciary duties to the Company's stockholders under applicable law; PROVIDED, HOWEVER, that neither the Company nor its Board of Directors nor any committee thereof shall, except as permitted by the immediately preceding paragraph, withdraw or modify or indicate publicly its intention to withdraw or modify, its position with respect to the Offer or the Merger and related transactions or approve or recommend, or indicate publicly its intention to approve or recommend, a Company Takeover Proposal. For so long as the Merger Agreement shall not have been terminated in accordance with its terms, the Board of Directors of the Company shall not redeem the Rights or waive or amend any provision of the Rights Agreement, in any such case to permit or facilitate the consummation of any Company Takeover Proposal or Alternative Transaction. RIGHTS AGREEMENT. The Merger Agreement provides that the Board of Directors of the Company shall take all further action, if any, necessary to render the Rights inapplicable to the Offer, the Merger and the other transactions contemplated by the Merger Agreement, in addition to having previously authorized and approved an amendment to the Rights Agreement to the effect that none of Purchaser and its affiliates shall become an "Acquiring Person" (as defined in the Rights Agreement), and no Distribution Date, Share Acquisition Date or Triggering Event (each as defined in the Rights Agreement) shall occur, by reason of the approval, execution, or delivery of the Merger Agreement, the transactions contemplated thereby or any announcement of same. 26 INDEMNIFICATION AND INSURANCE. From and after the Effective Time, the Surviving Corporation shall indemnify and hold harmless all past and present officers and directors (the "Indemnified Parties") of the Company and of the subsidiaries of the Company to the full extent such persons may be indemnified by the Company pursuant to Delaware law, the Company's Certificate of Incorporation and Bylaws, as each is in effect on January 8, 1999, for acts and omissions (x) arising out of or pertaining to the transactions contemplated by the Merger Agreement or arising out of the documents related to the Offer or (y) otherwise with respect to any acts or omissions occurring or arising at or prior to the Effective Time and shall advance reasonable litigation expenses incurred by such persons in connection with defending any action arising out of such acts or omissions, PROVIDED that such persons provide the requisite affirmations and undertaking, as set forth in applicable provisions of the DGCL. In addition, Tyco will provide, or cause the surviving Corporation to provide, for a period of not less than six years after the Effective Time, the Company's current directors and officers an insurance and indemnification policy that provides coverage for events occurring or arising at or prior to the Effective Time (the "D&O Insurance") that is no less favorable than the existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage; PROVIDED, HOWEVER, that Tyco and the Surviving Corporation shall not be required to pay an annual premium for the D&O Insurance in excess of 300% of the annual premium currently paid by the Company for such insurance, but in such case shall purchase as much such coverage as possible for such amount. The Merger Agreement provides that the foregoing provisions are intended to benefit the Indemnified Parties and shall be binding on all successors and assigns of Tyco, Purchaser, the Company and the Surviving Corporation. In the Merger Agreement, Tyco has agreed to guarantee the performance by the Surviving Corporation of the indemnified obligations set forth above, which guaranty is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the bankruptcy or insolvency of the Surviving Corporation or any person. The Indemnified Parties shall be intended third-party beneficiaries of the foregoing provisions on indemnification and insurance. REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the Company has made customary representations and warranties to Tyco and Purchaser with respect to, among other things, its organization, capitalization, subsidiaries, authority relative to the Merger Agreement, governmental approvals with respect to the Merger Agreement, the absence of contractual or legal violations resulting from the Merger Agreement, public filings, financial statements, the absence of material adverse effects on the Company and certain other events since December 31, 1997, the absence of undisclosed liabilities, compliance with laws, governmental permits, litigation, material contracts, employee benefit plans, taxes, intellectual property, labor matters, the absence of limitations on conduct of business, title to property, leased premises, environmental matters, insurance, customers, interested party transactions, alarm contracts, brokers and finders, year 2000 readiness, the Company's alarm service contracts, and the Company's central monitoring station. REASONABLE BEST EFFORTS. Under the Merger Agreement, each of the Company, Tyco and Purchaser has agreed to use reasonable best efforts to take all actions and to do all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by the Merger Agreement, including, but not limited to, (i) obtaining all consents from governmental authorities and other third parties required for the consummation of the Offer and the Merger and the transactions contemplated thereby and (ii) timely making all necessary filings under the HSR Act. The Company, Tyco and Purchaser have also agreed to use reasonable best efforts to take all actions and to do all things necessary to satisfy the other conditions of the closing of the Merger. 27 PUBLIC ANNOUNCEMENTS. So long as the Merger Agreement is in effect, the Company, on the one hand, and Tyco and Purchaser, on the other, have agreed not to issue or cause the publication of any press release or any other announcement with respect to the Offer or the Merger or the transactions contemplated thereby without the consent of the other party (such consent not to be unreasonably withheld or delayed), except where such release or announcement is required by applicable law or pursuant to any applicable listing agreement with, or rules or regulations of, any stock exchange on which shares of the capital stock of the Company or Tyco, as the case may be, are listed or the NASD, or other applicable securities exchange, in which case the parties will consult prior to making the announcement. TERMINATION; FEES. The Merger Agreement provides that it may be terminated at any time prior to the Effective Time, whether before or after approval of the stockholders of the Company described therein: (a) by mutual written consent of Tyco and the Company; (b) by either Tyco or the Company if any governmental authority shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the consummation of the transactions contemplated by the Merger Agreement and such order, decree or ruling or other action shall have become final and nonappealable; (c) by Tyco if (i) the Company shall have breached or failed to perform in any material respect any of its covenants or other agreements contained in the Merger Agreement, which breach or failure to perform is incapable of being cured or has not been cured within five days after the giving of written notice thereof to the Company (but not later than the expiration of the 20 business day period for which the Offer will be initially open); (ii) any representation or warranty of the Company shall not have been true and correct in all material respects when made; (iii) any representation or warranty of the Company shall cease to be true and correct in all material respects at any later date as if made on such date (other than representations and warranties made as of a specified date) other than as a result of a breach or failure to perform by the Company of any of its covenants or agreements under the Merger Agreement; PROVIDED, HOWEVER, that such representation or warranty is incapable of being cured or has not been cured within five days after the giving of written notice thereof to the Company (but not later than the expiration of the 20 business day period for which the Offer will be initially open); PROVIDED, HOWEVER, that the right to terminate the Merger Agreement pursuant to the provisions described in this clause (c) shall not be available to Tyco if Purchaser or any other affiliate of Tyco shall acquire shares of Company Common Stock pursuant to the Offer; (d) by Tyco if, whether or not permitted to do so by the Merger Agreement, (i) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified in a manner adverse to Tyco or Purchaser its approval or recommendation of the Offer, the Merger or of any related transactions; (ii) the Board of Directors of the Company or any committee thereof shall have approved or recommended to the stockholders of the Company any Company Takeover Proposal or Alternative Transaction; (iii) the Board of Directors of the Company or any committee thereof shall have approved or recommended that the stockholders of the Company tender their Shares in any tender or exchange offer that is an Alternative Transaction; (iv) the Board of Directors of the Company or any committee thereof shall have taken any position or make any disclosures to the Company's stockholders permitted by the Merger Agreement which has the effect of any of the foregoing; (v) the Board of Directors of the Company or any committee thereof shall have resolved to take any of the foregoing actions; or (vi) the Board of Directors of the Company or any committee 28 thereof shall have redeemed the Rights, or waived or amended any provision of the Rights Agreement, in any such case to permit or facilitate the consummation of any Company Takeover Proposal or Alternative Transaction; (e) by either Tyco or the Company if, as the result of the failure of the Minimum Condition or any of the other conditions set forth in Annex I to the Merger Agreement, the Offer shall have terminated or expired in accordance with its terms without Purchaser having purchased any Common Shares pursuant to the Offer, PROVIDED that if the failure to satisfy any conditions set forth in Annex I shall be a basis for termination of the Merger Agreement under any other clause (a) through (h) of this section "Termination; Fees," a termination pursuant to this clause (e) shall be deemed a termination under such other clause; (f) by either Tyco or the Company if the Offer shall not have been consummated on or before March 31, 1999, PROVIDED that the right to terminate the Merger Agreement pursuant to the provisions described in this clause (f) shall not be available to any party whose failure to perform any of its obligations under the Merger Agreement results in the failure of the Offer to be consummated by such time; (g) by the Company if Tyco or Purchaser shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the Merger Agreement, which breach or failure to perform is incapable of being cured or has not been cured within five days after the giving of written notice thereof to Tyco; or (h) by the Company in accordance with the provisions of the Merger Agreement described above under "No Solicitation"; PROVIDED, HOWEVER, that the right to terminate the Merger Agreement pursuant to the provisions described in this clause (h) shall not be available (x) if the Company has breached in any material respect its obligations under the provisions described above under "No Solicitation," or (y) if the Company shall fail to pay when due the fees and expenses provided for in the Merger Agreement. The Company agrees that if the Merger Agreement is terminated pursuant to (i) the provisions described in clause (d) above; (ii) the provisions described in clause (h) above; or (iii) the provisions described in clauses (e) or (f) above, and, with respect to this clause (iii), at the time of such termination any person, entity or group (as defined in Section 13(d)(3) of the Exchange Act) (other than Tyco or any of its affiliates or any person identified in the Company's Proxy Statement dated April 30, 1998 and who has executed the Preferred Stock Purchase Agreement, PROVIDED that such person has not breached the terms of such Preferred Stock Purchase Agreement) shall have become the beneficial owner of more than 15% of the Shares and such person, entity or group (or any affiliate of such person, entity or group) thereafter (x) shall make a Company Takeover Proposal and, in the case of a consensual transaction with the Company, shall substantially have negotiated the terms thereof, at any time on or prior to the date which is six months after such termination of the Merger Agreement, and (y) shall consummate such Company Takeover Proposal at any time on or prior to the date which is one year after termination of the Merger Agreement, in the case of a consensual transaction, or six months after termination of the Merger Agreement, in the case of a non-consensual transaction, in each case with a value per share of Common Stock of at least $9.25 (with appropriate adjustments for reclassifications of capital stock, stock dividends, stock splits, reverse stock splits and similar events); then the Company shall pay to Tyco the sum of (a) $4.5 million, as promptly as practicable but in no event later than two business days following termination of the Merger Agreement pursuant to the provisions 29 described in clause (d) or (h) above, or, in the case of clause (iii) of this paragraph, upon consummation of such Company Takeover Proposal. The Company further agrees that if the Merger Agreement is terminated pursuant to the provisions described in clause (c)(i) above, (A) the Company will pay to Tyco, as promptly as practicable but in no event later than two business days following termination of the Merger Agreement, the amount of all documented and reasonable costs and expenses incurred by Tyco, Purchaser and their affiliates (including but not limited to fees and expenses of counsel and accountants and out-of-pocket expenses (but not fees) of financial advisors) in an aggregate amount not to exceed $450,000 in connection with the Merger Agreement or the transactions contemplated thereby ("Tyco Expenses"); and (B) in the event that the company consummates a Company Takeover Proposal (whether or not solicited in violation of the Merger Agreement) which is publicly announced within one year from the date of termination of the Merger Agreement, the sum of $4.5 million, less the amount of any payment made pursuant to the preceding clause (A), which payment shall be made not later than two business days following consummation of such Company Takeover Proposal. The Company further agrees that if the Merger Agreement is terminated pursuant to the provisions described in clause (c)(ii) above, the Company will pay to Tyco, as promptly as practicable but in no event later than two business days following termination of the Merger Agreement, the Tyco Expenses. The Company shall not be obligated to make any payments to Tyco pursuant to clause (iii) of the second preceding paragraph or clause (B) of the immediately preceding paragraph if the Company Takeover Proposal referenced therein is a transaction (a "Permitted Financing") in which the Company sells equity securities for gross proceeds not in excess of $25,000,000; PROVIDED that the securities issued, or issuable upon exercise, conversion or exchange of the securities issued, in such Permitted Financing constitute or upon issuance would constitute less than forty (40%) percent of the outstanding voting power of the Company after such issuance, exercise, conversion or exchange. GUARANTEE. Tyco has guaranteed the payment by Purchaser of the Common Per Share Amount, the Preferred Per Share Amount and any other amounts payable by Purchaser pursuant to the Merger Agreement and has agreed to cause Purchaser to perform all of its other obligations under the Merger Agreement in accordance with its terms. PREFERRED STOCK PURCHASE AGREEMENT In connection with the Merger, Purchaser has entered into the Preferred Stock Purchase Agreement, dated as of January 8, 1999 (the "Preferred Stock Purchase Agreement"), with the holders of an aggregate of all 35,700 shares of Series A Preferred Stock and all 5,000 shares of Series B Preferred Stock of the Company ("Sellers"), American Stock Transfer & Trust Company, as escrow agent (the "Agent") and, for the limited purpose of participating in certain payment and indemnification obligations to the Agent, the Company. Pursuant to the Preferred Stock Purchase Agreement, upon consummation of the Offer, Purchaser will purchase from each Seller all right, title and interest of such Seller in and to such Seller's Preferred Stock. Tyco has guaranteed the obligations of Purchaser under the Preferred Stock Purchase Agreement. The following summary of certain provisions of the Preferred Stock Purchase Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1, is qualified in its entirety by reference to the text of the Preferred Stock Purchase Agreement. Capitalized terms used in the following summary and not otherwise defined in this Offer to Purchase shall have the meanings set forth in the Preferred Stock Purchase Agreement. 30 DELIVERY, SALE AND PURCHASE OF PREFERRED STOCK. Pursuant to the Preferred Stock Purchase Agreement, each Seller has delivered to the Agent, with copies to Purchaser, the original certificates evidencing such Seller's Preferred Stock, together with certain transfer documentation (all such certificates and additional documentation, the "Preferred Stock Documentation"), to be held by the Agent in escrow in accordance with the terms of the Preferred Stock Purchase Agreement. The Preferred Stock Purchase Agreement provides that within one business day following the date on which Purchaser first makes payment for Common Shares that Purchaser has accepted for payment pursuant to the Offer, Purchaser will pay to each Seller the purchase price of $1,400 per share of Preferred Stock owned by the Seller, together with accrued and unpaid dividends to and including the date of purchase. Upon payment of the purchase price to a Seller, such Seller will irrevocably transfer to Purchaser the Seller's Preferred Stock and related rights, and upon delivery by Purchaser to the Agent of written evidence of payment to the Seller of the Preferred Stock purchase price, the Agent will deliver to Purchaser the Preferred Stock Documentation of the Seller. The Preferred Stock Purchase Agreement further provides that if (v) Purchaser or its affiliate do not publicly announce the commencement of the Offer within seven business days from the date of the Preferred Stock Purchase Agreement, or (w) Purchaser or its affiliate or the Company publicly announces that the Merger Agreement has been terminated in accordance with its terms, or (x) Purchaser or its affiliate publicly announces that the Offer has expired without Purchaser having purchased any Common Shares thereunder or (y) Purchaser publicly announces that it has increased the per share price payable to the holders of Common Shares in the Offer and the Merger to an amount in excess of $9.25 and such announcement does not state that the holders of at least 75% of the outstanding shares of Preferred Stock have consented to such increase or (z) Purchaser does not furnish to the Agent evidence of payment of the Purchase Price to any Seller or Sellers on or before March 31, 1999, then, in the case of clauses (v), (w), (x) and (y), the Agent will promptly thereafter return the Preferred Stock Documentation to all Sellers or, in the case of clause (z), the Agent will promptly thereafter return such documentation to the affected sellers. NO SOLICITATION AND LOCK-UP. Pursuant to the Preferred Stock Purchase Agreement, each Seller, severally and not jointly, has agreed that unless an event has occurred requiring the return of such Seller's Preferred Stock Documentation, as set forth in the preceding paragraph: (a) At every meeting of the stockholders or of the holders of any class or series of stock of the Company called with respect to any of the following, and at every adjournment thereof, and on every action or approval by written consent of the stockholders or of the holders of any class or series of stock of the Company with respect to any of the following, such Seller will cast any votes that it may have at the time against (x) approval of any Company Takeover Proposal (as defined in the Merger Agreement), (y) any merger (including, without limitation, an Alternative Transaction (as defined in the Merger Agreement)), consolidation, sale of assets requiring stockholder approval or the approval of the holders of any class or series of stock, reorganization or recapitalization of the Company, with any other person other than Purchaser or its affiliates, and (z) any liquidation or winding up of the Company (each of the foregoing is referred to as an "Opposing Proposal"); (b) Such Seller will not, and will not permit any entity under its control to: (1) solicit proxies or become a "participant" in a "solicitation" (as such terms are defined in Regulation 14A under the Exchange Act) with respect to an Opposing Proposal or otherwise encourage or assist any person in taking or planning any action that would constitute an Opposing Proposal; or (2) initiate a vote or action by written consent of the Company's stockholders or of the holders of any class or series of stock with respect to an Opposing Proposal; (c) Such Seller shall not effect a transfer or any pledge or other encumbrance of any of its Preferred Stock to or in favor of any person, other than to an affiliate of such Seller who shall have agreed 31 in a writing, in form and substance acceptable to Purchaser in its sole discretion, for the benefit of and delivered to Purchaser, to be bound by all provisions of the Preferred Stock Purchase Agreement applicable to such Seller; and (d) Such Seller agrees to tender in the Offer all Common Shares that such Seller owned on the date of the Preferred Stock Purchase Agreement or later acquired. CONSENT UNDER INITIAL PURCHASE AGREEMENT. Pursuant to the Preferred Stock Purchase Agreement, each Seller irrevocably consents to any necessary amendment, modification and/or waiver of (x) Section 8.1 of the Preferred Stock Purchase Agreement, dated as of February 2, 1998 (the "Initial Purchase Agreement"), to provide that neither the Preferred Stock Purchase Agreement or the Merger Agreement, nor the transactions contemplated thereby, will be deemed to violate or impair the ability of the Company to perform its obligations under any provision of the Initial Purchase Agreement and (y) Section 4H of the Certificate of Designations of the Preferred Stock that forms a part of the Company's Charter to provide that in no event shall the amount payable to the holder of any share of Preferred Stock as a result of the consummation of the Offer or the Merger contemplated by the Merger Agreement be other than $1,400 per share of Preferred Stock together with accrued and unpaid dividends to and including the date of purchase. Such consent shall be effective immediately prior to the time of purchase of a Seller's Preferred Stock under the Preferred Stock Purchase Agreement. A Seller's consent contained in this paragraph will be void if an event has occurred requiring the return of the Seller's Preferred Stock Documentation as set forth above in the third paragraph under the caption "Delivery, Sale and Purchase of Preferred Stock." REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Seller and the Company have made certain representations and warranties in the Preferred Stock Purchase Agreement. In addition, Purchaser has agreed that Purchaser or its affiliate shall make a prompt public announcement if: (x) the Merger Agreement is terminated in accordance with its terms; or (y) the Offer expires without Purchaser having purchased any Common Shares thereunder; or (z) the consideration payable to the holders of Common Shares in the Offer and the Merger has been increased to an amount in excess of $9.25. 14. DIVIDENDS AND DISTRIBUTIONS. As discussed in Section 13, the Merger Agreement provides that the Company will not take certain actions such as paying dividends on, or making any other distributions in respect of, any of its capital stock, splitting, combining, or reclassifying any of its capital stock or purchasing, redeeming, or otherwise acquiring any shares of capital stock of the Company. If on or after the date of the Merger Agreement and notwithstanding the provisions thereof, the Company should (i) split, combine or otherwise change the Common Shares or its capitalization, (ii) acquire presently outstanding Common Shares or otherwise cause a reduction in the number of outstanding Common Shares or (iii) issue or sell any shares of any class or any securities convertible into any such shares, or any rights, warrants or options to acquire any such shares or convertible securities (other than Common Shares issued pursuant to, and in accordance with the terms in effect on the date of the Merger Agreement of, stock options, warrants or convertible preferred shares issued prior to such date), then, without prejudice to Purchaser's rights under the Merger Agreement, Purchaser (subject to the Merger Agreement), in its sole discretion, may make such adjustments in the Offer price and other terms of the Offer as it deems appropriate to reflect such action. If, on or after the date of the Merger Agreement and notwithstanding the provisions thereof, the Company should declare or pay any cash, non-cash or stock dividend or other distribution on, or issue any rights with respect to, the Common Shares, payable or distributable to stockholders of record on a date prior to the transfer to the name of Purchaser or its nominees or transferees on the Company's stock transfer records of the Common Shares purchased pursuant to the Offer, then, without prejudice to Purchaser's rights under the Merger Agreement, (i) the price per Common Share payable by Purchaser pursuant to the Offer may, subject to the provisions of the Merger Agreement, in the sole discretion of Purchaser, be reduced by the amount of any such cash dividend or distribution and (ii) any non-cash 32 dividend, distribution or right to be received by the tendering stockholders will (a) be received and held by the tendering stockholders for the account of Purchaser and will be required to be promptly remitted and transferred by each tendering stockholder to the Depositary for the account of Purchaser, accompanied by appropriate documentation of transfer or (b) at the direction of Purchaser, be exercised for the benefit of Purchaser, in which case the proceeds of such exercise will promptly be remitted to Purchaser. Pending such remittance, Purchaser will be entitled, subject to applicable law, to all rights and privileges as owner of any such non-cash dividend, distribution or right or such proceeds and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by Purchaser in its sole discretion. 15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term of the Offer or the Merger Agreement, provided that no Common Shares have theretofore been accepted for payment or paid for, Purchaser shall not be required to accept for payment or pay for, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) of the Exchange Act, any Common Shares and may terminate or amend the Offer, if (i) the conditions that (1) there shall be validly tendered and not withdrawn prior to the expiration of the Offer a number of Common Shares which represents at least 51% of the total number of issued and outstanding Common Shares and (2) the number of Common Shares tendered pursuant to the Offer together with the Preferred Shares subject to the Preferred Stock Purchase Agreement constitute at least 51% of the total voting power of the Company on a fully diluted basis, shall not each have been satisfied (the "Minimum Condition") or (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer or (iii) at any time after the date of the Preferred Stock Purchase Agreement and before the time of payment for any such Common Shares (whether or not any Common Shares have theretofore been accepted for payment or paid for pursuant to the Offer), any of the following conditions exists: (a) there shall be in effect an injunction or other order, decree, judgment or ruling by a Governmental Authority (as defined in the Merger Agreement) of competent jurisdiction or a Law (as defined in the Merger Agreement) shall have been promulgated, or enacted by a Governmental Authority of competent jurisdiction which in any such case (i) restrains or prohibits the making or consummation of the Offer or the consummation of the Merger or the consummation of the purchase of the Preferred Shares pursuant to the Preferred Stock Purchase Agreement, (ii) prohibits or restricts the ownership or operation by Tyco (or any of its affiliates or subsidiaries) of any portion of the Company's business or assets, or Tyco's business or assets relating to the security services business, which is material to the security services business of all such entities taken as a whole or which would substantially deprive Tyco and/or its affiliates or subsidiaries of the benefit of ownership of the Company's business or assets, or compels Tyco (or any of its affiliates or subsidiaries) to dispose of or hold separate any portion of the Company's business or assets, or Tyco's business or assets relating to the security services business, which is material to the security services business of all such entities taken as a whole or which would substantially deprive Tyco and/or its affiliates or subsidiaries of the benefit of ownership of the Company's business or assets, (iii) imposes material limitations on the ability of Purchaser effectively to acquire or to hold or to exercise full rights of ownership of the Shares, including, without limitation, the right to vote Shares purchased by Purchaser pursuant to the Offer, the Merger or the Preferred Stock Purchase Agreement on all matters properly presented to the stockholders of the Company, or (iv) imposes any material limitations on the ability of Tyco and/or its affiliates or subsidiaries effectively to control in any material respect the business and operations of the Company, or (v) seeks to restrict any future business activity by Tyco (or any of its affiliates) relating to the security services business, including, without limitation, by requiring the prior consent of any person or entity (including any Governmental Authority) to future transactions by Tyco (or any of its affiliates); or (b) there shall have been instituted, pending or threatened an action by a Governmental Authority seeking to restrain or prohibit the making or consummation of the Offer, the consummation 33 of the Merger or the purchase of Preferred Shares pursuant to the Preferred Stock Purchase Agreement or to impose any other restriction, prohibition or limitation referred to in the foregoing paragraph (a); or (c) the Merger Agreement shall have been terminated by the Company or Tyco in accordance with its terms; or (d) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in the Common Shares on the AMEX, (ii) a declaration of a banking moratorium or any general suspension of payments in respect of banks in the United States or (iii) in the case of any of the foregoing existing at the time of the execution of the Merger Agreement, a material acceleration or worsening thereof; or (e) Tyco and the Company shall have agreed that Purchaser shall amend the Offer to terminate the Offer or postpone the payment for Common Shares pursuant thereto; or (f) any of the representations and warranties made by the Company in the Merger Agreement shall not have been true and correct in all material respects when made, or shall thereafter have ceased to be true and correct in all material respects as if made as of such later date (other than representations and warranties made as of a specified date), or the Company shall not in all material respects have performed each obligation and agreement and complied with each covenant to be performed and complied with by it under the Merger Agreement, PROVIDED, HOWEVER, that such breach or failure to perform is incapable of being cured or has not been cured within 5 days after the giving of written notice thereof to the Company, PROVIDED, HOWEVER, that no such 5-day cure period shall require extension of the Offer beyond the initial 20 business days provided in the Merger Agreement; or (g) the Company's Board of Directors shall have modified or amended its recommendation of the Offer in any manner adverse to Tyco or shall have withdrawn its recommendation of the Offer, or shall have recommended acceptance of any Company Takeover Proposal or shall have resolved to do any of the foregoing; or (h) (i) any corporation, entity or "group" (as defined in Section 13(d)(3) of the Exchange Act) ("person/group"), other than Tyco and Purchaser and any person/group identified in the Company's Proxy Statement dated April 30, 1998 and who has executed the Preferred Stock Purchase Agreement, provided that such person/group has not breached the terms of such Preferred Stock Purchase Agreement, shall have acquired beneficial ownership of more than 15% of the outstanding Shares, or shall have been granted any options or rights, conditional or otherwise, to acquire a total of more than 15% of the outstanding Shares and which, in each case, does not tender the Common Shares beneficially owned by it in the Offer; (ii) any new group shall have been formed which beneficially owns more than 15% of the outstanding Shares and which does not tender the Common Shares beneficially owned by it in the Offer; or (iii) any person/group (other than Tyco or one or more of its affiliates) shall have entered into an agreement in principle or definitive agreement with the Company with respect to a tender or exchange offer for any Shares or a merger, consolidation or other business combination with or involving the Company; or (i) any change, development, effect or circumstance shall have occurred or be threatened that would reasonably be expected to be materially adverse to the business, assets (including intangible assets), financial condition or results of operations of the Company and its subsidiaries, taken as a whole; or (j) the Company shall commence a case under any chapter of Title XI of the United States Code or any similar law or regulation; or a petition under any chapter of Title XI of the United States Code or any similar law or regulation is filed against the Company which is not dismissed within 2 business days; or 34 (k) a Distribution Date (as defined in the Rights Agreement) shall have occurred under the Rights Agreement. The foregoing conditions are for the sole benefit of Tyco and Purchaser and may be asserted by Tyco or Purchaser regardless of the circumstances giving rise to any such condition and may be waived by Tyco or Purchaser, in whole or in part, at any time and from time to time, in the sole discretion of Tyco. The failure by Tyco or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any right, the waiver of such right with respect to any particular facts or circumstances shall not be deemed a waiver with respect to any other facts or circumstances, and each right shall be deemed an ongoing right which may be asserted at any time and from time to time. Should the Offer be terminated pursuant to the foregoing provisions, all tendered Common Shares not theretofore accepted for payment shall forthwith be returned to the tendering stockholders. 16. CERTAIN LEGAL MATTERS. GENERAL. Except as described in this Section 16, based on a review of publicly available filings by the Company with the Commission and other publicly available information concerning the Company, neither Tyco nor Purchaser is aware of any license or regulatory permit that appears to be material to the business of the Company and that might be adversely affected by Purchaser's acquisition of Common Shares pursuant to the Offer, or of any approval or other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required for the acquisition or ownership of Common Shares by Purchaser pursuant to the Offer. Should any such approval or other action be required, it is presently contemplated that such approval or action would be sought, except as described below under "State Takeover Laws." While Purchaser does not currently intend to delay acceptance for payment of Common Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if required, would be obtained without substantial conditions or that adverse consequences would not result to the Company's business or that certain parts of the Company's business would not have to be disposed of in the event that such approvals were not obtained or such other actions were not taken or in order to obtain any such approval or other action. If certain types of adverse action are taken with respect to the matters discussed below, Purchaser may decline to accept for payment or pay for any Common Shares tendered. See Section 15. STATE TAKEOVER LAWS. The Company and certain of its subsidiaries conduct business in a number of states throughout the United States, some of which have adopted laws and regulations applicable to offers to acquire shares of corporations that are incorporated or have substantial assets, stockholders and/or a principal place of business in such states. In EDGAR V. MITE CORP., the Supreme Court of the United States held that the Illinois Business Takeover Statute, which involved state securities laws that made the takeover of certain corporations more difficult, imposed a substantial burden on interstate commerce and was therefore unconstitutional. In CTS CORP. V. DYNAMICS CORP. OF AMERICA, however, the Supreme Court of the United States held that a state may, as a matter of corporate law and, in particular, those laws concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions, in particular, that the corporation has a substantial number of stockholders in and is incorporated under the laws of such state. The Company is incorporated under the laws of the State of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents an "interested stockholder" (including a person who owns or has the right to acquire 15% or more of the corporation's outstanding voting stock) from engaging in a "business combination" (defined to include mergers and certain other actions) with a Delaware corporation for a period of three years following the date such person became an interested stockholder. The Board of Directors of the Company has taken all appropriate action so that neither Tyco nor Purchaser is an "interested stockholder" pursuant to Section 203. 35 Neither Tyco nor Purchaser has determined whether any other state takeover laws and regulations will by their terms apply to the Offer, and, except as set forth above, neither Tyco nor Purchaser has presently sought to comply with any state takeover statute or regulation. Tyco and Purchaser reserve the right to challenge the applicability or validity of any state law or regulation purporting to apply to the Offer or the Merger, and neither anything in this Offer nor any action taken in connection herewith is intended as a waiver of such right. In the event it is asserted that one or more state takeover statutes is applicable to the Offer or the Merger and an appropriate court does not determine that such statute is inapplicable or invalid as applied to the Offer or the Merger, Tyco or Purchaser might be required to file certain information with, or to receive approval from, the relevant state authorities, and Purchaser might be unable to accept for payment or pay for Common Shares tendered pursuant to the Offer, or be delayed in consummating the Offer. ANTITRUST. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the FTC and certain waiting period requirements have been satisfied. The acquisition of Common Shares by Purchaser pursuant to the Offer is subject to such requirements. See Section 15. Under the provisions of the HSR Act applicable to the purchase of Common Shares pursuant to the Offer, purchases may not be consummated until the expiration of a 15-calendar day waiting period after the filing of certain required information and documentary material with the Antitrust Division and the FTC with respect to the Offer (unless earlier terminated pursuant to a request therefor, which Tyco will make). If, within such 15-day waiting period, either the Antitrust Division or the FTC requests additional information or documentary material relevant to the Offer from Tyco, the waiting period will be extended for an additional period of 10 calendar days following the date of substantial compliance with such request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the rules promulgated under the HSR Act. Thereafter, such waiting period may be extended only by court order or by agreement of Tyco. A request for additional information issued to the Company cannot extend the waiting period. Tyco expects to file, or cause to be filed, a Notification and Report Form with respect to the Offer under the HSR Act on Tuesday, January 19, 1999, and, in such event, the required waiting period with respect to the Offer will expire at 11:59 p.m., New York City time, on Tuesday, February 2, 1999, unless Tyco receives a request for additional information or documentary material or the Antitrust Division or the FTC terminates the waiting period prior thereto. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the proposed purchase of Common Shares by Purchaser pursuant to the Offer. At any time before or after such purchase, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the transaction or seeking divestiture of the Common Shares so acquired or divestiture of substantial assets of Tyco or its subsidiaries. Litigation seeking similar relief could also be brought by private persons and the state attorneys general. Based upon an examination of publicly available information relating to the businesses in which Tyco and the Company are engaged, Tyco and Purchaser do not believe that consummation of the Offer will result in violation of any applicable antitrust laws. However, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made, or, if such a challenge is made, what the result would be. See Section 15 for certain conditions to the Offer, including conditions with respect to certain judicial or governmental actions. 17. FEES AND EXPENSES. Purchaser has retained Morrow & Co., Inc. to act as the Information Agent and American Stock Transfer & Trust Company to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Common Shares by mail, telephone, telex, telecopy and personal interview and may request brokers, dealers and other nominee stockholders to forward the Offer 36 materials to beneficial owners. The Information Agent and the Depositary will receive reasonable and customary compensation for services relating to the Offer and will be reimbursed for certain out-of-pocket expenses. Purchaser and Tyco have also agreed to indemnify the Information Agent and the Depositary against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. Neither Tyco nor Purchaser will pay any fees or commissions to any broker or dealer or any other person (other than to the Information Agent) for soliciting tenders of Common Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. 18. MISCELLANEOUS. The Offer is being made to all holders of Common Shares. Purchaser is not aware of any jurisdiction where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Common Shares pursuant thereto, Purchaser will make a good faith effort to comply with any such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, Purchaser cannot comply with any such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Common Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. No person has been authorized to give any information or make any representation on behalf of Tyco, Purchaser or the Company not contained in this Offer to Purchase or in the related Letter of Transmittal and, if given or made, such information or representation must not be relied upon as having been authorized. Tyco and Purchaser have filed with the Commission a Tender Offer Statement on Schedule 14D-1, together with all exhibits thereto, pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, furnishing certain additional information with respect to the Offer. Such Tender Offer Statement and any amendments thereto, including exhibits, may be inspected and copies may be obtained from the offices of the Commission in the manner set forth in Section 8 (except that they will not be available at the regional offices of the Commission). T16 ACQUISITION CORP. January 15, 1999 37 ANNEX I CERTAIN INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF TYCO INTERNATIONAL LTD. The following table sets forth the name, current business address, present principal occupation or employment, and material occupations, positions, offices or employment for the past five years of each director of Tyco, each executive officer of Tyco and the executive officers of certain of Tyco's subsidiaries. Unless otherwise indicated, positions held shown in the following table are positions with Tyco. Except as set forth below, each such person is a citizen of the United States of America. None of the listed persons, during the past five years, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY - ----------------------------------------- ---------------------------- ----------------------------------------- L. Dennis Kozlowski,..................... One Tyco Park Mr. Kozlowski has been Chairman of the Chairman of the Board, President and Exeter, NH 03833 Board of Directors, Chief Executive Chief Executive Officer Officer and President of Tyco since July 1997. He was Chairman of the Board of Directors of Former Tyco from 1993 to July 1997. He has been Chief Executive Officer of Former Tyco since 1992 and President of Former Tyco since 1989. He was Chief Operating Officer of Former Tyco from 1989 to 1995. From 1984 to February 1997, he was President of Grinnell Corporation, a subsidiary of Tyco. Michael A. Ashcroft,..................... P.O. Box 1598 Mr. Ashcroft has been non-executive Director Belize City, Belize Chairman of BHI Corporation (services company) since 1987 and has been Chairman of Carlisle Holdings (services company) since 1988. He was Chairman of the Board of Directors and Chief Executive Officer of ADT Limited (now Tyco International Ltd.) from 1984 to 1997. Mr. Ashcroft is a citizen of Belize. Joshua M. Berman,........................ 919 Third Avenue Mr. Berman has been counsel to the law Director and Vice President New York, NY 10022 firm of Kramer Levin Naftalis & Frankel LLP (counselors at law) since 1985. He has also been Vice President of Tyco since July 1997.
38
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY - ----------------------------------------- ---------------------------- ----------------------------------------- Richard S. Bodman,....................... 2 Wisconsin Circle Mr. Bodman has been Managing General Director Suite 610 Partner of AT&T Ventures LLC (venture Chevy Chase, MD 20815 captial) since May 1996. Previously, since 1990, he had been Senior Vice President, Corporate Strategy and Development, of AT&T Corporation (communications). John F. Fort, III,....................... 2003 Milford Street Mr. Fort was Chairman of the Board and Director Houston, TX 77098 Chief Executive Officer of Former Tyco from 1982 to 1992. Stephen W. Foss,......................... 380 Lafayette Road Mr. Foss has been President and Chief Director Hampton, NH 03842 Executive Officer of Foss Manufacturing Company, Inc. (manufacturer of synthetic fibers and non-woven fabrics) since 1969. Richard A. Gilleland,.................... 15 Hampshire Street Mr. Gilleland has been President of Tyco Director and President of Tyco Healthcare Mansfield, MA 02048 Healthcare Group since October 1998. He Group was Chairman, President and Chief Executive Officer of Physician's Resource Group, Inc. from December 1997 to September 1998. He was President and Chief Executive Officer of AMSCO International, Inc., (healthcare) from July 1995 to July 1996 and Senior Vice President of Tyco (US) from October 1994 to July 1995. From July 1990 to July 1995, he was President and Chief Executive Officer of The Kendall Company (medical products). Philip M. Hampton,....................... 152 West 57th Street Mr. Hampton has been Co- Managing Director 44th Floor Director of R.H. Arnold & Co. (investment New York, NY 10022 bank) since April 1997. He was Chairman of Metzler Corporation (investment bank) from 1989 to March 1997. James S. Pasman, Jr.,.................... 29 The Trillium Mr. Pasman was President and Chief Director Pittsburgh, PA 15238 Operating Officer of National Intergroup, Inc. (industrial holding company) from 1989 to 1991 and was Chairman and Chief Executive Officer of Kaiser Aluminum and Chemical Corp. from 1987 to 1989.
39
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY - ----------------------------------------- ---------------------------- ----------------------------------------- W. Peter Slusser,........................ One Citicorp Center Mr. Slusser has been the President of Director Suite 5100 Slusser Associates, Inc. (investment 153 East 53rd Street firm) since 1988. New York, NY 10022 Frank E. Walsh, Jr.,..................... 330 South Street Mr. Walsh has been Chairman of the Director Morristown, NJ Sandyhill Foundation (charitable 07962-1975 organization) since August 1996. Previously, from 1989 to 1996, he was Chairman of Wesray Capital Corporation (investment firm). Mark A. Belnick,......................... One Tyco Park Mr. Belnick has been Executive Vice Executive Vice President and Chief Exeter, NH 03833 President and Chief Corporate Counsel of Corporate Counsel Tyco since September 1998. Previously, he had been a senior partner with the international law firm of Paul, Weiss, Rifkind, Wharton & Garrison since 1987. Jerry R. Boggess,........................ Three Tyco Park Mr. Boggess has been President of the President of the Tyco Fire and Security Exeter, NH 03833 Tyco Fire and Security Services group Services group since 1993 and Vice President of Former Tyco since 1996. Robert P. Mead,.......................... Three Tyco Park Mr. Mead has been President of the Tyco President of the Tyco Flow Control Exeter, NH 03833 Flow Control Products group since May Products group 1993 and Vice President of Former Tyco since August 1993. Neil R. Garvey,.......................... One Tyco Park Mr. Garvey has been President of Tyco President of Tyco Submarine Systems Ltd. Exeter, NH 03833 Submarine Systems Ltd. since July 1997. He was President of Simplex Technologies, which is part of the Tyco Electrical and Electronic Components group, from July 1995 to June 1997. From 1992 to June 1995, he was Vice President of Sales and Marketing of Simplex Technologies. Mark H. Swartz,.......................... One Tyco Park Mr. Swartz has been Executive Vice Executive Vice President and Chief Exeter, NH 03833 President and Chief Financial Officer of Financial Officer Tyco since July 1997. He has been Vice President and Chief Financial Officer of Former Tyco since 1995. From 1993 to 1995, he was Former Tyco's Director of Mergers and Acquisitions.
40 ANNEX II CERTAIN INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER The following table sets forth the name, current business address, present principal occupation or employment, and material occupations, positions, offices or employment for the past five years of each director and executive officer of Purchaser. Each such person is a citizen of the United States of America. None of the listed persons, during the past five years, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.
PRESENT PRINCIPAL CURRENT BUSINESS OCCUPATION OR EMPLOYMENT NAME AND POSITION HELD ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY - -------------------------------------------- --------------------- -------------------------------------------- Mark A. Belnick,............................ One Tyco Park * Director and President Exeter, NH 03833 Mark H. Swartz,............................. One Tyco Park * Director and Vice President Exeter, NH 03833 M. Brian Moroze,............................ One Tyco Park Mr. Moroze has been General Counsel of Director and Vice President Exeter, NH 03833 Former Tyco since 1994 and served as Associate General Counsel from 1986 to 1994. Michael A. Robinson,........................ One Tyco Park Mr.Robinson has been Senior Vice President Treasurer Exeter, NH 03833 and Treasurer of Former Tyco since March 1998. Previously, he had been a Vice President with the investment banking firm of Merrill Lynch, Pierce Fenner & Smith since 1993. Byron S. Kalogerou,......................... One Tyco Park Mr. Kalogerou has been Vice President and Secretary Exeter, NH 03833 Deputy Corporate Counsel of Former Tyco since November 1998, and served as General Counsel of International Operations since 1997. He had been Associate General Counsel of Former Tyco from 1990 to 1997.
- ------------------------ * Please see the information set forth in Annex I. 41 Manually signed facsimile copies of the Letter of Transmittal will be accepted. Letters of Transmittal and certificates for Common Shares should be sent or delivered by each stockholder of the Company or his broker, dealer, commercial bank or trust company to the Depositary at one of its addresses set forth below: THE DEPOSITARY FOR THE OFFER IS: AMERICAN STOCK TRANSFER & TRUST COMPANY BY MAIL: BY HAND OR BY FACSIMILE: 40 Wall Street BY OVERNIGHT COURIER: (718) 234-5001 46th Floor 40 Wall Street (For Eligible Institutions New York, NY 10005 46th Floor Only) New York, NY 10005 Confirm by Telephone: (800) 937-5449
Any questions or requests for assistance may be directed to the Information Agent at its address and telephone numbers set forth below. Requests for additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent or the Depositary. Stockholders may also contact their brokers, dealers, commercial banks or trust companies for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: [LOGO] 445 Park Avenue, 5th Floor New York, New York 10022 Toll Free (800) 566-9061 Call Collect (212) 754-8000 Banks and Brokerage Firms Please Call: (800) 662-5200 EX-99.2(A) 3 EX. 99.2(A) LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF ALARMGUARD HOLDINGS, INC. PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 15, 1999 OF T16 ACQUISITION CORP., AN INDIRECT WHOLLY OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 12, 1999, UNLESS THE OFFER IS EXTENDED - -------------------------------------------------------------------------------- THE DEPOSITARY FOR THE OFFER IS: AMERICAN STOCK TRANSFER & TRUST COMPANY BY HAND OR BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE: 40 Wall Street 40 Wall Street (718) 234-5001 46(th) Floor 46(th) Floor (For Eligible Iinstitutions New York, N.Y. 10005 New York, N.Y. 10005 Only) CONFIRM BY TELEPHONE: (800) 937-5449
------------------------ DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by stockholders either if certificates representing Common Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Instruction 2) is utilized, if delivery is to be made by book-entry transfer to the account maintained by the Depositary at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 2 of the Offer to Purchase. Stockholders whose certificates are not immediately available, or who cannot deliver their certificates or confirmation of the book-entry transfer of their Common Shares into the Depositary's account at the Book-Entry Transfer Facility ("Book-Entry Confirmation") and all other documents required hereby to the Depositary on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), must tender their Common Shares according to the guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. / / CHECK HERE IF TENDERED COMMON SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution: _____________________________________________ Account Number: ____________________________________________________________ Transaction Code Number: ___________________________________________________ / / CHECK HERE IF TENDERED COMMON SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s): ___________________________________________ Date of Execution of Notice of Guaranteed Delivery: ________________________ Name of Institution that Guaranteed Delivery: ______________________________ If Delivered by Book-Entry Transfer: _______________________________________ Name of Tendering Institution: _____________________________________________ Account Number: ____________________________________________________________ Transaction Code Number: ___________________________________________________
- ---------------------------------------------------------------------------------------------------- DESCRIPTION OF COMMON SHARES TENDERED - ---------------------------------------------------------------------------------------------------- CERTIFICATE(S) TENDERED (ATTACH ADDITIONAL LISTS IF NECESSARY) - ----------------------------------------------------------------------------------------------------- TOTAL NUMBER OF COMMON SHARES REPRESENTED NUMBER OF NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE BY COMMON SHARES (PLEASE FILL IN, IF BLANK) NUMBER(S)* CERTIFICATE(S) TENDERED** - ----------------------------------------------------------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- Total Common Shares - ----------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Common Shares represented by any certificates delivered to the Depositary are being tendered hereby. See Instruction 4. The names and addresses of the registered holders should be printed, if not already printed above, exactly as they appear on the certificates representing Common Shares tendered hereby. The certificates and number of Common Shares that the undersigned wishes to tender should be indicated in the appropriate boxes. NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to T16 Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company ("Tyco"), the above-described shares of common stock, par value $.0001 per share, including the associated preferred stock purchase rights (the "Common Shares"), of Alarmguard Holdings, Inc., a Delaware corporation (the "Company"), pursuant to Purchaser's offer to purchase all of the outstanding Common Shares at a price of $9.25 per Common Share, net to the tendering stockholder in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 15, 1999 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the "Offer"). Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to Tyco or to one or more affiliates of Tyco, the right to purchase Common Shares tendered pursuant to the Offer. Subject to, and effective upon, acceptance for payment of and payment for the Common Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer, the undersigned hereby sells, assigns, and transfers to, or upon the order of, Purchaser all right, title and interest in and to all of the Common Shares that are being tendered hereby (and any and all other Common Shares or other securities or rights issued or issuable in respect thereof on or after January 15, 1999) and irrevocably appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Common Shares (and any such other Common Shares or securities or rights), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates representing such Common Shares (and any such other Common Shares or securities or rights), or transfer ownership of such Common Shares (and any such other Common Shares or securities or rights) on the account books maintained by the Book-Entry Transfer Facility, together in either such case with all accompanying evidences of transfer and authenticity, to or upon the order of Purchaser upon receipt by the Depositary, as the undersigned's agent, of the purchase price (adjusted, if appropriate, as provided in the Offer to Purchase), (b) present such Common Shares (and any such other Common Shares or securities or rights) for registration and transfer on the books of the Company, and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Common Shares (and any such other Common Shares or securities or rights), all in accordance with the terms of the Offer. The undersigned hereby irrevocably appoints Mark H. Swartz and Mark A. Belnick and each of them or any other designee of Purchaser, the attorneys and proxies of the undersigned, each with full power of substitution, to vote in such manner as each such attorney and proxy or his substitute shall, in his sole discretion, deem proper, and otherwise act (including pursuant to written consent) with respect to all the Common Shares tendered hereby which have been accepted for payment by Purchaser prior to the time of such vote or action (and any and all other Common Shares or securities or rights issued or issuable in respect thereof on or after January 15, 1999), which the undersigned is entitled to vote at any meeting of stockholders (whether annual or special and whether or not an adjourned meeting) of the Company, or consent in lieu of any such meeting, or otherwise. This proxy and power of attorney is coupled with an interest in the Common Shares tendered hereby and is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Common Shares (and any such other Common Shares or securities or rights) by Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke all prior proxies granted by the undersigned at any time with respect to such Common Shares (and any such other Common Shares or securities or rights) and no subsequent proxies will be given (and if given will be deemed not to be effective) with respect thereto by the undersigned. The undersigned acknowledges that in order for Common Shares to be deemed validly tendered, immediately upon the acceptance for payment of such Common Shares, Purchaser or Purchaser's designee must be able to exercise full voting and other rights of a record and beneficial holder with respect to such Common Shares. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Common Shares tendered hereby (and any and all other Common Shares or securities or rights issued or issuable in respect thereof on or after January 15, 1999), and that, when the same are accepted for payment by Purchaser, Purchaser will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and the same will not be subject to any adverse claim. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and any such other Common Shares or securities or rights). No authority herein conferred or agreed to be conferred in this Letter of Transmittal shall be affected by, and all such authority shall survive, the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that tenders of Common Shares pursuant to any one of the procedures described in Section 2 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions of the Offer. The undersigned recognizes that, under certain circumstances set forth in the Offer to Purchase, Purchaser may not be required to accept for payment any of the Common Shares tendered hereby. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or return any certificates representing Common Shares not tendered or accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Common Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and/or return any certificates representing Common Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the registered holder(s) appearing under "Description of Common Shares Tendered" at the address shown below such registered holder(s) name(s). In the event that either or both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or return any certificates representing Common Shares not tendered or accepted for payment in the name(s) of, and deliver such check and/or return such certificates to, the person or persons so indicated. Stockholders tendering Common Shares by book entry transfer may request that any Common Shares not accepted for payment be returned by crediting such account maintained at the Book-Entry Transfer Facility such stockholder may designate by making an appropriate entry under "Special Payment Instructions." The undersigned recognizes that Purchaser has no obligation pursuant to the Special Payment Instructions to transfer any Common Shares from the name of the registered holder(s) thereof if Purchaser does not accept for payment any of the Common Shares so tendered hereby. SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificates representing Common Shares not tendered or not purchased and/or the check for the purchase price of Common Shares purchased are to be issued in the name of someone other than the undersigned, or if Common Shares tendered by book-entry transfer which are not purchased are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than that account designated above. Issue check and/or certificate(s) to: Name: __________________________________________________________________________ (Please Print) Address: _______________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Include Zip Code) _______________________________________________________________________________ (Tax Identification or Social Security No.) Credit unpurchased Common Shares tendered by book-entry transfer to the Book-Entry Transfer Facility account set forth below. _______________________________________________________________________________ (Account Number) SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificates representing Common Shares not tendered or not purchased and/or the check for the purchase price of Common Shares purchased are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown under "Description of Common Shares Tendered." Issue check and/or certificate(s) to: Name: __________________________________________________________________________ (Please Print) Address: _______________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Include Zip Code) SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE) Signature(s) of Holder(s) of Common Shares ___________________________ ______________________________________________________________________ ______________________________________________________________________ Dated: ____________________________________ , 1999 (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, agents, officers of corporations or others acting in a fiduciary or representative capacity, please set forth the full title and see Instruction 5.) Name(s) ______________________________________________________________ ______________________________________________________________________ (Please Print) Capacity (full title) ________________________________________________ Address ______________________________________________________________ ______________________________________________________________________ (Including Zip Code) (Area Code and Telephone No.) ________________________________________ (Tax Identification or Social Security No.) __________________________ GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) FOR USE BY FINANCIAL INSTITUTIONS ONLY PLACE MEDALLION GUARANTEE IN SPACE BELOW. Authorized Signature(s) ______________________________________________________ Name _________________________________________________________________________ (Please Print) Title ________________________________________________________________________ Name of Firm _________________________________________________________________ Address ______________________________________________________________________ (Include Zip Code) Area Code and Telephone Number _______________________________________________ Dated: ______________________________________________________________________, 1999 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of Transmittal is required (i) if this Letter of Transmittal is signed by the registered holder(s) of the Common Shares (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Common Shares) tendered herewith, unless such holder has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on this Letter of Transmittal, or (ii) if such Common Shares are tendered for the account of a firm that is a member in good standing of the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program (each being hereinafter referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of Transmittal is to be completed by stockholders either if certificates representing Common Shares are to be forwarded herewith to the Depositary or, unless an Agent's Message (as defined below) is utilized, if tenders of Common Shares are to be made pursuant to the procedures for delivery by book-entry transfer set forth in Section 2 of the Offer to Purchase. Certificates representing all physically tendered Common Shares, or any book-entry confirmation of Common Shares, as the case may be, together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or, in connection with a book-entry transfer, an Agent's Message, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). If a stockholder's certificate(s) representing Common Shares are not immediately available (or the procedure for the book-entry transfer cannot be completed on a timely basis) or time will not permit all required documents to reach the Depositary on or prior to the Expiration Date, such stockholder's Common Shares may nevertheless be tendered if the procedures for guaranteed delivery set forth in Section 2 of the Offer to Purchase are followed. Pursuant to such procedure, (i) such tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser, must be received by the Depositary on or prior to the Expiration Date, and (iii) the certificates representing all tendered Common Shares, in proper form for transfer, or Book-Entry Confirmation of Common Shares, as the case may be, in each case together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three American Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in Section 2 of the Offer to Purchase. The term "Agent's Message" means a message transmitted through electronic means by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the Book-Entry Transfer Facility participant tendering the Common Shares that such participant has received, and agrees to be bound by, this Letter of Transmittal. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATE(S) REPRESENTING COMMON SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER. THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF SUCH DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED, AND NO FRACTIONAL COMMON SHARES WILL BE PURCHASED. ALL TENDERING STOCKHOLDERS, BY EXECUTION OF THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF), WAIVE ANY RIGHT TO RECEIVE ANY NOTICE OF THE ACCEPTANCE OF THEIR COMMON SHARES FOR PAYMENT. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Common Shares should be listed on a separate signed schedule attached hereto. 4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER COMMON SHARES BY BOOK-ENTRY TRANSFER). If fewer than all the Common Shares represented by any certificate submitted are to be tendered, fill in the number of Common Shares that are to be tendered in the box entitled "Number of Common Shares Tendered." In such case, new certificate(s) representing the remainder of the Common Shares that were represented by the old certificate(s) will be sent to the registered holder(s), unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Common Shares represented by certificate(s) delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Common Shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face(s) of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Common Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Common Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. IF THIS LETTER OF TRANSMITTAL IS SIGNED BY THE REGISTERED HOLDER(S) OF THE COMMON SHARES LISTED AND TENDERED HEREBY, NO ENDORSEMENTS OF CERTIFICATES OR SEPARATE STOCK POWERS ARE REQUIRED, UNLESS PAYMENT OR CERTIFICATES FOR COMMON SHARES NOT TENDERED OR ACCEPTED FOR PAYMENT ARE TO BE ISSUED TO A PERSON OTHER THAN THE REGISTERED HOLDER(S). SIGNATURES ON SUCH CERTIFICATES OR STOCK POWERS MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. IF THIS LETTER OF TRANSMITTAL OR ANY CERTIFICATES OR STOCK POWERS ARE SIGNED BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, SUCH PERSON SHOULD SO INDICATE WHEN SIGNING, AND PROPER EVIDENCE SATISFACTORY TO PURCHASER OF SUCH PERSON'S AUTHORITY SO TO ACT MUST BE SUBMITTED. IF THIS LETTER OF TRANSMITTAL IS SIGNED BY A PERSON OTHER THAN THE REGISTERED HOLDER(S) OF THE COMMON SHARES TENDERED HEREBY, THE CERTIFICATES MUST BE ENDORSED OR ACCOMPANIED BY APPROPRIATE STOCK POWERS, IN EITHER CASE SIGNED EXACTLY AS THE NAME(S) OF THE REGISTERED HOLDER(S) APPEAR ON THE CERTIFICATES. SIGNATURES ON SUCH CERTIFICATES OR STOCK POWERS MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION, UNLESS THE SIGNATURE IS THAT OF AN ELIGIBLE INSTITUTION. 6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, Purchaser will pay or cause to be paid any stock transfer taxes with respect to the transfer and sale of purchased Common Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificates representing Common Shares not tendered or accepted for payment are to be registered in the name of, any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such other person) payable on account of the transfer to such person will be deducted from the purchase price, unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or certificates representing Common Shares not tendered or accepted for payment are to be issued in the name of a person other than the signer of this Letter of Transmittal or if a check is to be sent and/or such certificates are to be returned to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Stockholders tendering Common Shares by book-entry transfer may request that Common Shares not accepted for payment be credited to such account maintained at the Book-Entry Transfer Facility as such stockholder may designate hereon. If no such instructions are given, such Common Shares not accepted for payment will be returned by crediting the account at the Book-Entry Transfer Facility designated above. 8. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s) representing Common Shares has been lost, destroyed or stolen, the stockholder should promptly notify the Depositary. The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. 9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by Purchaser, in whole or in part, at any time and from time to time in Purchaser's sole discretion (subject to the provisions of the Merger Agreement referred to in the Offer to Purchase), in the case of any Common Shares tendered hereby. 10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN"), generally the stockholder's social security or federal employer identification number, on Substitute Form W-9, which is provided below, and to certify whether the stockholder is subject to backup withholding of United States federal income tax. If a tendering stockholder is subject to backup withholding, the stockholder must cross out item (2) of the Certification box of the Substitute Form W-9. Failure to provide the information on the Substitute Form W-9 may subject the tendering stockholder to 31% Federal income tax withholding on the payment of the purchase price. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the stockholder should write "Applied For" in the space provided for the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price until a TIN is provided to the Depositary. 11. NON-UNITED STATES HOLDERS. Non-United States holders must submit a completed IRS Form W-8 to avoid backup withholding. IRS Form W-8 may be obtained by contacting the Depositary at one of the addresses on the face of this Letter of Transmittal. 12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may be directed to the Information Agent at the address set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 may be obtained from the Information Agent at the address set forth below or from your broker, dealer, commercial bank or trust company. IMPORTANT: This Letter of Transmittal (or a facsimile thereof), together with certificates representing Common Shares or confirmation of book-entry transfer and all other required documents, or the Notice of Guaranteed Delivery, must be received by the Depositary on or prior to the Expiration Date. IMPORTANT TAX INFORMATION Under United States federal income tax law, a stockholder whose tendered Common Shares are accepted for payment is required to provide the Depositary (as payer) with such stockholder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9 below. If such stockholder is an individual, the TIN is such person's social security number. The TIN of a resident alien who does not have and is not eligible to obtain a social security number is such person's IRS individual taxpayer identification number. If a tendering stockholder is subject to backup withholding, the stockholder must cross out item (2) of the Certification box on the Substitute Form W-9. If the Depositary is not provided with the correct TIN, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service ("IRS"). In addition, payments that are made to such stockholder with respect to Common Shares purchased pursuant to the Offer may be subject to backup withholding. CERTAIN STOCKHOLDERS (INCLUDING, AMONG OTHERS, ALL CORPORATIONS AND CERTAIN NON-UNITED STATES INDIVIDUALS) ARE NOT SUBJECT TO BACKUP WITHHOLDING. IN ORDER FOR A FOREIGN INDIVIDUAL TO QUALIFY AS AN EXEMPT RECIPIENT, THAT STOCKHOLDER MUST SUBMIT TO THE DEPOSITARY A PROPERLY COMPLETED IRS FORM W-8, SIGNED UNDER PENALTIES OF PERJURY, ATTESTING TO THAT INDIVIDUAL'S EXEMPT STATUS. SUCH FORMS MAY BE OBTAINED FROM THE DEPOSITARY. EXEMPT STOCKHOLDERS, OTHER THAN NON-UNITED STATES INDIVIDUALS, SHOULD FURNISH THEIR TIN, WRITE "EXEMPT" ON THE FACE OF THE SUBSTITUTE FORM W-9 BELOW, AND SIGN, DATE AND RETURN THE SUBSTITUTE FORM W-9 TO THE DEPOSITARY. SEE THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INSTRUCTIONS. IF BACKUP WITHHOLDING APPLIES, THE DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO THE STOCKHOLDER. BACKUP WITHHOLDING IS NOT AN ADDITIONAL TAX. RATHER, THE TAX LIABILITY OF PERSONS SUBJECT TO BACKUP WITHHOLDING WILL BE REDUCED BY THE AMOUNT OF TAX WITHHELD. IF WITHHOLDING RESULTS IN AN OVERPAYMENT OF TAXES, A REFUND MAY BE OBTAINED FROM THE IRS. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a stockholder with respect to Common Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of such stockholder's correct TIN by completing the Substitute Form W-9 below certifying that the TIN provided on such form is correct (or that such stockholder is awaiting a TIN) and that (i) such holder is exempt from backup withholding, (ii) such holder has not been notified by the IRS that such holder is subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has notified such holder that such holder is no longer subject to backup withholding (see Part 2 of Substitute Form W-9). WHAT NUMBER TO GIVE THE DEPOSITARY The stockholder is required to give the Depositary the social security number, individual taxpayer identification number, or employer identification number of the record owner of the Common Shares. If the Common Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidelines on which number to report. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, such stockholder should write "Applied For" in the space provided for in the TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is written in Part 1 and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price until a TIN is provided to the Depositary. PAYER'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX SOCIAL SECURITY NUMBER FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING OR Employer identification number BELOW ----------------------------- (If awaiting TIN write "Applied For")
PART 2--For Payees exempt from backup withholding, see the enclosed Guidelines for Certification of Taxpayer Identification Number (TIN) on Substitute Form W-9 and complete as instructed therein. CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: DEPARTMENT OF THE TREASURY (1) The number shown on this form is my correct Taxpayer Identification INTERNAL REVENUE SERVICE Number (or a Taxpayer Identification Number has not been issued to me and either (a) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service ("IRS") or Social Security Administration office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number within sixty (60) days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number); and PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN) (2) I am not subject to backup withholding because (a) I am exempt from AND CERTIFICATION backup withholding, (b) I have not been notified by the IRS that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. If after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9). NAME: (PLEASE PRINT) ADDRESS: (PLEASE PRINT) SIGNATURE --------------------------------------------- DATE ------------, 1999
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION. THE INFORMATION AGENT FOR THE OFFER IS: [LOGO] 445 Park Avenue, 5th Floor New York, NY 10022 Toll Free (800) 566-9061 Call Collect (212) 754-8000 Banks and Brokerage Firms please call: (800) 662-5200 EX-99.3(A) 4 EX. 99.3(A) LETTER TO BROKERS OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF ALARMGUARD HOLDINGS, INC. AT $9.25 NET PER SHARE BY T16 ACQUISITION CORP., AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. - --------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 12, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- January 15, 1999 To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees: We have been appointed by T16 Acquisition Corp. ("Purchaser"), a Delaware corporation and an indirect wholly-owned subsidiary of Tyco International Ltd. ("Tyco"), a Bermuda company, to act as Information Agent in connection with Purchaser's offer to purchase all of the outstanding shares of common stock, par value $.0001 per share, including the associated preferred stock purchase rights (the "Common Shares"), of Alarmguard Holdings, Inc., a Delaware corporation (the "Company"), at a price of $9.25 per Common Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 15, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), copies of which are enclosed herewith. The Offer is being made in connection with the Agreement and Plan of Merger, dated as of January 8, 1999, among Tyco, Purchaser and the Company. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Common Shares registered in your name or in the name of your nominee. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THAT NUMBER OF COMMON SHARES WHICH (1) WOULD CONSTITUTE 51% OF THE OUTSTANDING COMMON SHARES AND (2) TOGETHER WITH THE SHARES OF THE COMPANY'S SERIES A PREFERRED STOCK AND SERIES B PREFERRED STOCK, EACH PAR VALUE $.0001 PER SHARE (THE "PREFERRED SHARES") SUBJECT TO THE PREFERRED STOCK PURCHASE AGREEMENT, DATED JANUARY 8, 1999 (THE "PREFERRED STOCK PURCHASE AGREEMENT"), AMONG PURCHASER AND THE HOLDERS OF THE PREFERRED SHARES, WOULD CONSTITUTE AT LEAST 51% OF THE TOTAL VOTING POWER OF THE COMPANY ON A FULLY DILUTED BASIS. STOCKHOLDERS OWNING 964,195 COMMON SHARES (CONSTITUTING 17.3% OF THE OUTSTANDING COMMON SHARES) AND ALL 40,700 OUTSTANDING PREFERRED SHARES (WHICH, TOGETHER WITH THE AFORESAID COMMON SHARES, CONSTITUTE 50.6% OF THE TOTAL VOTING POWER OF THE COMPANY ON A FULLY DILUTED BASIS) HAVE AGREED TO TENDER SUCH COMMON SHARES IN THE OFFER AND TO SELL SUCH PREFERRED SHARES TO PURCHASER PURSUANT TO THE PREFERRED STOCK PURCHASE AGREEMENT. For your information and for forwarding to your clients, we are enclosing the following documents: 1. The Offer to Purchase. 2. The Letter of Transmittal to be used by stockholders of the Company in accepting the Offer. Facsimile copies of the Letter of Transmittal (with manual signatures) may be used to tender Common Shares. 3. A letter to stockholders of the Company from Russell R. MacDonnell, Chairman, Chief Executive Officer and President of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company with the Securities and Exchange Commission and mailed to the stockholders of the Company. 4. A printed form of letter which may be sent to your clients for whose account you hold Common Shares in your name or in the name of your nominee with space provided for obtaining such clients' instructions with regard to the Offer. 5. The Notice of Guaranteed Delivery to be used to accept the Offer if certificates representing Common Shares are not immediately available or if time will not permit all required documents to reach the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) or if the procedures for book-entry transfer cannot be completed on a timely basis. 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 7. A return envelope addressed to American Stock Transfer & Trust Company, as Depositary. Your attention is directed to the following: 1. The tender price is $9.25 per Common Share, net to the seller in cash. 2. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE HOLDERS OF COMMON SHARES ACCEPT THE OFFER AND TENDER THEIR COMMON SHARES PURSUANT TO THE OFFER. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Friday, February, 12, 1999, unless the Offer is extended. 4. The Offer is being made for all of the outstanding Common Shares. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer at least that number of Common Shares which (1) would constitute 51% of the outstanding Common Shares and (2) together with the Preferred Shares subject to the Preferred Stock Purchase Agreement, would constitute at least 51% of the total voting power of the Company on a fully diluted basis. Stockholders owning 964,195 Common Shares (constituting 17.3% of the outstanding Common Shares) and all 40,700 outstanding Preferred Shares (which, together with the aforesaid Common Shares, constitute 50.6% of the outstanding voting power of the Company on a fully diluted basis) 2 have agreed to tender such Common Shares in the Offer and to sell such Preferred Shares to Purchaser pursuant to the Preferred Stock Purchase Agreement. 5. Stockholders who tender Common Shares will not be obligated to pay brokerage fees, commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Common Shares by Purchaser pursuant to the Offer. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will accept for payment and pay for all Common Shares which are validly tendered on or prior to the Expiration Date and not theretofore withdrawn pursuant to the Offer to Purchase. In all cases, payment for Common Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing such Common Shares (or a timely confirmation of a book-entry transfer of such Common Shares into the Depositary's account at The Depository Trust Company, pursuant to the procedures described in Section 2 of the Offer to Purchase), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message (as defined in Section 2 of the Offer to Purchase)), and (iii) all other documents required by the Letter of Transmittal. If holders of Common Shares wish to tender, but it is impracticable for them to forward their certificates or other required documents prior to the expiration of the Offer, a tender may be effected by following the guaranteed delivery procedures specified under Section 2, "Procedure for Tendering Shares," in the Offer to Purchase. Purchaser will not pay any fees or commissions to any broker or dealer or to any other person (other than the Information Agent) in connection with the solicitation of tenders of Common Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding the enclosed materials to your clients. Purchaser will pay or cause to be paid any transfer taxes payable on the transfer of Common Shares to it, except as otherwise provided in Instruction 6 of the enclosed Letter of Transmittal. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 12, 1999, UNLESS THE OFFER IS EXTENDED. Any inquiries you may have with respect to the Offer should be directed to, and additional copies of the enclosed materials may be obtained by contacting, the undersigned at (800) 566-9061 or (212) 754-8000 (call collect). Banks and brokerage firms please call (800) 662-5200. Very truly yours, [LOGO] NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF PURCHASER, TYCO, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN. 3 EX-99.4(A) 5 EX. 99.4(A) LETTER TO CLIENTS OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF ALARMGUARD HOLDINGS, INC. AT $9.25 NET PER SHARE BY T16 ACQUISITION CORP., AN INDIRECT WHOLLY OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 12, 1999 UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration is an Offer to Purchase, dated January 15, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer") relating to the offer by T16 Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of Tyco International Ltd., a Bermuda company ("Tyco"), to purchase all of the outstanding shares of common stock, par value $.0001 per share, including the associated stock purchase rights (the "Common Shares"), of Alarmguard Holdings, Inc., a Delaware corporation (the "Company"), at a price of $9.25 per Common Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer. The Offer is being made in connection with the Agreement and Plan of Merger, dated as of January 8, 1999, among Tyco, Purchaser and the Company. WE ARE THE HOLDER OF RECORD (DIRECTLY OR INDIRECTLY) OF COMMON SHARES FOR YOUR ACCOUNT. A TENDER OF SUCH COMMON SHARES CAN BE MADE ONLY BY US OR OUR NOMINEES AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER COMMON SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to have us tender on your behalf any or all of the Common Shares held by us for your account, pursuant to the terms and conditions set forth in the Offer. Your attention is directed to the following: 1. The tender price is $9.25 per Common Share, net to you in cash. 2. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE HOLDERS OF COMMON SHARES ACCEPT THE OFFER AND TENDER THEIR COMMON SHARES PURSUANT TO THE OFFER. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Friday, February 12, 1999, unless the Offer is extended. 4. The Offer is being made for all of the outstanding Common Shares. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer at least that number of Common Shares which (1) would constitute 51% of the outstanding Common Shares and (2) together with shares of the Company's Series A preferred stock and Series B preferred stock, each par value $.0001 per share (the "Preferred Shares"), subject to the Preferred Stock Purchase Agreement, dated January 8, 1999 (the "Preferred Stock Purchase Agreement"), among Purchaser and the holders of the Preferred Shares, would constitute at least 51% of the total voting power of the Company on a fully diluted basis. Stockholders owning 964,195 Common Shares (constituting 17.3% of the outstanding Common Shares) and all 40,700 outstanding Preferred Shares (which, together with the aforesaid Common Shares, constitute 50.6% of the outstanding voting power of the Company on a fully diluted basis) have agreed to tender such Common Shares in the Offer and to sell such Preferred Shares to Purchaser pursuant to the Preferred Stock Purchase Agreement. 5. Stockholders who tender Common Shares will not be obligated to pay brokerage fees, commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Common Shares by Purchaser pursuant to the Offer. If you wish to have us tender any or all of your Common Shares, please complete, sign and return the instruction form set forth below. An envelope to return your instructions to us is enclosed. If you authorize the tender of your Common Shares, all such Common Shares will be tendered unless otherwise specified on the instruction form set forth below. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER YOUR COMMON SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and any supplements and amendments thereto. Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Common Shares pursuant thereto, Purchaser will make a good faith effort to comply with any such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, Purchaser cannot comply with any such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Common Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. 2 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF ALARMGUARD HOLDINGS, INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated January 15, 1999, and the related Letter of Transmittal (which together constitute the "Offer") relating to the offer by T16 Acquisition Corp. ("Purchaser"), a Delaware corporation and an indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company, to purchase all of the outstanding shares of common stock, par value $.0001 per share, including the associated preferred stock purchase rights (the "Common Shares"), of Alarmguard Holdings, Inc., a Delaware corporation, at a price of $9.25 per Common Share, net to the seller in cash. This will instruct you to tender to Purchaser the number of Common Shares indicated below (or if no number is indicated below, all Common Shares) held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Common Shares to be Tendered:* Common Shares SIGN HERE Signature(s) Account Number: Please print name(s) and address(es) here Area Code and Telephone Number(s) Dated , 1999 Tax Identification or Social Security Number
- ------------------------ * Unless otherwise indicated, it will be assumed that all of your Common Shares held by us for your account are to be tendered. 3 EX-99.5(A) 6 EX. 99.5(A) NOTICE OF GUARANTEE NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF ALARMGUARD HOLDINGS, INC. TO T16 ACQUISITION CORP., AN INDIRECT WHOLLY OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. (Not to be used for Signature Guarantees) This form, or one substantially equivalent hereto, must be used to accept the Offer (as defined below) if certificates representing shares of common stock, par value $.0001 per share, including the associated preferred stock purchase rights (the "Common Shares"), of Alarmguard Holdings, Inc., a Delaware corporation, are not immediately available (or if the procedure for book-entry transfer cannot be completed on a timely basis), or if time will not permit all required documents to reach the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). Such form may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary. See Section 2 of the Offer to Purchase. THE DEPOSITARY FOR THE OFFER IS: AMERICAN STOCK TRANSFER & TRUST COMPANY
BY HAND OR BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE: 40 Wall Street 40 Wall Street (718) 234-5001 46(th) Floor 46(th) Floor (For Eligible Institutions New York, N.Y. 10005 New York, N.Y. 10005 Only) CONFIRM BY TELEPHONE: (800) 937-5449
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal or an Agent's Message (as defined in Section 2 of the Offer to Purchase) and certificates representing the Common Shares to the Depositary within the time period specified herein. Failure to do so could result in a financial loss to the Eligible Institution. Ladies and Gentlemen: The undersigned hereby tenders to T16 Acquisition Corp., a Delaware corporation and an indirect wholly owned subsidiary of Tyco International Ltd., a Bermuda company, upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 15, 1999, (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged, the number of Common Shares specified below pursuant to the guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase. Number of Common Shares Name(s) of Record Holder(s) Certificate No(s). (if available) (Please type or Print) Address(es) / / CHECK BOX IF COMMON SHARES WILL BE TENDERED BY BOOK-ENTRY TRANSFER. (Zip Code) Name of Tendering Institution: Area Code and Tel. No(s). Account Number Signature(s)
Dated , 1999 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member in good standing of the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program (each, an "Eligible Institution"), (a) represents that the above named person(s) own(s) the Common Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (b) represents that such tender of Common Shares complies with Rule 14e-4 under the Exchange Act, and (c) guarantees delivery to the Depositary, at one of its addresses set forth above, of certificates representing the Common Shares tendered hereby in proper form for transfer, or confirmation of book-entry transfer of such Common Shares into the Depositary's accounts at The Depository Trust Company, in each case with delivery of a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees, or an Agent's Message in the case of a book-entry transfer, and any other required documents, within three American Stock Exchange trading days after the date hereof. (Name of Firm) (Authorized signature) (Address) (Title) (Zip code) (Please Type or Print) Date , 1999 (Area Code and Tel. No.)
NOTE: DO NOT SEND CERTIFICATES FOR COMMON SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES REPRESENTING COMMON SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 2 EX-99.6(A) 7 EX. 99.6(A) PRESS RELEASE DTD 1/11/99 TYCO INTERNATIONAL'S ADT UNIT TO ACQUIRE ALARMGUARD HOLDINGS, INC. IMMEDIATELY ACCRETIVE ACQUISITION PROVIDES STRONG HIGH-END RESIDENTIAL ALARM PRESENCE Hamilton, Bermuda and Orange, CT, January 11, 1999 - Tyco International Ltd. (NYSE-TYC, LSE-TYI, BSX-TYC) (Tyco), a diversified manufacturing and service company, and Alarmguard Holdings, Inc. (AMEX-AGD) (Alarmguard), a provider of electronic security services, announced today that they have entered into a definitive Merger Agreement. Under the Agreement, a subsidiary of Tyco will acquire all of the outstanding shares of Alarmguard stock. Tyco will shortly commence a tender offer to purchase all of Alarmguard's common shares for $9.25 per share in cash. The tender offer will be followed by a merger in which each of the remaining common shares of Alarmguard will be exchanged for $9.25 in cash. The Tyco subsidiary has also entered into an agreement to purchase substantially all of Alarmguard's preferred stock. The purchase of the preferred stock is contingent upon the purchase of the common shares in the tender offer. The offer will be made pursuant to definitive offering documents to be filed with the Securities and Exchange Commission. The offer is conditioned on the tender of a majority of the outstanding shares of common stock, as well as certain other conditions, including the receipt of necessary government approvals. "Alarmguard is an excellent addition to our ADT Security business," said L. Dennis Kozlowski, Tyco's Chairman and Chief Executive Officer. "In addition to securing our position in the Northeast and Mid-Atlantic states, where Alarmguard has built a very strong and loyal customer base, we expect to create significant value by taking Alarmguard's local expertise in the high-end residential market and applying it to our national franchise. The transaction will have an immediate positive impact on earnings per share." Tyco recently acquired Holmes Protection and Wells Fargo Alarm, and the acquisition of the security operations of Entergy is pending. ADT Security is the largest provider of electronic security services in the U. S. Alarmguard sells and installs burglar and fire systems and provides security monitoring services and security system repair and maintenance services to homeowners and businesses. Tyco International Ltd., a diversified manufacturing and service company, is the world's largest manufacturer and installer of fire protection systems, the largest provider of electronic security services, the largest manufacturer of flow control valves, and has strong leadership positions in disposable medical products, plastics and adhesives, electrical and electronic components and underwater telecommunications systems. The company operates in more than 80 countries around the world and has expected fiscal 1999 revenues in excess of $17 billion. FORWARD LOOKING INFORMATION Certain statements in this release are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All forward looking statements involve risks and uncertainties. In particular, any statements contained herein regarding the consummation and benefits of future acquisitions, as well as expectations with respect to future sales, operating efficiencies and product expansion, are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of the Company, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Factors that might affect such forward looking statements include, among other things, overall economic and business conditions, the demand for the Company's goods and services, competitive factors in the industries in which the Company competes, changes in government regulation; changes in tax requirements (including tax rate changes, new tax laws and revised tax law interpretations); interest rate fluctuations and other capital market conditions, including foreign currency rate fluctuations; economic and political conditions in international markets, including governmental changes and restrictions on the ability to transfer capital across borders; the ability to achieve anticipated synergies and other cost savings in connection with acquisitions; the timing, impact and other uncertainties of future acquisitions; and the Company's ability and its customers' and suppliers' ability to replace, modify or upgrade computer programs in order to adequately address the year 2000 issue. EX-99.7(A) 8 EX. 99.7(A) SUMMARY ADVERTISEMENT This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares. The Offer is made solely by the Offer to Purchase, dated January 15, 1999, and the related Letter of Transmittal and is not being made to (nor will tenders be accepted from or on behalf of) holders of shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction the securities laws of which require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock (Including the Associated Preferred Stock Purchase Rights) of Alarmguard Holdings, Inc. at $9.25 Net Per Share by T16 Acquisition Corp. a wholly owned subsidiary of Tyco International Ltd. T16 Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of Tyco International Ltd., a Bermuda corporation ("Tyco"), is offering to purchase all outstanding shares of common stock, par value $.0001 per share, including the associated preferred stock purchase rights (the "Common Shares"), of Alarmguard Holdings, Inc., a Delaware corporation (the "Company"), at $9.25 per Common Share, net to the seller in cash (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 15, 1999, and in the related Letter of Transmittal (which together constitute the "Offer"). THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 12, 1999, UNLESS EXTENDED. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer at least that number of Common Shares which (1) would constitute 51% of the outstanding Common Shares and (2) together with the shares of the Company's Series A preferred stock and Series B preferred stock, each par value $.0001 per share (the "Preferred Shares" and, together with the Common Shares, the "Shares") subject to the Preferred Stock Purchase Agreement, dated January 8, 1999 (the "Preferred Stock Purchase Agreement"), among Purchaser and the holders of Preferred Shares, would constitute at least 51% of the total voting power of the Company on a fully diluted basis (the "Minimum Condition"). Stockholders owning 964,195 Common Shares (constituting 17.3% of the outstanding Common Shares) and all 40,700 outstanding Preferred Shares (which, together with the aforesaid Common Shares, constitute 50.6% of the total voting power of the Company on a fully diluted basis) have agreed to tender such Common Shares in the Offer and to sell such Preferred Shares to Purchaser pursuant to the Preferred Stock Purchase Agreement. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of January 8, 1999 (the "Merger Agreement"), among Tyco, Purchaser and the Company pursuant to which, following the consummation of the Offer and the satisfaction or waiver of certain conditions, Purchaser will be merged with and into the Company (the "Merger"). At the effective time of the Merger, each outstanding Share (other than Shares held in the Company's treasury, or by any wholly owned subsidiary of the Company, or owned by Tyco, Purchaser or any other wholly owned subidiary of Tyco or held by stockholders, if any, who are entitled to and who properly exercise dissenters' rights under Delaware law) will be converted into the right to receive the Offer Price, in the case of the Common Shares, and $1,400 plus accrued but unpaid dividends thereon, in the case of the Preferred Shares, in each case without interest. The Board of Directors of the Company has determined that the Offer and the Merger are fair to, and in the best interests of, the Company and its stockholders, has approved the Merger Agreement, the Offer and the Merger, and recommends that the holders of the Common Shares accept the Offer and tender their Common Shares pursuant to the Offer. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, Common Shares properly tendered to Purchaser and not withdrawn as, if and when Purchaser gives oral or written notice to American Stock Transfer & Trust Company (the "Depositary") of Purchaser's acceptance for payment of such Common Shares. Upon the terms and subject to the conditions of the Offer, payment for Common Shares purchased pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from Purchaser and transmitting payment to tendering stockholders. In all cases, payment for Common Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (a) certificates for such Common Shares or timely confirmation of book-entry transfer of such Common Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to the procedures set forth in Section 2 of the Offer to Purchase, (b) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees or, in the case of a book-entry transfer, an Agent's Message (as defined in the Offer to Purchase) and (c) any other documents required by the Letter of Transmittal. Under no circumstances will interest be paid by Purchaser on the purchase price of the Common Shares, regardless of any extension of the Offer or any delay in making such payment. The term "Expiration Date" means 12:00 Midnight, New York City time, on Friday, February 12, 1999, unless and until Purchaser, in its sole discretion (but subject to the terms of the Merger Agreement), shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. Purchaser expressly reserves the right, in its sole discretion (but subject to the terms of the Merger Agreement), at any time or from time to time, and regardless of whether or not any of the events set forth in Section 15 of the Offer to Purchase shall have occurred or shall have been determined by Purchaser to have occurred, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and the payment for, any Common Shares, by giving oral or written notice of such extension to the Depositary. Purchaser shall not have any obligation to pay interest on the purchase price for tendered Common Shares in the event Purchaser exercises its right to extend the period of time during which the Offer is open. There can be no assurance that Purchaser will exercise its right to extend the Offer. Any such extension will be followed by a public announcement thereof no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Common Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder's Common Shares. Except as otherwise provided below, tenders of Common Shares are irrevocable. Common Shares tendered pursuant to the Offer may be withdrawn at any time prior to 12:00 Midnight, New York City time, on Friday, February 12, 1999 (or, if Purchaser shall have extended the period of time during which the Offer is open, the latest time and date at which the Offer, as so extended by Purchaser, shall expire) and, unless theretofore accepted for payment and paid for by Purchaser pursuant to the Offer, may also be withdrawn at any time on or after March 16, 1999. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase and must specify the name of the person having tendered the Common Shares to be withdrawn, the number of Common Shares to be withdrawn and the name of the registered holder of the Common Shares to be withdrawn, if different from the name of the person who tendered the Common Shares. If certificates for Common Shares have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Common Shares have been tendered by an Eligible Institution (as defined in Section 2 of the Offer to Purchase), the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Common Shares have been delivered pursuant to the procedures for book-entry transfer as set forth in Section 2 of the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Common Shares and otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Common Shares may not be rescinded, and any Common Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Common Shares may be retendered by again following one of the procedures described in Section 2 of the Offer to Purchase at any time prior to the Expiration Date. The Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed to record holders of Common Shares and furnished to brokers, dealers, banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder lists or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Common Shares. The information required to be disclosed by Rule 14d-6(e)(1)(vii) under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Offer to Purchase and the related Letter of Transmittal contain important information and should be read in their entirety before any decision is made with respect to the Offer. Requests for copies of the Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent as set forth below, and copies will be furnished promptly at Purchaser's expense. The Information Agent for the Offer is: MORROW & CO., INC. 445 Park Avenue, 5th Floor New York, New York 10022 Toll Free (800) 566-9061 Call Collect (212) 754-8000 Banks and Brokerage Firms Please Call: (800) 662-5200 January 15, 1999 EX-99.8(A) 9 EX. 99.8(A) TAX GUIDELINES W-9 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.-- Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer.
- ----------------------------------------------------------- GIVE THE NAME AND SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ----------------------------------------------------------- 1. Individual The individual 2. Two or more individuals The actual owner of the (joint account) account or, if combined funds, the first individual on the account(1) 3. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 4. a. The usual revocable The grantor-trustee(1) savings trust (grantor is also trustee) b. So-called trust The actual owner(1) account that is not a legal or valid trust under state law 5. Sole proprietorship The owner(3) - ----------------------------------------------------------- GIVE THE NAME AND EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ----------------------------------------------------------- 6. A valid trust, estate, The legal entity(4) or pension trust 7. Corporate The corporation 8. Association, club, The organization religious, charitable, educational or other tax-exempt organization 9. Partnership The partnership 10. A broker or registered The broker or nominee nominee 11. Account with the The public entity Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments
- --------------------------------------------- - --------------------------------------------- (1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's social security number. (3) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your social security number or employer identification number (if you have one). (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number, or Form SS-4, Application for an Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. United States resident aliens who cannot obtain a social security number must apply for an ITIN (Individual Taxpayer Identification Number) on Form W-7. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on payments of interest, dividends and with respect to broker transactions include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan. - The United States or any agency or instrumentality thereof. - A state, the District of Columbia, a possession of the United States, or any political subdivision or instrumentality thereof. - A foreign government, or any political subdivision, agency or instrumentality thereof. - An international organization or any agency or instrumentality thereof. - A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An exempt charitable remainder trust, or a non-exempt trust described in section 4947. - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the United States and which have at least one nonresident alien partner. - Payments of patronage dividends not paid in money. - Payments made by certain foreign organizations. - Payments made to a middleman known in the investment community as a nominee or who is listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Payments made to a middleman known in the investment community as a nominee or who is listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-99.1(C) 10 EX. 99.1(C) CONFIDENTIAL AGMT November 2, 1998 Irving Gutin Tyco International Ltd. One Tyco Park Exeter, NH 03833 Dear Mr. Gutin: In connection with your consideration of a possible negotiated transaction by you or one or more of your affiliates involving Alarmguard Holdings, Inc. (the "Company") (a "Transaction"), the Company, Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), acting as the Company's exclusive financial advisor in connection with the proposed Transaction, and their respective advisors and agents are prepared to make available to you certain information which is non-public, confidential or proprietary in nature ("Evaluation Material"). 1. By execution of this letter agreement (the "Agreement"), you agree to treat all Evaluation Material confidentially and to observe the terms and conditions set forth herein. For purposes of this Agreement, Evaluation Material shall include all information, regardless of the form in which it is communicated or maintained (whether prepared by the Company, DLJ or otherwise) that contains or otherwise reflects information concerning the Company that you or your Representatives (as defined below) may be provided by or on behalf of the Company or DLJ in the course of your evaluation of a possible Transaction. The term "Evaluation Material" shall also include all reports, analyses, notes or other information that are based on, contain or reflect any Evaluation Material ("Notes"). You shall not be required to maintain the confidentiality of those portions of the Evaluation Material that (i) become generally available to the public other than as result of a disclosure by you or any of your Representatives, (ii) were available to you on a non-confidential basis prior to the disclosure of such Evaluation Material to you pursuant to this Agreement, provided that the source of such information was not known by you or any of your Representatives to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Company or any of its affiliates with respect to such material or (iii) become available to you on a non-confidential basis from a source other than the Company or its agents, advisors or representatives provided that the source of such information was not known by you or any of your Representatives to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Company or any of its affiliates with respect to such material. November 2, 1998 Irving Gutin Tyco International Ltd. Page 2 2. You agree that you will not use the Evaluation Material for any purpose other than determining whether you wish to enter into a Transaction. You agree not to disclose or allow disclosure to others of any Evaluation Material; except that, you may disclose Evaluation Material to your directors, officers, employees, partners, affiliates, agents, financing sources, advisors or representatives (hereinafter, "Representatives"), to the extent necessary to permit such Representatives to assist you in making the determination referred to in the prior sentence, provided, however, that you shall require each such Representative to be bound by the terms of this Agreement to the same extent as if they were parties hereto and you shall be responsible for any breach of this Agreement by any of your Representatives. 3. You agree that you will not use the Evaluation Material in any way directly or indirectly, detrimental to the Company. In particular, you agree that for a period of two years from the date of the signing of this Agreement you and your affiliates will not knowingly, as a result of knowledge or information obtained from the Evaluation Material or otherwise in connection with a possible Transaction: (i) divert or attempt to divert any business or customer of the Company or any of its affiliates; nor (ii) solicit to employ an employee of the Company or any of its affiliates. 4. In addition, you agree that you will not make any disclosure that you are having or have had discussions concerning a Transaction, that you have received Evaluation Material or that you are considering a possible Transaction; provided that you may make such disclosure if you have received the written opinion of your counsel that such disclosure must be made by you in order that you not commit a violation of law and, prior to such disclosure, you promptly advise and consult with the Company and its legal counsel concerning the information you propose to disclose. 5. Although the Company and DLJ have endeavored to include in the Evaluation Material information known to them which they believe to be relevant for the purpose of your investigation, you understand and agree that none of the Company, DLJ or any of their affiliates, agents, advisors or representatives (i) have made or make any representation or warranty, expressed or implied, as to the accuracy or completeness of the Evaluation Material or (ii) shall have any liability whatsoever to you or your Representatives relating to or resulting from the use of the Evaluation Material or any errors therein or omissions therefrom. 6. In the event that you or anyone to whom you transmit any Evaluation Material in accordance with this Agreement are requested or required (by deposition, interrogatories, requests for information or documents in legal proceedings, subpoenas, civil investigative demand or similar process), in connection with any proceeding, to disclose any Evaluation Material, you will give the Company prompt written notice of such request or requirement so that the Company may seek an appropriate protective order or other remedy and/or waive compliance with the provisions of this Agreement, and you will cooperate with the Company to obtain such protective order. In the event that such protective order or other remedy is not obtained or the Company waives compliance with the relevant provisions of this Agreement, you (or such other persons to whom such request is directed) will furnish only that portion of the Evaluation Material which, in the written opinion of your counsel, is legally required to be disclosed and, upon the Company's request, use your best efforts to obtain assurances that confidential treatment will be accorded to such information. November 2, 1998 Irving Gutin Tyco International Ltd. Page 3 7. If you decide that you do not wish to proceed with a Transaction, you will promptly notify DLJ of that decision. In that case, or if the Company shall elect at any time to terminate further access by you to the Evaluation Material for any reason, you will within two business days redeliver to us all copies of the Evaluation Material, destroy all Notes and deliver to DLJ and the Company a certificate executed by one of your duly authorized officers indicating that the requirements of this sentence have been satisfied in full. Notwithstanding the return or destruction of Evaluation Material and Notes, you and your Representatives will continue to be bound by your obligations of confidentiality and other obligations hereunder. 8. You hereby acknowledge that you are aware that the securities laws of the United States prohibit any person who has material, non-public information concerning the Company or a possible Transaction involving the Company from purchasing or selling securities in reliance upon such information or from communicating such information to any other person or entity under circumstances in which it is reasonably foreseeable that such person or entity is likely to purchase or sell such securities in reliance upon such information. 9. You agree that, for a period of three years from the date of this agreement, unless such shall have been specifically invited in writing by the Board of Directors of the Company, neither you nor any of your Representatives will in any manner, directly or indirectly, (a) effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause or participate in or in any way assist any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any securities (or beneficial ownership thereof) or assets of the Company or any of its subsidiaries; (ii) any tender or exchange offer or merger or other business combination involving the Company or any of its subsidiaries; (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of its subsidiaries; or (iv) any "solicitation" of "proxies" (as such terms are used in the proxy rules of the Securities and Exchange Commission) or consents to vote any voting securities of the Company, (b) form, join or in any way participate in a "group" (as defined under the Securities Exchange Act of 1934, as amended), (c) otherwise act, alone or in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company, (d) take any action which might force the Company to make a public announcement regarding any of the types of matters set forth in (a) above, or (e) enter into any discussions or arrangements with any third party with respect to any of the foregoing. You also agree during any such period not to request the Company (or its directors, officers, employees or agents), directly or indirectly, to amend or waive any provision of this paragraph (including this sentence). 10. You understand that (i) the Company and DLJ shall conduct the process for a possible Transaction as they in their sole discretion shall determine (including, without limitation, negotiating with any prospective buyer and entering into definitive agreements without prior notice to you or any other person), (ii) any procedures relating to such a Transaction may be changed at any time without notice to you or any other person, (iii) the Company shall have the right to reject or accept any potential buyer, proposal or offer, for any reason whatsoever, in its sole discretion, and (iv) neither you nor any of your Representatives shall have any claims whatsoever against the Company or DLJ or any of their respective directors, officers, stockholders, owners, affiliates or agents arising out of or relating to the Transaction (other than those against the parties to a definitive agreement with you November 2, 1998 Irving Gutin Tyco International Ltd. Page 4 in accordance with the terms thereof). You agree that unless and until a definitive agreement between the Company and you with respect to any Transaction has been executed and delivered, neither the Company nor you will be under any legal obligation of any kind whatsoever with respect to such Transaction. 11. It is further understood and agreed that DLJ will arrange for appropriate contacts for due diligence purposes. It is also understood and agreed that all (i) communications regarding a possible Transaction, (ii) requests for additional information, (iii) requests for facility tours or management meetings and (iv) discussions or questions regarding procedures, will be submitted or directed exclusively to DLJ, and that none of you or your Representatives who are aware of the Evaluation Material and/or the possibility of a Transaction will initiate or cause to be initiated any communication with any director, officer or employee of the Company concerning the Evaluation Material or a Transaction. 12. You agree that money damages would not be a sufficient remedy for any breach of this Agreement by you or your Representatives, that in addition to all other remedies the Company shall be entitled to specific performance and injunctive or other equitable relief as a remedy for any such breach, and you further agree to waive, and to use your best efforts to cause your Representatives to waive, any requirement for the securing or posting of any bond in connection with such remedy. In the event of litigation relating to this letter agreement, if a court of competent jurisdiction determines that you or any of your Representatives have breached this letter agreement, you shall be liable and pay to the Company the reasonable legal fees incurred by the Company in connection with such litigation, including any appeal therefrom. 13. The Company reserves the right to assign its rights, powers and privileges under this letter agreement (including, without limitation, the right to enforce the terms of this letter agreement) to any person who enters into a Transaction. 14. All modifications of, waivers of and amendments to this Agreement or any part hereof must be in writing signed on behalf of you and the Company. You acknowledge that the Company is intended to be benefited by this Agreement and that the Company shall be entitled, either alone or together with DLJ, to enforce this Agreement and to obtain for itself the benefit of any remedies that may be available for the breach hereof. 15. It is further understood and agreed that no failure or delay by the Company in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any right, power or privilege hereunder. 16. You hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any State or Federal court sitting in New York City over any suit, action or proceeding arising out of or relating to this letter. You hereby agree that service of any process, summons, notice or document by U.S. registered mail addressed to you shall be effective service of process for any action, suit or proceeding brought against you in any such November 2, 1998 Irving Gutin Tyco International Ltd. Page 5 court. You hereby irrevocably and unconditionally waive any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. You agree that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon you and may be enforced in any other courts to whose jurisdiction you are or may be subject, by suit upon such judgment. 17. In the event that any provision or portion of this letter is determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this letter shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by applicable law. 18. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York. 19. If you are in agreement with the foregoing, please so indicate by signing, dating and returning one copy of this Agreement, which will constitute our agreement with respect to the matters set forth herein. Very truly yours, ALARMGUARD HOLDINGS, INC. By: /s/ Martin C. Murrer ----------------------------------------- Martin C. Murrer MANAGING DIRECTOR DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION as Exclusive Agent Agreed and Accepted: TYCO INTERNATIONAL LTD. By: /s/ Irving Gutin ------------------------- Title: Senior Vice President ---------------------- Date: November 5, 1998 -----------------------
EX-99.C(2) 11 EX. 99.C(2) AGREEMENT & PLAN OF MERGER DTD 1/8/99 EXHIBIT 99(c)(2) ALARMGUARD HOLDINGS, INC., TYCO INTERNATIONAL LTD. and T16 ACQUISITION CORP. AGREEMENT AND PLAN OF MERGER ------------------------------ ------------------------------ Dated as of January 8, 1999 TABLE OF CONTENTS
Page ARTICLE I TENDER OFFER AND MERGER 1.1. The Offer ................................................................................................ 2 1.2. Company Action............................................................................................ 4 1.3. Directors ................................................................................................ 5 1.4. The Merger ............................................................................................... 7 1.5. Effective Time............................................................................................ 7 1.6. Conversion of Shares...................................................................................... 7 1.7. Dissenting Shares......................................................................................... 8 1.8. Surrender of Shares....................................................................................... 9 1.9. Options and Warrants...................................................................................... 10 1.10. Certificate of Incorporation and Bylaws................................................................... 11 1.11. Directors and Officers.................................................................................... 11 1.12. Other Effects of Merger................................................................................... 11 1.13. Proxy Statement........................................................................................... 11 1.14. Additional Actions........................................................................................ 12 1.15. Merger Without Meeting of Stockholders.................................................................... 13 1.16. Lost, Stolen or Destroyed Certificates.................................................................... 13 1.17. Material Adverse Effect................................................................................... 13
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.......................................................................... 15 2.5. Governmental Approvals.....................................................................................16 2.6. No Violations............................................................................................. 16 2.7. Securities Filings........................................................................................ 17 2.8. Company Financial Statements.............................................................................. 17 2.9. Absence of Certain Changes or Events...................................................................... 17 2.10. No Undisclosed Liabilities................................................................................ 18 2.11. Compliance with Laws...................................................................................... 18 2.12. Permits................................................................................................... 18 2.13. Litigation ............................................................................................... 18 2.14. Contracts ................................................................................................ 19 2.15. Employee Benefit Plans.................................................................................... 20
2.16. Taxes and Returns......................................................................................... 22 2.17. Intellectual Property..................................................................................... 25 2.18. Disclosure Documents...................................................................................... 25 2.19. Labor Matters............................................................................................. 26 2.20. Limitation on Business Conduct............................................................................ 26 2.21. Title to Property......................................................................................... 26 2.22. Leased Premises........................................................................................... 27 2.23. Environmental Matters..................................................................................... 27 2.24. Insurance................................................................................................. 29 2.25. Customers................................................................................................. 29 2.26. Interested Party Transactions............................................................................. 29 2.27. Alarm Contracts........................................................................................... 29 2.28. Finders and Investment Bankers............................................................................ 29 2.29. Fairness Opinion.......................................................................................... 29 2.30. Takeover Statutes......................................................................................... 30 2.31. Full Disclosure........................................................................................... 30 2.32. Year 2000................................................................................................. 30 2.33. Rights Agreement.......................................................................................... 31 2.34. Standard Form Contracts................................................................................... 31 2.35. Central Station/Inspection................................................................................ 32
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER 3.1. Organization and Good Standing............................................................................ 33 3.2. Authorization; Binding Agreement.......................................................................... 33 3.3. Governmental Approvals.................................................................................... 33 3.4. No Violations............................................................................................. 33 3.5. Disclosure Documents...................................................................................... 34 3.6. Finders and Investment Bankers............................................................................ 34 3.7. Financing Arrangements.................................................................................... 34 3.8. No Prior Activities....................................................................................... 35
ARTICLE IV ADDITIONAL COVENANTS OF THE COMPANY 4.1. Conduct of Business of the Company and the Company Subsidiaries .......................................... 35 4.2. Notification of Certain Matters........................................................................... 37 4.3. Access and Information.................................................................................... 38 4.4. Stockholder Approval...................................................................................... 38 4.5. Reasonable Best Efforts................................................................................... 38 4.6. Public Announcements...................................................................................... 39
4.7. Compliance ............................................................................................... 39 4.8. No Solicitation........................................................................................... 39 4.9. SEC and Stockholder Filings............................................................................... 42 4.10. Takeover Statutes......................................................................................... 42 4.11. Rights Agreement.......................................................................................... 42
ARTICLE V ADDITIONAL COVENANTS OF PURCHASER AND PARENT 5.1. Reasonable Best Efforts................................................................................... 42 5.2. Public Announcements...................................................................................... 43 5.3. Compliance ............................................................................................... 43 5.4. Employee Benefit Plans.................................................................................... 43 5.5. Indemnification........................................................................................... 44 5.6. Voting of Shares.......................................................................................... 45 5.7. Guarantee of Parent....................................................................................... 45
ARTICLE VI MERGER CONDITIONS 6.1. Offer..................................................................................................... 45 6.2. Stockholder Approval...................................................................................... 45 6.3. No Injunction or Action................................................................................... 45 6.4. Governmental Approvals.................................................................................... 46
ARTICLE VII TERMINATION AND ABANDONMENT 7.1. Termination .............................................................................................. 46 7.2. Effect of Termination and Abandonment..................................................................... 48
ARTICLE VIII MISCELLANEOUS 8.1. Confidentiality........................................................................................... 48 8.2. Amendment and Modification................................................................................ 49 8.3. Waiver of Compliance; Consents............................................................................ 49 8.4. Survival ................................................................................................. 50 8.5. Notices................................................................................................... 50 8.6. Binding Effect; Assignment................................................................................ 51 8.7. Expenses ................................................................................................. 51 8.8. Governing Law............................................................................................. 53 8.9. Counterparts.............................................................................................. 53
8.10. Interpretation............................................................................................ 53 8.11. Entire Agreement.......................................................................................... 54 8.12. Severability ............................................................................................. 54 8.13. Specific Performance...................................................................................... 54 8.14. Third Parties............................................................................................. 55 8.15. Disclosure Letter......................................................................................... 55 Annex I................................................................................................ A1 Glossary of Defined Terms.............................................................................. G1
AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (THIS "AGREEMENT") is made and entered into as of January 8, 1999, by and among ALARMGUARD HOLDINGS, INC., a Delaware corporation (the "COMPANY"), TYCO INTERNATIONAL LTD., a Bermuda company ("PARENT"), and T16 ACQUISITION CORP., a Delaware corporation and an indirect wholly owned subsidiary of Parent ("PURCHASER"). W I T N E S S E T H: WHEREAS, the respective Boards of Directors of the Company, Purchaser and Parent have approved the acquisition by Purchaser of the Company; and WHEREAS, in furtherance thereof, it is proposed that Purchaser will make a cash tender offer (the "OFFER") to acquire all of the issued and outstanding shares of common stock, par value $.0001 per share, of the Company ("COMPANY COMMON STOCK") together with the associated right to purchase shares of Series C Junior Participating Preferred Stock of the Company, par value $.0001 per share (the "RIGHTS"), issued pursuant to the Rights Agreement (the "RIGHTS AGREEMENT"), dated as of April 10, 1998, between the Company and American Stock Transfer & Trust Company, as Rights Agent (the shares of Company Common Stock together with the associated Rights are referred to as the "COMMON SHARES"), for $9.25 per share, or such higher price as may be paid in the Offer (the "COMMON PER SHARE AMOUNT"), subject to any applicable withholding, net to the seller in cash without interest; and WHEREAS, Purchaser has entered into a Preferred Stock Purchase Agreement (the "PREFERRED STOCK PURCHASE AGREEMENT") with the holders of at least 75% of the issued and outstanding shares ("PREFERRED SHARES," and, together with the Common Shares, the "SHARES") of the Series A and Series B preferred stock of the Company ("COMPANY PREFERRED STOCK," and, together with the Company Common Stock, the "COMPANY STOCK"), pursuant to which Purchaser will acquire the Preferred Shares for $1,400 per share plus accrued but unpaid dividends to and including the date of purchase (the "PREFERRED PER SHARE AMOUNT," and together with the Common Per Share Amount, as applicable, the "PER SHARE AMOUNT"), subject to any applicable withholding, net to the seller in cash without interest; and WHEREAS, also in furtherance of such acquisition, the respective Boards of Directors of the Company, Purchaser and Parent have each approved the merger (the "MERGER") of Purchaser with and into the Company following the Offer in accordance with the laws of the State of Delaware; and WHEREAS, the Board of Directors of the Company has approved and resolved to recommend acceptance of the Offer and the Merger to the holders of Shares and has determined that the consideration to be paid for each Share in the Offer and the Merger is fair to and in the best interest of the holders of Common Shares and to recommend that the holders of such Shares accept the Offer and that the holders of Common Shares and Preferred Shares approve this Agreement and the transactions contemplated hereby; and WHEREAS, the Company, Purchaser and Parent desire to make certain representations, warranties and agreements in connection with, and establish various conditions precedent to, the transactions contemplated hereby; NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements hereinafter set forth, the parties hereto agree as follows: ARTICLE I TENDER OFFER AND MERGER 1.1 THE OFFER. (a) Provided that this Agreement shall not have been terminated in accordance with SECTION 7.1 hereof and that none of the events set forth in ANNEX I hereto shall have occurred and be existing, Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "SECURITIES EXCHANGE ACT")) the Offer as promptly as practicable, but in no event later than five business days following the first public announcement of the Offer, and shall use reasonable best efforts to consummate the Offer. The obligation of Purchaser to accept for payment any Common Shares tendered shall be subject to the satisfaction of only those conditions set forth in ANNEX I hereto. The Common Per Share Amount payable in the Offer shall be net to each seller in cash, subject to reduction only for any applicable federal back-up withholding or stock transfer taxes payable by such seller. The Company agrees that no Common Shares held by the Company or any Company Subsidiaries (as defined below) will be tendered pursuant to the Offer. (b) Without the prior written consent of the Company, Purchaser shall not (i) decrease the Common Per Share Amount or change the form of consideration payable in the Offer, (ii) decrease the number of Common Shares sought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition (as defined in ANNEX I hereto) or (iv) impose additional conditions to the Offer or amend any other term of the Offer in any manner adverse to the holders of the Common Shares. The Offer shall initially expire twenty (20) business days after the date of its commencement, unless this Agreement is terminated in accordance with ARTICLE VII hereof, in which case the Offer (whether or not previously extended in accordance with the terms hereof) shall expire on such date of termination. Purchaser agrees that it shall not terminate or withdraw the Offer or extend the expiration date of the Offer unless at the expiration date of the Offer the conditions to the Offer described in ANNEX I hereto shall not have been satisfied or earlier waived. Notwithstanding the foregoing, Purchaser may, without the consent of the Company, extend the Offer at any time, and from time to time, (i) if at the then scheduled expiration date of the Offer any of the conditions to Purchaser's obligation to accept for payment and pay for Common Shares shall not have been satisfied or waived, until 2 such time as such conditions are satisfied or waived; (ii) for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "SEC") or its staff applicable to the Offer; or (iii) if all conditions to Purchaser's obligation to accept for payment and pay for Common Shares are satisfied or waived but the number of Common Shares tendered is less than 90% of the then outstanding number of Common Shares, for an aggregate period of not more than ten (10) business days (for all such extensions) beyond the latest expiration date that would be permitted under clause (i) or (ii) of this sentence. (c) The Offer shall be made by means of an offer to purchase (the "OFFER TO PURCHASE") having only the conditions set forth in ANNEX I hereto. As soon as practicable on the date the Offer is commenced, Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together with all amendments and supplements thereto, the "SCHEDULE 14D-1") with respect to the Offer that will comply in all material respects with the provisions of, and satisfy in all material respects the requirements of, such Schedule 14D-1 and all applicable federal securities laws and will contain (including as an exhibit) or incorporate by reference the Offer to Purchase and forms of the related letter of transmittal and summary advertisement (which documents, together with any supplements or amendments thereto, and any other SEC schedule or form which is filed in connection with the Offer and related transactions, are referred to collectively herein as the "OFFER DOCUMENTS"). Each of Parent, Purchaser and the Company agrees promptly to correct any information provided by it for use in the Schedule 14D-1 or the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect and to supplement the information provided by it specifically for use in the Schedule 14D-1 or the Offer Documents to include any information that shall become necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and Purchaser further agrees to take all steps necessary to cause the Schedule 14D-1, as so corrected or supplemented, to be filed with the SEC and the Offer Documents, as so corrected or supplemented, to be disseminated to holders of Common Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment on any Offer Documents before they are filed with the SEC, and Parent and Purchaser shall consider any such comments in good faith. (d) Upon the terms and subject to the conditions of the Offer, Purchaser shall accept for payment and pay for Common Shares as soon as permitted under the terms of the Offer and applicable law. 1.2 COMPANY ACTION. (a) The Company hereby approves and consents to the Offer and represents and warrants that the Board of Directors of the Company, at a meeting duly called and held on January 8, 1999, at which a majority of the Directors was present, duly approved and adopted this Agreement and the transactions contemplated hereby, including the Offer and the Merger, recommended that stockholders of the Company accept the Offer, tender their Common Shares pursuant to the Offer and approve this Agreement and the transactions contemplated hereby, including the Merger, and determined that this 3 Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best interests of the stockholders of the Company. The Company hereby consents to the inclusion in the Offer Documents of such recommendation of the Board of Directors of the Company. The Company represents that its Board of Directors has received the written opinion (the "FAIRNESS OPINION") of Donaldson, Lufkin & Jenrette Securities Corporation (the "FINANCIAL ADVISOR") that the proposed consideration to be received by the holders of Common Shares pursuant to the Offer and the Merger is fair to such holders from a financial point of view. The Company has been authorized by the Financial Advisor to permit, subject to the prior review and consent by the Financial Advisor (such consent not to be unreasonably withheld), the inclusion of the Fairness Opinion (or a reference thereto) in the Offer Documents, the Schedule 14D-9 (as hereinafter defined) and the Proxy Statement (as hereinafter defined). (b) The Company shall file with the SEC, as promptly as practicable after the filing by Parent of the Schedule 14D-1 with respect to the Offer, a Tender Offer Solicitation/ Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the "SCHEDULE 14D-9") that will comply in all material respects with the provisions of all applicable federal securities laws. The Company shall mail such Schedule 14D-9 to the stockholders of the Company as promptly as practicable after the commencement of the Offer. The Schedule 14D-9 and the Offer Documents shall contain the recommendations of the Board of Directors of the Company described in SECTION 1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and to the extent that it shall become false or misleading in any material respect (and each of Parent and Purchaser, with respect to written information supplied by it specifically for use in the Schedule 14D-9, shall promptly notify the Company of any required corrections of such information and cooperate with the Company with respect to correcting such information) and to supplement the information contained in the Schedule 14D-9 to include any information that shall become necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Company shall take all steps necessary to cause the Schedule 14D-9 as so corrected or supplemented to be filed with the SEC and disseminated to holders of Common Shares to the extent required by applicable federal securities laws. Purchaser and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 before it is filed with the SEC, and the Company shall consider any such comments in good faith. (c) In connection with the Offer, the Company shall promptly upon execution of this Agreement furnish Purchaser with mailing labels containing the names and addresses of all record holders of Common Shares and security position listings of Common Shares held in stock depositories, each as of a recent date, and shall promptly furnish Purchaser with such additional information reasonably available to the Company, including updated lists of stockholders, mailing labels and security position listings, and such other information and assistance as Purchaser or its agents may reasonably request for the purpose of communicating the Offer to the record and beneficial holders of Common Shares. Subject 4 to the requirements of applicable law and except as necessary to disseminate the Offer Documents and otherwise for the purpose of effecting the transactions contemplated hereby, Parent and Purchaser shall hold in confidence the materials furnished pursuant to this SECTION 1.2(c), use such information only in connection with the Offer, the Merger and the other transactions contemplated by this Agreement and, if this Agreement is terminated, as promptly as practicable return to the Company such materials and all copies thereof in the possession of Parent and Purchaser. 1.3 DIRECTORS. Promptly upon the purchase by Parent of Common Shares pursuant to the Offer (and provided that the Minimum Condition has been satisfied), Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as will give Parent, subject to compliance with Section 14(f) of the Securities Exchange Act, representation on the Board of Directors of the Company equal to at least that number of directors which equals the product of the total number of directors on the Board of Directors of the Company (giving effect to the directors appointed or elected pursuant to this sentence and including current directors serving as officers of the Company) multiplied by the percentage that the aggregate number of Shares beneficially owned by Parent or any affiliate of Parent (including for purposes of this SECTION 1.3 such Shares as are accepted for payment pursuant to the Offer, but excluding Shares held by the Company) bears to the number of Shares outstanding. For this purpose, each Common Share shall be counted as one Share, and each Preferred Share shall be counted as the number of Common Shares into which such Preferred Share is convertible. At such time, if requested by Parent, the Company will also cause each committee of the Board of Directors of the Company to include persons designated by Parent constituting the same percentage of each such committee as Parent's designees are of the Board of Directors of the Company. The Company shall, upon request by Parent, promptly increase the size of the Board of Directors of the Company or exercise reasonable best efforts to secure the resignations of such number of directors as is necessary to enable Parent's designees to be elected to the Board of Directors of the Company in accordance with the terms of this SECTION 1.3 and to cause Parent's designees so to be elected; PROVIDED, HOWEVER, that, in the event that Parent's designees are appointed or elected to the Board of Directors of the Company, until the Effective Time (as hereinafter defined) the Board of Directors of the Company shall have at least two directors who are directors on the date hereof and each of whom is neither an officer of the Company nor a designee, shareholder, affiliate or associate (within the meaning of the federal securities laws) of Parent (such directors, the "INDEPENDENT DIRECTORS"); PROVIDED, FURTHER, that each Independent Director shall be designated by the Company, unless (i) the Company is then required to comply with Section VIII.2(j) of the Preferred Stock Purchase Agreement dated as of February 2, 1998 between the Company and the holders on the date of this Agreement of the Company Preferred Stock (the "CURRENT PREFERRED HOLDERS") (which section permits Advance Capital Offshore Partners, L.P. ("ADVANCE") to designate one director (the "ADVANCE DIRECTOR") so long as Advance owns any Preferred Shares and at least 20% of the Preferred Shares remain outstanding), in which case one Independent Director shall be an Advance Director and the other Independent Director shall be designated by the Company, or (ii) the 5 Company is not then required to comply with the aforementioned Section VIII.2(j) but the Current Preferred Holders continue to own at least 10% of the outstanding Preferred Shares (the "CURRENT PREFERRED DIRECTOR CONDITION"), in which case one Independent Director shall be designated by Current Preferred Holders holding a majority of the outstanding Preferred Shares at such time excluding any Preferred Shares then held by Parent or Purchaser (the "MAJORITY OF CURRENT PREFERRED") and the other Independent Director shall be designated by the Company; PROVIDED, FURTHER, that if no Independent Directors remain, persons shall be designated to fill the vacancies by the Company or, if the Current Preferred Director Condition is satisfied, one such person shall be designated by the Company and one by the Majority of Current Preferred, in any event each person so designated shall be neither an officer of the Company nor a designee, shareholder, affiliate or associate of Parent, and each such person shall be deemed to be an Independent Director for purposes of this Agreement. Subject to applicable law, the Company shall promptly take all action necessary pursuant to Section 14(f) of the Securities Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under this SECTION 1.3 and shall include in the Schedule 14D-9 mailed to stockholders promptly after the commencement of the Offer (or in an amendment thereof or an information statement pursuant to Rule 14f-1 if Parent has not theretofore designated directors) such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this SECTION 1.3. Parent will supply the Company and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by such Section 14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to the contrary, prior to the Effective Time, the unanimous vote of the Independent Directors shall be required to (i) amend or terminate this Agreement on behalf of the Company, (ii) exercise or waive any of the Company's rights or remedies hereunder, (iii) extend the time for performance of Parent's obligations hereunder, (iv) take any other action by the Company in connection with this Agreement required to be taken by the Board of Directors of the Company or (v) amend the Company's Certificate of Incorporation or the Company's Bylaws, each as in effect on the date of this Agreement. 1.4 THE MERGER. Upon the terms and subject to the conditions of this Agreement, the Merger shall be consummated in accordance with the Delaware General Corporation Law (the "DELAWARE CODE"). At the Effective Time (as defined in SECTION 1.5 hereof), upon the terms and subject to the conditions of this Agreement, Purchaser shall be merged with and into the Company in accordance with the Delaware Code and the separate existence of Purchaser shall thereupon cease, and the Company, as the surviving corporation in the Merger (the "SURVIVING CORPORATION"), shall continue its corporate existence under the laws of the State of Delaware as an indirect subsidiary of Parent. The parties shall prepare and execute a certificate of merger (the "CERTIFICATE OF MERGER") in order to comply in all respects with the requirements of the Delaware Code and with the provisions of this Agreement. 1.5 EFFECTIVE TIME. The Merger shall become effective at the time of the filing 6 of the Certificate of Merger with the Secretary of State of Delaware in accordance with the applicable provisions of the Delaware Code or at such later time as may be specified in the Certificate of Merger. As soon as practicable after all of the conditions set forth in ARTICLE VI of this Agreement have been satisfied or waived by the party or parties entitled to the benefit of the same, the parties hereto shall cause the Merger to become effective. Parent and the Company shall mutually determine the time of such filing and the place where the closing of the Merger (the "CLOSING") shall occur. The time when the Merger shall become effective is herein referred to as the "EFFECTIVE TIME", and the date on which the Effective Time occurs is herein referred to as the "CLOSING DATE." 1.6 CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger and without any action on the part of Purchaser, the Company or the holder of any of the securities specified below: (a) Each Common Share issued and outstanding immediately before the Effective Time (other than any Dissenting Shares (as hereinafter defined) and Common Shares to be canceled pursuant to SECTION 1.6(c)) shall be canceled and extinguished and be converted into the right to receive the Common Per Share Amount in cash payable to the holder thereof, without interest, upon surrender of the certificate representing such Common Share in accordance with SECTION 1.8 hereof. From and after the Effective Time, the holders of certificates evidencing ownership of Common Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Common Shares except as otherwise provided for herein or by applicable Law. (b) Each Preferred Share issued and outstanding immediately before the Effective Time (other than any Dissenting Shares and Preferred Shares to be canceled pursuant to SECTION 1.6(c)) shall be canceled and extinguished and be converted into the right to receive the Preferred Per Share Amount in cash payable to the holder thereof, without interest, upon surrender of the certificate representing such Preferred Share in accordance with SECTION 1.8 hereof. From and after the Effective Time, the holders of certificates evidencing ownership of Preferred Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Preferred Shares except as otherwise provided for herein or by applicable Law. (c) Each Share held in the treasury of the Company and each Share owned by Parent or any direct or indirect wholly owned subsidiary of Parent immediately before the Effective Time shall be canceled and extinguished, and no payment or other consideration shall be made with respect thereto. (d) The shares of Purchaser common stock outstanding immediately prior to the Merger shall be converted into 1,000 shares of the common stock of the Surviving Corporation (the "SURVIVING CORPORATION COMMON STOCK"), which shares of the Surviving Corporation Common Stock shall constitute all of the issued and outstanding capital stock of 7 the Surviving Corporation and shall be owned by an indirect subsidiary of Parent. 1.7 DISSENTING SHARES. (a) Notwithstanding any provision of this Agreement to the contrary, any Shares issued and outstanding immediately prior to the Effective Time and held by a holder who has demanded and perfected his demand for appraisal of his Shares in accordance with the Delaware Code (including but not limited to Section 262 thereof), and as of the Effective Time has neither effectively withdrawn nor lost his right to such appraisal ("DISSENTING SHARES"), shall not be converted into or represent a right to receive cash pursuant to SECTION 1.6 hereof, but the holder thereof shall be entitled to only such rights as are granted by the Delaware Code. (b) Notwithstanding the provisions of SECTION 1.7(a) hereof, if any holder of Shares who demands appraisal of his Shares under the Delaware Code shall effectively withdraw or lose (through failure to perfect or otherwise) his right to appraisal, then as of the Effective Time or the occurrence of such event, whichever occurs later, such holder's Shares shall automatically be converted into and represent only the right to receive cash as provided in SECTION 1.6 hereof, without interest thereon, upon surrender of the certificate or certificates representing such Shares. (c) The Company shall give Purchaser (i) prompt notice of any written demands for appraisal or payment of the fair value of any Shares, withdrawals of such demands and any other instruments served pursuant to the Delaware Code received by the Company after the date hereof and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the Delaware Code. The Company shall not voluntarily make any payment with respect to any demands for appraisal and shall not, except with the prior written consent of Purchaser, settle or offer to settle any such demands. 1.8 SURRENDER OF SHARES. (a) Prior to the Effective Time, Purchaser shall appoint American Stock Transfer & Trust Company or such other commercial bank or trust company designated by Purchaser and reasonably acceptable to the Company to act as exchange agent hereunder (the "EXCHANGE AGENT") for the payment of the Per Share Amount upon surrender of certificates representing the Shares. All of the fees and expenses of the Exchange Agent shall be borne by Purchaser. (b) Parent shall cause the Surviving Corporation to provide the Exchange Agent with cash in amounts necessary to pay for all of the Shares pursuant to SECTION 1.8(c) hereof when and as such amounts are needed by the Exchange Agent. (c) On the Closing Date, Purchaser shall instruct the Exchange Agent to mail to each holder of record of a certificate representing any Shares canceled upon the Merger pursuant to SECTIONS 1.6(a) AND (b) hereof, within five business days of receiving from the Company a list of such holders of record, (i) a letter of transmittal (which shall specify that 8 delivery shall be effected, and risk of loss and title to the certificates shall pass, only upon delivery of the certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the certificates. Each holder of a certificate or certificates representing any Shares canceled upon the Merger pursuant to SECTIONS 1.6(a) AND (b) hereof may thereafter surrender such certificate or certificates to the Exchange Agent, as agent for such holder, to effect the surrender of such certificate or certificates on such holder's behalf for a period ending one year after the Effective Time. Upon the surrender of certificates representing the Shares, Parent shall cause the Exchange Agent to pay the holder of such certificates in exchange therefor cash in an amount equal to the applicable Per Share Amount multiplied by the number of Shares represented by such certificate. Until so surrendered, each such certificate (other than certificates representing Dissenting Shares) shall represent solely the right to receive the aggregate Per Share Amount relating thereto. (d) If payment of cash in respect of canceled Shares is to be made to a person other than the person in whose name a surrendered certificate or instrument is registered, it shall be a condition to such payment that the certificate or instrument so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid any transfer and other taxes required by reason of such payment in a name other than that of the registered holder of the certificate or instrument surrendered or shall have established to the satisfaction of Parent or the Exchange Agent that such tax either has been paid or is not payable. (e) At the Effective Time, the stock transfer books of the Company shall be closed, and no transfer of Shares shall be made thereafter, other than transfers of Shares that have occurred prior to the Effective Time. In the event that, after the Effective Time, certificates are presented to the Surviving Corporation, they shall be canceled and exchanged for cash as provided in SECTIONS 1.6(a) AND (b). (f) The Per Share Amount paid in the Merger shall be net to the holder of Shares in cash, and without interest thereon subject to reduction only for any applicable federal back-up withholding or stock transfer taxes payable by such holder. (g) Promptly following the date which is one year after the Effective Time, the Exchange Agent shall deliver to Parent all cash, certificates and other documents in its possession relating to the transactions contemplated hereby, and the Exchange Agent's duties shall terminate. Thereafter, each holder of a certificate representing Shares (other than certificates representing Dissenting Shares and certificates representing Shares held directly or indirectly by Parent or in the treasury of the Company) may surrender such certificate to the Surviving Corporation and (subject to any applicable abandoned property, escheat or similar law) receive in consideration therefor the aggregate Per Share Amount relating thereto, without any interest thereon. 9 (h) None of the Company, Parent, the Surviving Corporation or the Exchange Agent shall be liable to any holder of Shares for any cash delivered to a public official pursuant to any abandoned property, escheat or similar law, rule, regulation, statute, order, judgment or decree. 1.9 OPTIONS AND WARRANTS. (a) Each of the Company and Parent shall take all reasonable actions necessary to provide that all then outstanding options to purchase Company Common Stock, whether or not then exercisable or vested ("COMPANY OPTIONS"), shall become fully exercisable and vested upon the consummation of the Offer. Holders of Company Options that have become fully exercisable and vested upon the consummation of the Offer in accordance with the provisions of the preceding sentence will have a period of sixty (60) days following the consummation of the Offer to surrender their options to the Company in exchange for cash equal to the excess of (i) the aggregate value of the Common Shares underlying such options, based on the Common Per Share Amount, over (ii) the aggregate exercise price for the Common Shares underlying such options. Each of the Company and Parent shall take all reasonable actions necessary to provide that, upon consummation of the Merger, all then outstanding Company Options shall be converted into the right to receive cash equal to the excess of (i) the aggregate value of the Common Shares underlying such options, based on the Common Per Share Amount, over (ii) the aggregate exercise price for the Common Shares underlying such options. (b) Each of the Company and Parent shall take all reasonable actions necessary so that each of the warrants to purchase 50,000 shares of Company Common Stock at a price of $5.00 per share, subject to adjustment (the "PATRICOF WARRANTS"), the warrants to purchase 80,000 shares of Company Common Stock at a price of $8.66 per share, subject to adjustment (the "LEHMAN WARRANTS"), and the warrants to purchase 215,939 shares of Company Common Stock at a price of $11.11 per share, subject to adjustment (the "SUBORDINATED DEBT WARRANTS" and together with the Patricof Warrants and the Lehman Warrants, the "COMPANY WARRANTS"), shall be exercisable, from and after the Effective Time, for an amount of cash equal in the aggregate to the Common Per Share Amount multiplied by the number of shares of Company Common Stock for which such warrant was exercisable immediately prior to the Effective Time. Otherwise, the exercise of any Company Warrant shall remain subject to all terms and conditions provided in the applicable Company Warrant and/or Warrant Agreement. 1.10 CERTIFICATE OF INCORPORATION AND BYLAWS. Subject to SECTION 5.5 hereof, unless otherwise determined by Parent prior to the Effective Time, at and after the Effective Time (a) the Restated Certificate of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended as provided by the Delaware Code and such Certificate of Incorporation; PROVIDED, HOWEVER, that (i) Article IV shall be amended and restated in its entirety to provide that the capital stock of the Surviving Corporation shall consist of 1,000 shares of Common Stock, par value $.01 per share; (ii) Article V shall be amended and 10 restated in its entirety to provide that the Surviving Corporation's Board shall consist of not less than three members, all of a single class, with the exact number to be fixed from time to time by resolution of the Board of Directors; and (iii) Article VII shall be deleted in its entirety; and (b) the Bylaws of the Surviving Corporation shall be the Bylaws of Purchaser in effect at the Effective Time (subject to any subsequent amendments). 1.11 DIRECTORS AND OFFICERS. At and after the Effective Time, the directors of Purchaser immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their successors are duly elected or appointed and qualified. 1.12 OTHER EFFECTS OF MERGER. The Merger shall have all further effects as specified in the applicable provisions of the Delaware Code. 1.13 PROXY STATEMENT. (a) Following the consummation of the Offer and if required by the Securities Exchange Act because of action by the Company's stockholders necessary in order to consummate the Merger, the Company shall prepare and file with the SEC and, when cleared by the SEC, shall mail to stockholders, a proxy statement in connection with a meeting of the Company's stockholders to vote upon the adoption of this Agreement and the Merger and the transactions contemplated hereby and thereby (the "COMPANY PROPOSALS"), or an information statement, as appropriate, satisfying all requirements of the Securities Exchange Act (such proxy or information statement in the form mailed by the Company to its stockholders, together with any and all amendments or supplements thereto, is herein referred to as the "PROXY STATEMENT"). (b) Parent will furnish the Company with such information concerning Parent and its subsidiaries as is necessary in order to cause the Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply with applicable Law. Parent agrees promptly to advise the Company if, at any time prior to the meeting of stockholders of the Company referenced herein, any Parent Information (as defined below) in the Proxy Statement is or becomes incorrect or incomplete in any material respect and to provide the Company with the information needed to correct such inaccuracy or omission. Parent will furnish the Company with such supplemental information as may be necessary in order to cause the Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply with applicable Law after the mailing thereof to the stockholders of the Company. (c) The Company and Parent agree to cooperate in making any preliminary filings of the Proxy Statement with the SEC, as promptly as practicable, pursuant to Rule 14a-6 under the Securities Exchange Act. (d) The Company shall provide Parent for its review a copy of the Proxy Statement prior to each filing thereof, with reasonable time and opportunity for such review. 11 Parent authorizes the Company to utilize in the Proxy Statement the information concerning Parent and its subsidiaries provided to the Company in connection with, or contained in, the Proxy Statement. 1.14 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of Purchaser or the Company or otherwise to carry out this Agreement, the officers and directors of the Company and Purchaser shall be authorized to execute and deliver, in the name and on behalf of Purchaser or the Company, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of Purchaser or the Company, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement. 1.15 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the foregoing provisions of this ARTICLE I, in the event that Purchaser, or any other direct or indirect subsidiary of Parent, shall acquire at least 90 percent of the outstanding shares of each class of Shares, the parties hereto agree to take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the expiration of the Offer without a meeting of stockholders of the Company, in accordance with Section 253 of the Delaware Code. 1.16 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any certificates representing shares of Company Stock shall have been lost, stolen or destroyed, the Exchange Agent shall make such payment in exchange for such lost, stolen or destroyed certificates upon the making of an affidavit of that fact by the holder thereof; PROVIDED, HOWEVER, that Parent may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Parent or the Exchange Agent with respect to the certificates alleged to have been lost, stolen or destroyed. 1.17 MATERIAL ADVERSE EFFECT. When used in connection with the Company or any Company Subsidiaries or Parent or any of its subsidiaries, as the case may be, the term "MATERIAL ADVERSE EFFECT" means any change, effect or circumstance that, individually or when taken together with all other similar changes, effects or circumstances that have occurred during the period relevant to the determination of such Material Adverse Effect, is or is reasonably likely to be materially adverse to the business, assets (including intangible assets), financial condition or results of operations of the Company and any Company Subsidiaries or Parent and its subsidiaries, as the case may be, in each case taken as a whole; PROVIDED, HOWEVER, that any change, effect or circumstance directly resulting from the resignation of any 12 of the Company's employees in response to the public announcement of the transactions contemplated by this Agreement shall not be taken into consideration in determining whether a Material Adverse Effect has occurred with respect to the Company. Changes, effects and circumstances referred to in any of the provisions of SECTION 2.15 hereof shall be deemed similar for purposes of this SECTION 1.17. ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Parent and Purchaser that, except as set forth in the correspondingly numbered Sections of the letter, dated the date hereof, from the Company to Parent (the "COMPANY DISCLOSURE LETTER"): 2.1 ORGANIZATION AND GOOD STANDING. The Company and each of the Company Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company and each of the Company Subsidiaries is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not reasonably be expected to have a Material Adverse Effect. The Company has heretofore made available to Parent accurate and complete copies of the Certificate of Incorporation and Bylaws, as currently in effect, of the Company. For purposes of this Agreement, the term "COMPANY SUBSIDIARY" shall mean any "subsidiary" (as such term is defined in Rule 1-02 of Regulation S-X of the SEC) of the Company. 2.2 CAPITALIZATION. As of the date hereof, the authorized capital stock of the Company consists of (A) 25,000,000 shares of Company Common Stock and (B) 5,000,000 shares of Company Preferred Stock, of which 35,700 have been designated as Series A Preferred Stock and 5,000 shares have been designated as Series B Preferred Stock. As of December 23, 1998, (i) 5,569,983 shares of Company Common Stock were issued and outstanding, (ii) 35,700 shares of Series A Preferred Stock were issued and outstanding, (iii) 5,000 shares of Series B Preferred Stock were issued and outstanding, (iv) no shares of Company Common Stock or shares of Company Preferred Stock were issued and held in the treasury of the Company, (vi) no shares of Company Common Stock or Company Preferred Stock were held by Company Subsidiaries, (vii) 4,972,434 shares of Company Common Stock were reserved for future issuance upon conversion of the outstanding shares of Company Preferred Stock, (viii) 849,083 shares of Company Common Stock were reserved for future issuance pursuant to outstanding Company Options, and (ix) 345,939 shares of Company Common Stock were reserved for future issuance upon exercise of Company Warrants. No material change in the capitalization of the Company has occurred between December 23, 1998 and the date hereof. No other capital stock of the Company is authorized or issued. All 13 issued and outstanding shares of the Company Stock are duly authorized, validly issued, fully paid and non-assessable. Except as set forth in the Company Securities Filings (as hereinafter defined) filed prior to the date of this Agreement or as otherwise contemplated by this Agreement, as of the date hereof, there are no outstanding rights, subscriptions, warrants, puts, calls, unsatisfied preemptive rights, options or other agreements of any kind relating to any of the outstanding, authorized but unissued or treasury shares of the capital stock or any other security of the Company, and there is no authorized or outstanding security of any kind convertible into or exchangeable for any such capital stock or other security. Except as disclosed in the Company Securities Filings filed prior to the date of this Agreement, there are no obligations, contingent or other, of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any shares of Company Common Stock or the capital stock of any Company Subsidiary or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any such Company Subsidiary or any other entity. 2.3 SUBSIDIARIES. Section 2.3 of the Company Disclosure Letter sets forth the name and jurisdiction of incorporation of each Company Subsidiary, each of which is wholly owned by the Company except as otherwise indicated in said Section 2.3 of the Company Disclosure Letter. All of the capital stock and other interests of the Company Subsidiaries so held by the Company are owned by it or a Company Subsidiary as indicated in said Section 2.3 of the Company Disclosure Letter, free and clear of any claim, lien, encumbrance or security interest with respect thereto. All of the outstanding shares of capital stock of each of the Company Subsidiaries directly or indirectly held by the Company are duly authorized, validly issued, fully paid and non-assessable and were issued free of preemptive rights and in compliance with applicable Laws. No equity securities or other interests of any of the Company Subsidiaries are or may become required to be issued or purchased by reason of any options, warrants, rights to subscribe to, puts, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any capital stock of any Company Subsidiary, and there are no contracts, commitments, understandings or arrangements by which any Company Subsidiary is bound to issue additional shares of its capital stock, or options, warrants or rights to purchase or acquire any additional shares of its capital stock or securities convertible into or exchangeable for such shares. Except as set forth in the Company Securities Filings filed prior to the date of this Agreement or Section 2.3 of the Company Disclosure Letter, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity, with respect to which interest the Company has invested or is required to invest $100,000 or more, excluding securities in any publicly traded company held for investment by the Company and comprising less than five percent of the outstanding stock of such company. 2.4 AUTHORIZATION; BINDING AGREEMENT. The Company has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the 14 transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including, but not limited to, the Merger, have been duly and validly authorized by the Company's Board of Directors, and no other corporate proceedings on the part of the Company or any Company Subsidiary are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby (other than (i) the consent of the holders of 75% of the outstanding Preferred Shares and (ii) adoption of this Agreement by the holders of Shares with voting power equal to a majority of the voting power of all outstanding Shares in accordance with the Delaware Code). This Agreement has been duly and validly executed and delivered by the Company and constitutes the legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by principles of equity regarding the availability of remedies ("ENFORCEABILITY EXCEPTIONS"). 2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or authorization of, notice to or declaration or filing with ("CONSENT") any nation or government, any state or other political subdivision thereof or any entity, authority or body exercising executive, legislative, judicial or regulatory functions of or pertaining to government, including, without limitation, any governmental or regulatory authority, agency, department, board, commission or instrumentality, any court, tribunal or arbitrator and any self-regulatory organization ("GOVERNMENTAL AUTHORITY"), on the part of the Company or any of the Company Subsidiaries is required in connection with the execution or delivery by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby other than (i) the filing of the Certificate of Merger with the Secretary of State of Delaware in accordance with the Delaware Code, (ii) filings with the SEC, (iii) filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR ACT"), (iv) consents or filings required under the Communications Act of 1934, as amended, relating to change in ownership or control of certain business radio and related licenses held by the Company or the Company Subsidiaries, (v) filings pursuant to the rules and regulations of the American Stock Exchange ("AMEX") and (vi) those Consents that, if they were not obtained or made, would not reasonably be expected to have a Material Adverse Effect. 2.6 NO VIOLATIONS. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and compliance by the Company with any of the provisions hereof will not (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or Bylaws of the Company or any of the Company Subsidiaries, (ii) require any Consent under or result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of, any Company Material Contract (as hereinafter defined), (iii) result in the creation or imposition of any lien or encumbrance of any kind upon any of the assets of the Company or 15 any Company Subsidiary or (iv) subject to obtaining the Consents from Governmental Authorities referred to in SECTION 2.5 hereof, violate any applicable provision of any statute, law, rule or regulation or any order, decision, injunction, judgment, award or decree ("LAW") to which the Company or any Company Subsidiary or its assets or properties are subject, except, in the case of each of clauses (ii), (iii) and (iv) above, for any deviations from the foregoing which would not reasonably be expected to have a Material Adverse Effect. 2.7 SECURITIES FILINGS. The Company has made available to Parent true and complete copies of (i)its Annual Report on Form 10-K, for the year ended December 31, 1997, as filed with the SEC, (ii) its proxy statements relating to all of the meetings of stockholders (whether annual or special) of the Company since January 1, 1996 as filed with the SEC, and (iii) all other reports, statements and registration statements and amendments thereto (including, without limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by the Company with the SEC since January 1, 1998. The reports and statements set forth in clauses (i) through (iii) above, and those subsequently provided or required to be provided pursuant to this SECTION 2.7, are referred to collectively herein as the "COMPANY SECURITIES FILINGS." Except as set forth in Section 2.7 of the Company Disclosure Letter, as of their respective dates, or as of the date of the last amendment thereof, if amended after filing, the Company Securities Filings (i) were prepared in all material respects in accordance with the requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT") and the rules and regulations promulgated thereunder, or the Securities Exchange Act, as the case may be, and none of the Company Securities Filings contained or, as to the Company Securities Filings subsequent to the date hereof, will contain, any untrue statement of a material fact or omitted or, as to the Company Securities Filings subsequent to the date hereof, will omit, to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 2.8 COMPANY FINANCIAL STATEMENTS. The audited consolidated financial statements and unaudited interim financial statements of the Company included in the Company Securities Filings (the "COMPANY FINANCIAL STATEMENTS") have been prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as may be indicated therein or in the notes thereto) and present fairly, in all material respects, the financial position of the Company and the Company Subsidiaries as at the dates thereof and the results of their operations and cash flows for the periods then ended subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments, any other adjustments described therein and the fact that certain information and notes have been condensed or omitted in accordance with the Securities Exchange Act. 2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the Company Securities Filings filed prior to the date of this Agreement or Section 2.9 of the Company Disclosure Letter, since December 31, 1997, through the date of this Agreement, there has not been: (i) any event that has had or would reasonably be expected to have a 16 Material Adverse Effect; (ii) any declaration, payment or setting aside for payment of any dividend or other distribution or any redemption or other acquisition of any shares of capital stock or securities of the Company by the Company; (iii) any material damage or loss to any material asset or property, whether or not covered by insurance; (iv) any change by the Company in accounting principles or practices; (v) any material revaluation by the Company of any of its assets, including writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business; (vi) any sale of a material amount of property of the Company, except in the ordinary course of business; or (vii) any other action or event, involving an amount exceeding $250,000, that would have required the consent of Parent pursuant to SECTION 4.1 hereof had such action or event occurred after the date of this Agreement. 2.10 NO UNDISCLOSED LIABILITIES. Except as set forth in the Company Securities Filings filed prior to the date of this Agreement or Section 2.10 of the Company Disclosure Letter, neither the Company nor any Company Subsidiary has any liabilities (absolute, accrued, contingent or otherwise), except liabilities (a) in the aggregate adequately provided for in the Company's audited balance sheet (including any related notes thereto) for the fiscal year ended December 31, 1997 included in the Company's 1997 Annual Report on Form 10-K (the "1997 BALANCE SHEET"), (b) incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected on the 1997 Balance Sheet, (c) incurred since December 31, 1997 in the ordinary course of business consistent with past practice, (d) incurred in connection with this Agreement or (e) which would not reasonably be expected to have a Material Adverse Effect. 2.11 COMPLIANCE WITH LAWS. The business of the Company and each of the Company Subsidiaries has been operated in compliance with all Laws applicable thereto, except for any non-compliance which would not reasonably be expected to have a Material Adverse Effect. 2.12 PERMITS. Except as set forth in Section 2.12 of the Company Disclosure Letter, (i) the Company and the Company Subsidiaries have all permits, certificates, licenses, approvals and other authorizations from Governmental Authorities required in connection with the operation of their respective businesses (collectively, "COMPANY PERMITS"), (ii) neither the Company nor any Company Subsidiary is in violation of any Company Permit and (iii) no proceedings are pending or, to the knowledge of the Company, threatened, to revoke or limit any Company Permit, except, in the case of each of clauses (i), (ii) and (iii) above, those the absence or violation of which would not reasonably be expected to have a Material Adverse Effect. 2.13 LITIGATION. Except as disclosed in the Company Securities Filings filed prior to the date of this Agreement or Section 2.13 of the Company Disclosure Letter, there is no suit, action or proceeding ("LITIGATION") pending or, to the knowledge of the Company, threatened against the Company or any of the Company Subsidiaries which, individually or in 17 the aggregate, would reasonably be expected to have a Material Adverse Effect, nor is there any judgment, decree, injunction, rule or order of any Governmental Authority outstanding against the Company or any Company Subsidiary which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. Except as set forth in the Company Securities Filings filed prior to the date of this Agreement or Section 2.13 of the Company Disclosure Letter, since December 31, 1997, and prior to or on the date hereof, there have been no actions, suits or proceedings made or pending against the Company or any Company Subsidiary alleging (x) any Environmental Claims (as hereinafter defined) or (y) any claim against the Company in connection with its rendering of any security services, except for (i) such claims (not resulting as of the date hereof in an action, suit or proceeding) not exceeding in any individual case $500,000 or (ii) such actions, suits or proceedings which, in the case of either clause (x) or (y) above, would not reasonably be expected to result in liability to the Company or any Company Subsidiary, not covered by insurance, of $100,000 or more in any individual case or (without regard to whether or not any thereof is covered by insurance) $500,000 in the aggregate. The Company has not established any reserves in the Company Financial Statements with respect to claims referred to in clauses (x) and (y) of the preceding sentence. Section 2.13 of the Company Disclosure Letter lists all letters received by the Company from insurance carriers asserting a reservation of rights with respect to any action, suit or proceeding in which $25,000 or more is at stake. 2.14 CONTRACTS. Section 2.14 of the Company Disclosure Letter includes a list of all loan agreements and financing agreements and of all equipment lease financing agreements involving obligations of the Company or any Company Subsidiary in excess of $250,000. Neither the Company nor any of the Company Subsidiaries is a party or is subject to any note, bond, mortgage, indenture, contract, lease, license, agreement or instrument that is required to be described in or filed as an exhibit to any Company Securities Filing filed prior to the date of this Agreement (collectively with those agreements listed in Section 2.14 of the Company Disclosure letter, the "COMPANY MATERIAL CONTRACTS") that is not so described in or filed as required by the Securities Act or the Securities Exchange Act, as the case may be. The Company is not a party to any agreements to acquire in the future the stock or substantially all the assets of another person. Except as disclosed in the Company Securities Filings filed prior to the date of this Agreement, all such Company Material Contracts are valid and binding and are in full force and effect and nforceable against the Company or such Company Subsidiary in accordance with their respective terms, subject to the Enforceability Exceptions. Neither the Company nor any Company Subsidiary is in violation or breach of or default under any such Company Material Contract where such violation or breach would reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, no party (other than the Company or Company Subsidiaries) is in default, violation or breach of any Company Material Contract where such violation or breach would reasonably be expected to have a Material Adverse Effect. 2.15 EMPLOYEE BENEFIT PLANS. (a) Section 2.15(a) of the Company Disclosure Letter lists all employee pension benefit plans (as defined in Section 3(2) of the Employee 18 Retirement Income Security Act of 1974, as amended ("ERISA")), all employee welfare benefit plans (as defined in Section 3(1) of ERISA) and all other bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other similar fringe or employee benefit plans, programs or arrangements, and any employment, executive compensation or severance agreements, written or otherwise, as amended, modified or supplemented, for the benefit of, or relating to, any former or current employee, officer or consultant who is an individual or an individual doing business in a corporate form (or any of their beneficiaries) of the Company or any other entity (whether or not incorporated) which is a member of a controlled group including the Company or which is under common control with the Company (an "ERISA AFFILIATE") within the meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the "CODE") or Section 4001(a)(14) or (b) of ERISA, or any Company Subsidiary, with respect to which the Company has or could have any current (actual or contingent) material liability (together for purposes of this SECTION 2.15, the "EMPLOYEE PLANS"). Prior to the date of this Agreement, the Company has provided or made available to Parent copies of (i) each such written Employee Plan (or a written description of any Employee Plan which is not written) and all related trust agreements, insurance and other contracts (including policies), summary plan descriptions, summaries of material modifications and any material communications to plan participants, (ii) the three most recent annual reports on Form 5500 series, with accompanying schedules and attachments, filed with respect to each Employee Plan required to make such a filing, (iii) the latest reports which have been filed with the Department of Labor with respect to each Employee Plan required to make such filing and (iv) the most recent favorable determination letters issued for each Employee Plan and related trust which is subject to Parts 1, 2 and 4 of Subtitle B of Title I of ERISA (and, if an application for such determination is pending, a copy of the application for such determination). (b) (i) None of the Employee Plans promises or provides retiree medical or other retiree welfare benefits to any person (other than in accordance with Section 4980B of the Code or Part 6 of Subtitle B of Title I of ERISA), and none of the Employee Plans is a "multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii) to the knowledge of the Company, no "party in interest" or "disqualified person" (as defined in Section 3(14) of ERISA and Section 4975 of the Code) has at any time engaged in a transaction with respect to any Employee Plan which could subject the Company or any ERISA Affiliate, directly or indirectly, to a tax, penalty or other liability for prohibited transactions under ERISA or Section 4975 of the Code, except for any such tax, penalty or liability that would not reasonably be expected to result in a Material Adverse Effect; (iii) to the knowledge of the Company, no fiduciary of any Employee Plan has breached any of the responsibilities or obligations imposed upon fiduciaries under Title I of ERISA, except where such breach would not reasonably be expected to result in a Material Adverse Effect; (iv) all Employee Plans have been established and maintained substantially in accordance with their terms and have operated in compliance with the requirements prescribed by any and all statutes (including ERISA and the Code), orders, or governmental rules and regulations currently in effect with respect thereto (including all applicable requirements for notification to participants or the 19 Department of Labor, the Internal Revenue Service (the "IRS") or the Secretary of the Treasury), except where failure to do so would not reasonably be expected to result in a Material Adverse Effect; and the Company and each Company Subsidiary have performed all obligations required to be performed by them under, are not in default under or in violation of any Employee Plan except where failure to do so would not reasonably be expected to result in a Material Adverse Effect, and have no knowledge of any default or violation by any other party to, any of the Employee Plans; (v) each Employee Plan which is subject to Parts 1, 2 and 4 of Subtitle B of ERISA is the subject of a favorable determination letter from the IRS, and to the knowledge of the Company nothing has occurred which may reasonably be expected to impair such determination; (vi) all contributions required to be made with respect to any Employee Plan pursuant to the terms of the Employee Plan have been made on or before their due dates except for any failure to make contributions that would not reasonably be expected to result in a Material Adverse Effect; (vii) no facts exist or have existed under which the Company or any ERISA Affiliate could incur any liability under Title IV of ERISA; and (viii) there are no complaints, charges or claims against the Company pending or to the Company's knowledge threatened to be brought by or filed with any governmental authority based on, arising out of, in connection with or otherwise relating to the classification of any individual by the Company as an independent contractor or "leased employee" (within the meaning of section 414(n) of the Code) rather than as an employee. (c) Section 2.15(c) of the Company Disclosure Letter sets forth a true and complete list of each current or former employee, officer or director of the Company or any Company Subsidiary who holds (i) any option to purchase Company Common Stock as of the date hereof, together with the number of shares of Company Common Stock subject to such option, the option price of such option (to the extent determined as of the date hereof), whether such option is intended to qualify as an incentive stock option within the meaning of Section 422(b) of the Code (an "ISO"), and the expiration date of such option; (ii) any shares of Company Common Stock that are restricted as a result of an agreement with or stock plan of the Company; and (iii) any other right, directly or indirectly, to receive Company Common Stock, except as otherwise disclosed in Section 2.15 of the Company Disclosure Letter, together with the number of shares of Company Stock subject to such right. Section 2.15(c) of the Company Disclosure Letter also sets forth the total number of any such ISOs and any such nonqualified options and other such rights. (d) Unless otherwise disclosed in Section 2.15(a) of the Company Disclosure Letter, Section 2.15(d) of the Company Disclosure Letter sets forth a true and complete list of (i) all employment agreements with officers of the Company or any of the Company Subsidiaries; (ii) all agreements with consultants who are individuals obligating the Company or any of the Company Subsidiaries to make annual cash payments in an amount exceeding $100,000; (iii) all agreements which individually or in the aggregate are or could be material with respect to the services of independent contractors or leased employees who are individuals or individuals doing business in a corporate form whether or not they participate in any of the Employee Plans; (iv) all officers of the Company or any of the Company 20 Subsidiaries who have executed a non-competition agreement with the Company or any of the Company Subsidiaries; (v) all severance agreements, programs and policies of the Company or any of the Company Subsidiaries with or relating to its employees, in each case with outstanding commitments exceeding $100,000, excluding programs and policies required to be maintained by law; and (vi) all plans, programs, agreements and other arrangements of the Company which contain change in control provisions. (e) (i) Except as set forth in Section 2.15(e) of the Company Disclosure Letter, no Employee Plan is an employee stock ownership plan (within the meaning of Section 4975(e)(7) of the Code) or otherwise invests in Company Stock; and (ii) the consummation of the transactions contemplated by this Agreement will not result in an increase in the amount of compensation or benefits or accelerate the vesting or timing of payment of any benefits or compensation payable in respect of any employee except as otherwise provided in SECTION 1.9 hereof or disclosed in Section 2.15(e) of the Company Disclosure Letter or except where such increase or acceleration would not reasonably be expected to result in a Material Adverse Effect. The Company will take all actions within its control to ensure that all actions required to be taken by a fiduciary of any Employee Plan in order to effectuate the transaction contemplated by this Agreement shall comply with the terms of such Plan, ERISA and other applicable laws. The Company will take all actions within its control to ensure that all actions required to be taken by a trustee of any Employee Plan that owns Company Stock shall have been duly authorized by the appropriate fiduciaries of such Plan and shall comply with the terms of such Plan, ERISA and other applicable laws. (f) The Company maintains no Employee Plan covering non-U.S. employees. (g) The Company has fiduciary liability insurance of at least $500,000 in effect covering the fiduciaries of the Employee Plans (including the Company) with respect to whom the Company may have liability. 2.16 TAXES AND RETURNS. (a) The Company and each of the Company Subsidiaries has timely filed, or caused to be timely filed, all material Tax Returns (as hereinafter defined) required to be filed by it, and all such tax returns are true, complete and correct in all material respects, and has timely paid, collected or withheld, or caused to be paid, collected or withheld, all material amounts of Taxes (as hereinafter defined) required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Company Financial Statements have been established or which are being contested in good faith. Except as set forth in Section 2.16 of the Company Disclosure Letter, there are no material claims or assessments pending against the Company or any of the Company Subsidiaries for any alleged deficiency in any Tax, and the Company has not been notified in writing of any proposed Tax claims or assessments against the Company or any of the Company Subsidiaries (other than in each case, claims or assessments for which adequate reserves in the Company Financial Statements have been established or which are being contested in good faith or are immaterial in amount). Except as would not reasonably be 21 expected to have a Material Adverse Effect: (i) neither the Company nor any of the Company Subsidiaries has executed any waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes; and (ii) there are no outstanding requests by the Company or any of the Company Subsidiaries for any extension of time within which to file any material Tax Return or within which to pay any material amounts of Taxes shown to be due on any Tax Return. The statute of limitations period for assessment of federal income taxes has expired for all taxable years through the taxable year of Security Systems Holdings, Inc. ending December 31, 1994, and of Triton Group Ltd. ending March 31, 1994. To the best knowledge of the Company, there are no liens for material amounts of Taxes on the assets of the Company or any of the Company Subsidiaries except for statutory liens for current Taxes not yet due and payable. There are no outstanding powers of attorney enabling any party to represent the Company or any of the Company Subsidiaries with respect to Tax matters. (b) For purposes of this Agreement, the term "TAX" shall mean any federal, state, local, foreign or provincial income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, alternative or add-on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty imposed by any Governmental Authority. The term "TAX RETURN" shall mean a report, return or other information (including any attached schedules or any amendments to such report, return or other information) required to be supplied to or filed with a governmental entity with respect to any Tax, including an information return, claim for refund, amended return or declaration or estimated Tax. (c) (i) Except as set forth in Section 2.16 of the Company Disclosure Letter, neither the Company nor any of the Company Subsidiaries has, since consummation of the Triton Group Ltd. plan of reorganization pursuant to Chapter 11 of the United States Bankruptcy Code on June 25, 1993, been a member of an affiliated group within the meaning of Section 1504 of the Code or filed or been included in a combined, consolidated or unitary Tax Return, other than of the Company and the Company Subsidiaries; (ii) other than with respect to the Company and the Company Subsidiaries, neither the Company nor any of the Company Subsidiaries is currently liable for Taxes of any other person, or is currently under any contractual obligation to indemnify any person with respect to Taxes (except for customary agreements to indemnify lenders or securityholders in respect of taxes other than income taxes), or is a party to any tax sharing agreement or any other agreement providing for payments by the Company or any of the Company Subsidiaries with respect to Taxes; (iii) neither the Company nor any of the Company Subsidiaries is a party to any joint venture, partnership or other arrangement or contract which could be treated as a partnership for federal income tax purposes; (iv) neither the Company nor any of the Company Subsidiaries has entered into any sale leaseback or any leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 75-21 (or similar provisions of foreign law); (v) neither the Company nor any of the Company Subsidiaries has agreed or is required, as a result of a 22 change in method of accounting or otherwise, to include any adjustment under Section 481 of the Code (or any corresponding provision of state, local or foreign law) in taxable income; (vi) neither the Company nor any of the Company Subsidiaries is a party to any agreement, contract, arrangement or plan that would result (taking into account the transactions contemplated by this Agreement), separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code; (vii) the prices for any property or services (or for the use of property) provided by the Company or any of the Company Subsidiaries to any other subsidiary or to the Company have been arm's length prices, determined using a method permitted by the Treasury Regulations under Section 482 of the Code; (viii) neither the Company nor any of the Company Subsidiaries is liable with respect to any indebtedness the interest of which is not deductible for applicable federal, foreign, state or local income tax purposes; (ix) neither the Company nor any of the Company Subsidiaries is a "consenting corporation" under Section 341(f) of the Code or any corresponding provision of state, local or foreign law; and (x) none of the assets owned by the Company or any of the Company Subsidiaries is property that is required to be treated as owned by any other person pursuant to Section 168(g)(8) of the Internal Revenue Code of 1954, as amended, as in effect immediately prior to the enactment of the Tax Reform Act of 1986, or is "tax-exempt use property" within the meaning of Section 168(h) of the Code. (d) The amount of net operating losses (as defined in Section 172 of the Code) of the Company and the Company Subsidiaries as of the end of the fiscal year ended December 31, 1997 is as set forth in the Company's financial statements for such year. Each of the statements made in this SECTION 2.16 shall be deemed true and correct for purposes of this Agreement unless in any such case any failure of such statement to be true or correct would reasonably be expected to result in a Material Adverse Effect. 2.17 INTELLECTUAL PROPERTY. The Company or the Company Subsidiaries own, or are licensed or otherwise possess legal enforceable rights to use, all patents, trademarks, trade names, service marks, copyrights and any applications therefor, technology, know-how, trade secrets, computer software programs or applications, domain names and tangible or intangible proprietary information or materials that are used in the respective businesses of the Company and the Company Subsidiaries as currently conducted, except for any such failures to own, be licensed or possess that would not reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Company, there are no valid grounds for any bona fide claims (i) to the effect that the business of the Company or any of the Company Subsidiaries infringes on any copyright, patent, trademark, service mark or trade secret; (ii) against the use by the Company or any of the Company Subsidiaries of any trademarks, trade names, trade secrets, copyrights, patents, technology, know-how or computer software programs and applications used in the business of the Company or any of the Company Subsidiaries as currently conducted or as proposed to be conducted; (iii) challenging the ownership, validity or effectiveness of any of the patents, registered and material unregistered trademarks and service marks, registered copyrights, trade names and any applications 23 therefor owned by the Company or any of the Company Subsidiaries (the "COMPANY INTELLECTUAL PROPERTY RIGHTS") or other trade secret material to the Company; or (iv) challenging the license or legally enforceable right to use of any third-party patents, trademarks, service marks and copyrights by the Company or any of the Company Subsidiaries, except, in the case of each of clauses (i), (ii), (iii) and (iv) above, for matters that, if determined adversely to the Company, would not reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Company, all material patents, registered trademarks, service marks and copyrights held by the Company are valid and subsisting. Except as set forth in the Company Securities Filings filed prior to the date of this Agreement or Section 2.17 of the Company Disclosure Letter, to the Company's knowledge, there is no material unauthorized use, infringement or misappropriation of any of the Company Intellectual Property by any third party, including any employee or former employee of the Company or any of the Company Subsidiaries. 2.18 DISCLOSURE DOCUMENTS. The Proxy Statement will comply in all material respects with the applicable requirements of the Securities Exchange Act except that no representation or warranty is being made by the Company with respect to the Parent Information included in the Proxy Statement. The Proxy Statement will not, at the time the Proxy Statement is filed with the SEC or first sent to stockholders, at the time of the Company's stockholders' meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading except that no representation or warranty is being made by the Company with respect to the Parent Information included in the Proxy Statement. The Schedule 14D-9 will comply in all material respects with the Securities Exchange Act except that no representation or warranty is being made by the Company with respect to the Parent Information included in the Schedule 14D-9. Neither the Schedule 14D-9 nor any of the information relating to the Company or its affiliates provided by or on behalf of the Company specifically for inclusion in the Schedule 14D-1 or the Offer Documents will, at the respective times the Schedule 14D-9, the Schedule 14D-1 and the Offer Documents are filed with the SEC and are first published, sent or given to stockholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 2.19 LABOR MATTERS. Except as set forth in the Company Securities Filings filed prior to the date of this Agreement, (i) there are no controversies pending or, to the knowledge of the Company or any of the Company Subsidiaries, threatened, between the Company or any of the Company Subsidiaries and any of their respective employees, which controversies would reasonably be expected to have a Material Adverse Effect; (ii) neither the Company nor any of the Company Subsidiaries is a party to any material collective bargaining agreement or other labor union contract applicable to persons employed by the Company or the Company Subsidiaries, nor, as of the date of this Agreement, does the Company or any of the 24 Company Subsidiaries know of any activities or proceedings of any labor union to organize any such employees; and (iii) neither the Company nor any of the Company Subsidiaries has any knowledge of any strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to any employees of the Company or any of the Company Subsidiaries which would reasonably be expected to have a Material Adverse Effect. 2.20 LIMITATION ON BUSINESS CONDUCT. Except as set forth in the Company Securities Filings filed prior to the date of this Agreement, neither the Company nor any of the Company Subsidiaries is a party to, or has any obligation under, any contract or agreement, written or oral, which contains any covenants currently or prospectively limiting in any material respect the freedom of the Company or any of the Company Subsidiaries to engage in any line of business or to compete with any entity. 2.21 TITLE TO PROPERTY. Except as set forth in the Company Securities Filings filed prior to the date of this Agreement or Section 2.21 of the Company Disclosure Letter, each of the Company and each of the Company Subsidiaries owns the properties and assets that it purports to own free and clear of all liens, charges, mortgages, security interests or encumbrances of any kind ("LIENS"), except for Liens which arise in the ordinary course of business and do not materially impair the Company's or the Company Subsidiaries' ownership or use of such properties or assets, Liens for taxes not yet due and Liens securing obligations under the Fourth Amended and Restated Term Loan and Acquisition Credit Agreement, dated as of July 31, 1998, by and among Alarmguard, Inc., as Borrower, the Company, as Guarantor, and BankBoston, N.A. and the other banks parties thereto, as Lenders (the "CREDIT AGREEMENT"). With respect to the property and assets it leases, the Company, the Company Subsidiaries, and to the best of the Company's knowledge each of the other parties thereto, is in material compliance with such leases, and the Company or the Company Subsidiaries, as the case may be, hold a valid leasehold interest free of any Liens, except those referred to above. The rights, properties and assets presently owned, leased or licensed by the Company and the Company Subsidiaries include all rights, properties and assets necessary to permit the Company and the Company Subsidiaries to conduct their business in all material respects in the same manner as their businesses have been conducted prior to the date hereof. 2.22 LEASED PREMISES. Neither the Company nor any of the Company Subsidiaries owns any real property. Each of the buildings, structures and premises leased by the Company or any of the Company Subsidiaries is in reasonably good repair and operating condition, except as would not reasonably be expected to have a Material Adverse Effect. 2.23 ENVIRONMENTAL MATTERS. (a) Except as set forth in the Company Securities Filings filed prior to the date of this Agreement or Section 2.23 of the Company Disclosure Letter, the Company and the Company Subsidiaries are in material compliance with the Environmental Laws (as hereinafter defined), which compliance includes the possession by the Company and the Company Subsidiaries of all material permits and governmental authorizations required under applicable Environmental Laws, and compliance in all material 25 respects with the terms and conditions thereof, except in each case where such non-compliance would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of the Company Subsidiaries has received any communication (written or oral), whether from a governmental authority, citizens group, employee or otherwise, that alleges that the Company or any of the Company Subsidiaries is not in such material compliance, and there are no circumstances that may prevent or interfere with such compliance in the future, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect. (b) Except as set forth in Section 2.23 of the Company Disclosure Letter, there are no Environmental Claims (as hereinafter defined), including claims based on "arranger liability," pending or, to the best knowledge of the Company, threatened against the Company or any of the Company Subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of the Company Subsidiaries has retained or assumed either contractually or by operation of law, except for such Environmental Claims that would not reasonably be expected to have a Material Adverse Effect. (c) Except as set forth in Section 2.23 of the Company Disclosure Letter, to the best knowledge of the Company, there are no past or present actions, inactions, activities, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Material of Environmental Concern (as hereinafter defined), that would form the basis of any Environmental Claim against the Company or any of the Company Subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of the Company Subsidiaries have retained or assumed either contractually or by operation of law, except for such Environmental Claims that would not reasonably be expected to have a Material Adverse Effect. (d) Except as set forth in Section 2.23 of the Company Disclosure Letter, the Company is in compliance in all material respects with Environment Laws as they relate to (i) any on-site or off-site locations where the Company or any of the Company Subsidiaries has stored, disposed or arranged for the disposal of Materials of Environmental Concern for itself (but not on behalf of others) or (ii) any underground storage tanks located on property owned or leased by the Company or any of the Company Subsidiaries. To the knowledge of Company, there is no asbestos contained in or forming part of any building, building component, structure or office space owned or leased by the Company or any of the Company Subsidiaries. To the knowledge of Company, no polychlorinated biphenyls (PCB's) or PCB-containing items are used or stored at any property owned or leased by the Company or any of the Company Subsidiaries. (e) For purposes of this Agreement: (i) "ENVIRONMENTAL CLAIM" means any written claim, action, cause of action, investigation or notice by any person or entity alleging potential liability (including 26 potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from (x) the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by the Company or any of the Company Subsidiaries, or (y) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. (ii) "ENVIRONMENTAL LAWS" means all Federal, state, local and foreign laws or regulations relating to pollution or protection of human health and the environment (including ambient air, surface water, ground water, land surface or sub-surface strata), including laws and regulations relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern. (iii) "MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, toxic substances, petroleum and petroleum products that are regulated under the Environmental Laws. 2.24 INSURANCE. The Company maintains insurance that provides adequate coverage for normal risks incident to the business of the Company and the Company Subsidiaries and their respective properties and assets and in character and amount comparable to that carried by persons engaged in similar businesses. The insurance polices maintained by the Company are with reputable insurance carriers and have no premium delinquencies. 2.25 CUSTOMERS. No customer of the Company accounted for more than 4.0% of the revenues of the Company and the Company Subsidiaries for the fiscal year ended December 31, 1997. 2.26 INTERESTED PARTY TRANSACTIONS. Except as set forth in the Company Securities Filings filed prior to the date of this Agreement, since the date of the Company's proxy statement dated April 30, 1998, no event has occurred that would be required to be reported as a Certain Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC, except for contracts entered into in the ordinary course of business of the Company, on an arms-length basis, with terms no less favorable to the Company than would reasonably be expected in a similar transaction with an unaffiliated third party. 2.27 ALARM CONTRACTS. The Chief Executive Officer and the Chief Financial Officer of the Company believe, following reasonable inquiry, that no more than 20% of accounts for alarm system monitoring and/or service owned by the Company or any Company Subsidiary are not evidenced by a written contract. 27 2.28 FINDERS AND INVESTMENT BANKERS. Neither the Company nor any of its officers or directors has employed any broker, finder or financial advisor or otherwise incurred any liability for any brokerage fees, commissions, or financial advisors' or finders' fees in connection with the transactions contemplated hereby, other than pursuant to an agreement with Donaldson, Lufkin & Jenrette Securities Corporation, the terms of which are as set forth in Section 2.10 of the Company Disclosure Letter. 2.29 FAIRNESS OPINION. The Company's Board of Directors has received from its financial advisor, Donaldson, Lufkin & Jenrette Securities Corporation, a written opinion addressed to it for inclusion in the Schedule 14D-9 and the Proxy Statement to the effect that the consideration to be received by the stockholders of the Company pursuant to each of the Offer and the Merger is fair to the Company's stockholders from a financial point of view. 2.30 TAKEOVER STATUTES. Assuming Parent and its "associates" and "affiliates" (as defined in Section 203 of the Delaware Code) collectively beneficially own and have beneficially owned at all times during the three-year period prior to the date hereof less than fifteen percent (15%) of the Company Stock outstanding, Section 203 of the Delaware Code is, and shall be, inapplicable to the acquisition of Shares pursuant to the Offer and the Merger. 2.31 FULL DISCLOSURE. No statement contained in any certificate or schedule, including, without limitation, the Company Disclosure Letter, furnished or to be furnished by the Company or the Company Subsidiaries to Parent or Purchaser in, or pursuant to the provisions of, this Agreement contains or shall contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in the light of the circumstances under which it was made, in order to make the statements herein or therein not misleading. 2.32 YEAR 2000. Except as would not reasonably be expected to have a Material Adverse Effect on the Company: (a) None of the computer software, computer firmware, computer hardware (whether general or special purpose) or other similar or related items of automated, computerized or software systems that are used or relied on by Company or by any of the Company Subsidiaries in the conduct of their respective businesses will malfunction, will cease to function, will generate incorrect data or will produce incorrect results when processing, providing or receiving (i) date-related data from, into and between the twentieth and twenty-first centuries or (ii) date-related data in connection with any valid date in the twentieth and twenty-first centuries. (b) None of the products and services sold, licensed, rendered, or otherwise provided by the Company or by any of the Company Subsidiaries in the conduct of their respective businesses will malfunction, will cease to function, will generate incorrect data or will produce incorrect results when processing, providing or receiving (i) date-related data 28 from, into and between the twentieth and twenty-first centuries or (ii) date-related data in connection with any valid date in the twentieth and twenty-first centuries; and, accordingly, neither the Company nor any of the Company Subsidiaries is or will be subject to any claim, demand, action, suit, liability, damage, material loss, or material expense arising from, or related to, circumstances where such products and services malfunction, cease to function, generate incorrect data, or produce incorrect results when processing, providing or receiving (i) date-related data from, into and between the twentieth and twenty- first centuries or (ii) date-related data in connection with any valid date in the twentieth and twenty-first centuries. (c) Neither the Company nor any of the Company Subsidiaries has made any other representations or warranties regarding the ability of any product or service sold, licensed, rendered, or otherwise provided by the Company or by any of the Company Subsidiaries in the conduct of their respective businesses to operate without malfunction, to operate without ceasing to function, to generate correct data or to produce correct results when processing, providing or receiving (i) date-related data from, into and between the twentieth and twenty-first centuries and (ii) date-related data in connection with any valid date in the twentieth and twenty-first centuries. 2.33 RIGHTS AGREEMENT. The Board of Directors of the Company has authorized and approved an amendment to the Rights Agreement to the effect that (i) none of Parent, Purchaser or their affiliates, either individually or as a group, shall become an "ACQUIRING PERSON" (as defined in the Rights Agreement), and (ii) no Distribution Date, Share Acquisition Date or Trigger Event (as each such term is defined in the Rights Agreement) shall occur, with respect to each of clauses (i) and (ii), by reason of the approval, execution or delivery of this Agreement, the consummation of the transactions contemplated hereby or any announcement of the same. The Company and the Rights Agent (as defined in the Rights Agreement) shall execute such amendment to the Rights Agreement no later than the second business day following the date hereof. 2.34 STANDARD FORM CONTRACTS (a) The term "STANDARD FORM SERVICE CONTRACT" shall mean any written contract between the Company or any Company Subsidiary and its respective customers which contains a clause that either limits the liability of the Company or such Company Subsidiary to a sum not in excess of the lesser of (A) $500, or (B) six times the monthly service charge pursuant to any such agreement, for losses from whatever cause (including the negligence of the Company or such Company Subsidiary) or that exculpates the Company or such Company Subsidiary from all liability and such clause has not been modified in any material respect, either as a result of any other document or as a result of a course of dealing between the Company or such Company Subsidiary and its customers. To the best of the Company's knowledge, none of the Company or any Company Subsidiary has entered into any service contract or agreement with any of its customers other than pursuant to a Standard Form Service Contract. Each Standard Form Service Contract which the Company or any Company Subsidiary has with its customers and each of the terms, provisions and conditions thereof are valid, binding and in full force and effect, subject to the Enforceability 29 Exceptions. (b) Since January 1, 1996, the Company has not materially increased the service charges payable by its customers. (c) The Company and the Company Subsidiaries have no material free, bartered or discounted service liability to customers existing with respect to its business. The Company and the Company Subsidiaries have no obligation or liability for the refund of any material monies to its customers other than obligations to refund deposits made by customers in the ordinary course of business. (d) To the best of the Company's knowledge, all service contracts or agreements negotiated with residential customers have provided the 3-day right of recision in compliance in all material respects with the provisions of 16 C.F.R. Part 429 (Cooling-Off Period for Door-to-Door Sales) and any applicable state laws. 2.35 CENTRAL STATION/INSPECTION. The Company's central station located at 125 Frontage Road, Orange, Connecticut 06477, has been approved and/or listed by Underwriters' Laboratory and by the other insurance rating organizations indicated in Section 2.35 of the Company Disclosure Letter; is operated in conformity in all material respects with current Underwriters' Laboratory and such other applicable insurance rating organization's standards; and no such approval and/or listings are suspended or, to the best of the Company's knowledge, threatened to be suspended. Except as set forth in Section 2.35 of the Company Disclosure Letter, no material deficiency reports have been issued by Underwriters' Laboratory or by any other applicable insurance rating organizations relating to the operations of such facility and, as to any such reports which have been issued, all material deficiencies noted therein have been remedied to the satisfaction of the issuer of such report. Section 2.35 of the Company Disclosure Letter also sets forth, as of the date of this Agreement, a listing of the dates upon which the last inspection of the central station location was conducted by Underwriters' Laboratory and the other appropriate insurance rating organizations. All required fire inspections with respect to each fire alarm system installed at the premises of customers of the Company have been performed as required in accordance with the obligations and commitments of the Company to its customers, to Underwriters' Laboratory and to any other applicable insurance rating organizations, other than any such inspections the absence of which would not reasonably be expected to have a Material Adverse Effect. All Underwriters' Laboratory or other applicable insurance rating organization's certificates issued for alarm systems installed at the premises of the Company's customers have been properly issued and the systems for which such certificates have been issued comply in all respects with all of the Underwriters' Laboratory or other applicable insurance rating organization's specifications and standards for such systems, other than any such matters that would not reasonably be expected to have a Material Adverse Effect. 30 ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER Parent and Purchaser jointly and severally represent and warrant to the Company that: 3.1 ORGANIZATION AND GOOD STANDING. Each of Parent and Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. 3.2 AUTHORIZATION; BINDING AGREEMENT. Parent and Purchaser have all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including, but not limited to, the Merger, have been duly and validly authorized by the respective Boards of Directors of Parent and Purchaser, as appropriate, and no other corporate proceedings on the part of Parent, Purchaser or any other subsidiary of Parent are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby (other than the requisite approval by the sole stockholder of Purchaser of this Agreement and the Merger). This Agreement has been duly and validly executed and delivered by each of Parent and Purchaser and constitutes the legal, valid and binding agreement of Parent and Purchaser, enforceable against each of Parent and Purchaser in accordance with its terms, subject to the Enforceability Exceptions. 3.3 GOVERNMENTAL APPROVALS. No Consent from or with any Governmental Authority on the part of Parent or Purchaser is required in connection with the execution or delivery by Parent and Purchaser of this Agreement or the consummation by Parent and Purchaser of the transactions contemplated hereby other than (i) filings with the SEC and (ii) filings under the HSR Act. 3.4 NO VIOLATIONS. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and compliance by Parent or Purchaser with any of the provisions hereof will not (i) conflict with or result in any breach of any provision of the Memorandum of Association or Bye-laws or other governing instruments of Parent or any subsidiary of Parent, (ii) require any Consent under or result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of, any material note, bond, mortgage, indenture, contract, lease, license, agreement or instrument to which Parent is a party or by which Parent or any of its assets or property is subject, (iii) result in the creation or imposition of any material lien or encumbrance of any kind upon any of the assets of Parent or any subsidiary of Parent or (iv) 31 subject to obtaining the Consents from Governmental Authorities referred to in SECTION 3.3 hereof, violate any Law to which Parent or any subsidiary of Parent or its assets or properties are subject, except in any such case for any such conflicts, violations, breaches, defaults or other occurrences that would not prevent or delay consummation of the Offer or the Merger, or otherwise materially and adversely affect the ability of Parent or Purchaser to perform their respective obligations under this Agreement. 3.5 DISCLOSURE DOCUMENTS. None of the information supplied by Parent, its officers, directors, representatives, agents or employees (the "PARENT INFORMATION") for inclusion in the Proxy Statement will, at the time the Proxy Statement is filed with the SEC or first mailed to the Company's stockholders, at the time of the Company's stockholders' meeting or at the Effective Time, contain any untrue statement of a material fact, or will omit to state any material fact necessary in order to make the statements therein, in light of the circumstances in which they were made not misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for such stockholders' meeting which has become false or misleading. Neither the Schedule 14D-1 or the Offer Documents or any amendments thereof or supplements thereto nor any of the Parent Information provided specifically for inclusion in the Schedule 14D-9 will, at the respective times the Schedule 14D-1, the Offer Documents or the Schedule 14D-9 are filed with the SEC or first published, sent or given to the Company's stockholders, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, neither Parent nor Purchaser makes any representation or warranty with respect to any information that has been supplied by the Company or its accountants, counsel or other authorized representatives for use in any of the foregoing documents. The Schedule 14D-1 and the Offer Documents will comply as to form in all material respects with the provisions of the Securities Exchange Act. 3.6 FINDERS AND INVESTMENT BANKERS. Neither Parent, Purchaser nor any of their respective officers or directors has employed any broker, finder or financial advisor or otherwise incurred any liability for any brokerage fees, commissions or financial advisors' or finders' fees in connection with the transactions contemplated hereby. 3.7 FINANCING ARRANGEMENTS. Parent (including for this purpose one or more of its wholly-owned subsidiaries) has funds available to it sufficient to enable the Purchaser to purchase the Shares in accordance with the terms of this Agreement and to pay all amounts due (or which will, as a result of the transactions contemplated hereby, become due) in respect of any indebtedness of the Company for money borrowed. 3.8 NO PRIOR ACTIVITIES. Except for obligations or liabilities incurred in connection with its incorporation or organization or the negotiation and consummation of this Agreement and the transactions contemplated hereby (including any financing in connection therewith), Purchaser has not incurred any obligations or liabilities and has not engaged in any 32 business or activities of any type or kind whatsoever or entered into any agreements or arrangements with any person or entity. ARTICLE IV ADDITIONAL COVENANTS OF THE COMPANY The Company covenants and agrees as follows: 4.1 CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY SUBSIDIARIES. (a) Unless Parent shall otherwise consent in writing (which consent shall not be unreasonably withheld) and except as expressly contemplated by this Agreement or in the Company Disclosure Letter, during the period from the date of this Agreement to the Effective Time, (i) the Company shall conduct, and it shall cause the Company Subsidiaries to conduct, its or their businesses in the ordinary course and consistent with past practice, and the Company shall, and it shall cause the Company Subsidiaries to, use its or their reasonable best efforts to preserve substantially intact its business organization, to keep available the services of its present officers and employees and to preserve the present commercial relationships of the Company and the Company Subsidiaries with persons with whom the Company or the Company Subsidiaries do significant business and (ii) without limiting the generality of the foregoing, neither the Company nor any of the Company Subsidiaries will: (A) amend or propose to amend its Certificate of Incorporation or Bylaws in any material respect; (B) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any shares of, or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any shares of, the capital stock or other securities of the Company or any of the Company Subsidiaries, including, but not limited to, any securities convertible into or exchangeable for shares of stock of any class of the Company or any of the Company Subsidiaries, except for (a) the issuance of shares pursuant to the exercise of Company Options outstanding on the date of this Agreement in accordance with their present terms, (b) the issuance of shares upon the exercise of Company Warrants outstanding on the date of this Agreement in accordance with their present terms and (c) the issuance of shares upon the conversion of Preferred Shares outstanding on the date of this Agreement in accordance with the present terms of the Company Preferred Stock; (C) split, combine or reclassify any shares of its capital stock or declare, pay or set aside any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, other than dividends to the holders of Preferred Shares in accordance with the present terms of the Company Preferred Stock and dividends or distributions to the Company or a Company Subsidiary, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any shares of its capital stock or other securities; 33 (D) create, incur or assume any indebtedness for borrowed money or issue any debt securities, except pursuant to the Credit Agreement, or make any loans (except as provided in clause (b) of paragraph (E) below); (E) other than in the ordinary course of business consistent with past practice, (a) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for the obligations of any person (other than the Company or a Company Subsidiary); (b) make any capital expenditures or make any advances or capital contributions to, or investments in, any other person (other than to a Company Subsidiary); (c) voluntarily incur any material liability or obligation (absolute, accrued, contingent or otherwise); or (d) sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any assets or properties, real, personal or mixed, material to the Company and the Company Subsidiaries taken as a whole other than to secure debt permitted under paragraph (D); (F) increase in any manner the compensation of any of its officers or employees (other than, except with respect to employees who are executive officers or directors, in the ordinary course of business reasonably consistent with past practice) or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any stockholder, officer, director, employee, consultant or affiliate other than, in any such case referred to above, as may be required by Law or as required pursuant to the terms of agreements in effect on the date of this Agreement or in the ordinary course of business reasonably consistent with past practice and other than arrangements with new employees (other than employees who will be officers of the Company) hired in the ordinary course of business reasonably consistent with past practice and providing for compensation (other than equity-based compensation) and other benefits reasonably consistent with those provided for similarly situated employees of the Company as of the date hereof; (G) alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any subsidiary or the Company; (H) except as may be required as a result of a change in law or as required by the SEC, change any of the accounting principles or practices used by it; (I) make any tax election or settle or compromise any material income tax liability; (J) pay, discharge or satisfy any material claims, liabilities or obligations 34 (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in, or contemplated by, the financial statements (or the notes thereto) of the Company or incurred in the ordinary course of business consistent with past practice; (K) except to the extent necessary for the exercise of its fiduciary duties by the Board of Directors of the Company as set forth in, and consistent with the provisions of, SECTION 4.8 hereof, waive, amend or allow to lapse any term or condition of any confidentiality or "standstill" agreement to which the Company or any subsidiary is a party; or (L) take, or agree in writing or otherwise to take, any of the foregoing actions or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect in any material respect at or prior to the Effective Time. (b) The Company shall, and the Company shall cause each of the Company Subsidiaries, to comply with all Laws applicable to it or any of its properties, assets or business and to maintain in full force and effect all the Company Permits necessary for such business, except in any such case for any failure so to comply or maintain that would not reasonably be expected to result in a Material Adverse Effect. 4.2 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice to Parent if any of the following occur after the date of this Agreement: (i) receipt of any notice or other communication in writing from any third party alleging that the Consent of such third party is or may be required in connection with the transactions contemplated by this Agreement, provided that such Consent would have otherwise been required to have been disclosed in this Agreement; (ii) receipt of any material notice or other communication from any Governmental Authority (including, but not limited to, the National Association of Securities Dealers ("NASD"), the AMEX or any other securities exchange) in connection with the transactions contemplated by this Agreement; (iii) the occurrence of an event which would be reasonably likely (A) to have a Material Adverse Effect or (B) to cause any condition set forth in ANNEX I hereto to be unsatisfied in any material respect at any time prior to the consummation of the Offer; or (iv) the commencement or threat of any Litigation involving or affecting the Company or any of the Company Subsidiaries, or any of their respective properties or assets, or, to the Company's knowledge, any employee, agent, director or officer, in his or her capacity as such, of the Company or any of the Company Subsidiaries which, if pending on the date hereof, would have been required to have been disclosed in this Agreement or which relates to the consummation of the Offer or the Merger. 4.3 ACCESS AND INFORMATION. Between the date of this Agreement and the Effective Time, and without intending by this SECTION 4.3 to limit any of the other obligations of the parties under this Agreement, the Company will give, and shall direct its accountants 35 and legal counsel to give, Parent and its authorized representatives (including, without limitation, its financial advisors, accountants and legal counsel), at reasonable times and without undue disruption to or interference with the normal conduct of the business and affairs of the Company, access as reasonably required in connection with the transactions provided for in this Agreement to all offices and other facilities and to all contracts, agreements, commitments, books and records of or pertaining to the Company and the Company Subsidiaries and will furnish Parent with (a) such financial and operating data and other information with respect to the business and properties of the Company and the Company Subsidiaries as Parent may from time to time reasonably request in connection with such transactions and (b) a copy of each material report, schedule and other document filed or received by the Company or any of the Company Subsidiaries pursuant to the requirements of applicable securities laws, the NASD or the AMEX. 4.4 STOCKHOLDER APPROVAL. As soon as practicable following the consummation of the Offer, the Company will take all steps necessary to duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of voting upon the Company Proposals and for such other purposes as may be necessary or desirable in connection with effectuating the transactions contemplated hereby, if such meeting is required. Except as otherwise contemplated by this Agreement, the Board of Directors of the Company will recommend to the stockholders of the Company that they approve the Company Proposals. 4.5 REASONABLE BEST EFFORTS. Subject to the terms and conditions herein provided, the Company agrees to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, including, but not limited to, (i) obtaining all Consents from Governmental Authorities and other third parties required for the consummation of the Offer and the Merger and the transactions contemplated thereby and (ii) timely making all necessary filings under the HSR Act. Upon the terms and subject to the conditions hereof, the Company agrees to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to satisfy the other conditions of the Closing set forth herein. 4.6 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the Company shall not, and shall use reasonable best efforts to cause its affiliates not to, issue or cause the publication of any press release or any other announcement with respect to the Offer or the Merger or the transactions contemplated hereby without the consent of Parent (such consent not to be unreasonably withheld or delayed), except where such release or announcement is required by applicable Law or pursuant to any applicable listing agreement with, or rules or regulations of, the NASD or the AMEX, in which case the Company, prior to making such announcement, will consult with Parent regarding the same. 4.7 COMPLIANCE. In consummating the transactions contemplated hereby, the Company shall comply in all material respects with the provisions of the Securities Exchange 36 Act and the Securities Act and shall comply, and cause the Company Subsidiaries to comply or to be in compliance, in all material respects, with all other applicable Laws. 4.8 NO SOLICITATION. (a) The Company shall not, directly or indirectly, through any officer, director, employee, representative or agent of the Company or any of the Company Subsidiaries, solicit or encourage the initiation of (including by way of furnishing information) any inquiries or proposals regarding any merger, sale of assets, sale of shares of capital stock (including without limitation by way of a tender offer) or similar transactions involving the Company or any Company Subsidiaries that if consummated would constitute an Alternative Transaction (as defined below) (any of the foregoing inquiries or proposals being referred to herein as a "COMPANY TAKEOVER PROPOSAL"). Nothing contained in this Agreement shall prevent the Board of Directors of the Company from (i) furnishing information to a third party which has made a BONA FIDE Company Takeover Proposal that is a Superior Proposal (as defined below) not solicited in violation of this Agreement, provided that such third party has executed an agreement with confidentiality provisions substantially similar to those then in effect between the Company and Parent or (ii) subject to compliance with the other terms of this SECTION 4.8, considering and negotiating a bona fide Company Takeover Proposal that is a Superior Proposal not solicited in violation of this Agreement; provided that, as to each of clauses (i) and (ii), the Board of Directors of the Company reasonably determines in good faith (after due consultation with independent counsel, which may be Latham & Watkins) that it is or is reasonably likely to be required to do so in order to discharge properly its fiduciary duties. For purposes of this Agreement, a "SUPERIOR PROPOSAL" means any proposal made by a third party to acquire, directly or indirectly, for consideration consisting of cash and/or securities, all of the equity securities of the Company entitled to vote generally in the election of directors or all or substantially all the assets of the Company, on terms which the Board of Directors of the Company reasonably believes (after consultation with a financial advisor of nationally recognized reputation) to be more favorable from a financial point of view to its stockholders than the Offer and the Merger taking into account at the time of determination all factors relating to such proposed transaction deemed relevant by the Board of Directors of the Company, including, without limitation, the financing thereof, the proposed timing thereof and all other conditions thereto and any changes to the financial terms of this Agreement proposed by Parent and Purchaser. "ALTERNATIVE TRANSACTION" means any of (i) a transaction pursuant to which any person (or group of persons) other than Parent or its affiliates (a "THIRD PARTY") acquires or would acquire more than 20% of the outstanding shares of any class of equity securities of the Company, whether from the Company or pursuant to a tender offer or exchange offer or otherwise, (ii) a merger or other business combination involving the Company pursuant to which any Third Party acquires more than 20% of the outstanding equity securities of the Company or the entity surviving such merger or business combination (iii) any transaction pursuant to which any Third Party acquires or would acquire control of assets (including for this purpose the outstanding equity securities of Company Subsidiaries and securities of the entity surviving any merger or business combination including any of the Company Subsidiaries) of the Company or any Company Subsidiaries having a fair market value (as determined by the Board of Directors of the Company in good faith) equal to more 37 than 20% of the fair market value of all the assets of the Company and the Company Subsidiaries, taken as a whole, immediately prior to such transaction, or (iv) any other consolidation, business combination, recapitalization or similar transaction involving the Company or any of the Company Subsidiaries, other than the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that the term Alternative Transaction shall not include any acquisition of securities by a broker dealer in connection with a bona fide public offering of such securities. Notwithstanding anything to the contrary contained in this SECTION 4.8 or elsewhere in this Agreement, prior to the Effective Time, the Company may, in connection with a possible Company Takeover Proposal, refer any third party to this SECTION 4.8 and SECTION 8.7 and make a copy of this SECTION 4.8 and SECTION 8.7 available to a third party. (b) The Company shall immediately notify Parent and Purchaser after receipt of any Company Takeover Proposal, or any modification of or amendment to any Company Takeover Proposal, or any request for nonpublic information relating to the Company or any of the Company Subsidiaries in connection with a Company Takeover Proposal or for access to the properties, books or records of the Company or any subsidiary by any person or entity that informs the Board of Directors of the Company or such subsidiary that it is considering making, or has made, a Company Takeover Proposal. Such notice to Parent and Purchaser shall be made orally and in writing, and shall indicate the identity of the person making the Company Takeover Proposal or intending to make the Company Takeover Proposal or requesting non-public information or access to the books and records of the Company, the terms of any such Company Takeover Proposal or modification or amendment to a Company Takeover Proposal, and whether the Company is providing or intends to provide the person making the Company Takeover Proposal with access to information concerning the Company as provided in SECTION 4.8(a). The Company shall also immediately notify Parent and Purchaser, orally and in writing, if it enters into negotiations concerning any Company Takeover Proposal. (c) Except as set forth in this SECTION 4.8, neither the Board of Directors of the Company nor any committee thereof shall (i) withdraw or modify, or indicate publicly its intention to withdraw or modify, in a manner adverse to Parent, the approval or recommendation by such Board of Directors or such committee of the Offer or the Company Proposals, (ii) approve or recommend, or indicate publicly its intention to approve or recommend, any Company Takeover Proposal or (iii) cause the Company to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, a "COMPANY ACQUISITION AGREEMENT") related to any Company Takeover Proposal. Notwithstanding the foregoing, in the event that prior to the Effective Time the Board of Directors of the Company determines in good faith, with the advice of outside counsel, that the failure to do so could reasonably be determined to be a breach of its fiduciary duties to the Company's stockholders under applicable law, the Board of Directors of the Company may (subject to this and the following sentences) approve or recommend a Superior Proposal and, in connection therewith, withdraw or modify its approval or recommendation of the Offer or the Company Proposals and/or terminate this Agreement (and concurrently with or after such 38 termination, if it so chooses, cause the Company to enter into any Company Acquisition Agreement with respect to any Superior Proposal), but only at a time that is after the third business day following Parent's receipt of written notice advising Parent that the Board of Directors of the Company has received a Superior Proposal and, in the case of any previously received Superior Proposal that has been materially modified or amended, such modification or amendment and specifying the material terms and conditions of such Superior Proposal, modification or amendment. (d) Nothing contained in this SECTION 4.8 shall prohibit the Company from taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated under the Securities Exchange Act or from making any disclosure to the Company's stockholders if, in the good faith judgment of the Board of Directors of the Company, with the advice of outside counsel, failure so to disclose could be determined to be a breach of its fiduciary duties to the Company's stockholders under applicable law; PROVIDED, HOWEVER, that neither the Company nor its Board of Directors nor any committee thereof shall, except as permitted by SECTION 4.8(c), withdraw or modify, or indicate publicly its intention to withdraw or modify, its position with respect to the Offer or the Company Proposals or approve or recommend, or indicate publicly its intention to approve or recommend, a Company Takeover Proposal. (e) The Company shall advise its officers and directors and any investment banker or attorney retained by the Company in connection with the transactions contemplated by this Agreement of the restrictions set forth in this SECTION 4.8. (f) For so long as the this Agreement shall not have been terminated in accordance with its terms, the Board of Directors of the Company shall not redeem the Rights or waive or amend any provision of the Rights Agreement, in any such case to permit or facilitate the consummation of any Company Takeover Proposal or Alternative Transaction. 4.9 SEC AND STOCKHOLDER FILINGS. The Company shall send to Parent a copy of all material public reports and materials as and when it sends the same to its stockholders, the SEC or any state or foreign securities commission. 4.10 TAKEOVER STATUTES. If any "fair price," "moratorium," "control share acquisition" or other similar anti-takeover statute or regulation enacted under state or federal laws in the United States (each a "TAKEOVER STATUTE"), including, without limitation, Section 203 of the Delaware Code, is or may become applicable to the Offer or the Merger, the Company will use reasonable best efforts to grant such approvals and take such actions as are necessary so that the transactions contemplated by this Agreement and the Company Proposals may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act so as to eliminate or minimize the effects of any Takeover Statute on any of the transactions contemplated hereby. 39 4.11 RIGHTS AGREEMENT. The Board of Directors of the Company shall take all further action (in addition to that referred to in SECTION 2.33), if any, necessary in order to render the Rights inapplicable to the Offer, the Merger and the other transactions contemplated by this Agreement. ARTICLE V ADDITIONAL COVENANTS OF PURCHASER AND PARENT Parent and Purchaser covenant and agree as follows: 5.1 REASONABLE BEST EFFORTS. Subject to the terms and conditions herein provided, Parent and Purchaser agree to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, including, but not limited to, (i) obtaining all Consents from Governmental Authorities and other third parties required for the consummation of the Offer and the Merger and the transactions contemplated thereby and (ii) timely making all necessary filings under the HSR Act. Upon the terms and subject to the conditions hereof, Parent and Purchaser agree to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to satisfy the other conditions of the Closing set forth herein. 5.2 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, Parent and Purchaser shall not, and shall use reasonable best efforts to cause their affiliates not to, issue or cause the publication of any press release or any other announcement with respect to the Offer or the Merger or the transactions contemplated hereby without the consent of the Company (such consent not to be unreasonably withheld or delayed), except where such release or announcement is required by applicable Law or pursuant to any applicable listing agreement with, or rules or regulations of, any stock exchange on which shares of Parent's capital stock are listed or the NASD, or other applicable securities exchange, in which case Parent, prior to making such announcement, will consult with the Company regarding the same. 5.3 COMPLIANCE. In consummating the transactions contemplated hereby, Parent and Purchaser shall comply in all material respects with the provisions of the Securities Exchange Act and the Securities Act and shall comply, and cause their subsidiaries to comply or to be in compliance, in all material respects, with all other applicable Laws. 5.4 EMPLOYEE BENEFIT PLANS. (a) As of the Effective Time, Parent shall cause the Surviving Corporation to honor and satisfy all obligations and liabilities with respect to the Employee Plans. Notwithstanding the foregoing, the Surviving Corporation shall not be required to continue any particular Employee Plan after the Effective Time, and any Employee Plan may be amended or terminated in accordance with its terms and applicable Law. To the 40 extent that any Employee Plan is terminated or amended after the Effective Time so as to reduce the benefits that are then being provided with respect to participants thereunder, Parent shall arrange for each individual who is then a participant in such terminated or amended plan to participate in a comparable Parent Benefit Plan ("PARENT BENEFIT PLAN") in accordance with the eligibility criteria thereof, provided that (i) such participant shall receive full credit for years of service with the Company or any of the Company Subsidiaries prior to the Effective Time for all purposes for which such service was recognized under the applicable Employee Plan, including, but not limited to, recognition of service for eligibility, vesting (including acceleration thereof pursuant to the terms of the applicable Employee Plan), entitlement to commence benefits and, to the extent not duplicative of benefits received under such Employee Plan, the amount of benefits, (ii) such participant shall participate in the Parent Benefit Plans on terms no less favorable than those offered by Parent to similarly situated employees of Parent, (iii) Parent shall cause any and all pre-existing condition limitations (to the extent such limitations did not apply to a pre-existing condition under the Employee Plans) and eligibility waiting periods under any group health plans to be waived with respect to such participant and his or her eligible dependents and (iv) Parent shall cause the Parent Benefit Plans that are group welfare plans to provide such participant with credit towards any applicable deductibles, co-payments and similar exclusions for expenses incurred prior to the Effective Time. (b) Parent and the Company hereby acknowledge that the consummation of the Offer and the transactions contemplated under this Agreement will be treated as a "Change in Control" for purposes of each of the applicable Employee Plans, and each applicable employment, severance or similar agreement applicable to any employee of the Company or any of the Company Subsidiaries, listed in Section 5.4(b) of the Company Disclosure Letter (such Employee Plans and agreements collectively, "CHANGE IN CONTROL AGREEMENTS") and agree to abide by the provisions of any Change in Control Agreements which relate to a Change in Control, including, but not limited to, the accelerated vesting and/or payment of equity-based awards. (c) The provisions of this SECTION 5.4 are not intended to and do not create rights of third party beneficiaries. 5.5 INDEMNIFICATION. (a) From and after the Effective Time, the Surviving Corporation shall indemnify and hold harmless all past and present officers and directors (the "INDEMNIFIED PARTIES") of the Company and of the Company Subsidiaries to the full extent such persons may be indemnified by the Company pursuant to Delaware law, the Company's Certificate of Incorporation and Bylaws, as each is in effect on the date of this Agreement, for acts and omissions (x) arising out of or pertaining to the transactions contemplated by this Agreement or arising out of the Offer Documents or (y) otherwise with respect to any acts or omissions occurring or arising at or prior to the Effective Time and shall advance reasonable litigation expenses incurred by such persons in connection with defending any action arising out of such acts or omissions, PROVIDED that such persons provide the requisite affirmations and undertaking, as set forth in Section 145(e) of the Delaware Code. 41 (b) In addition, Parent will provide, or cause the Surviving Corporation to provide, for a period of not less than six years after the Effective Time, the Company's current directors and officers an insurance and indemnification policy that provides coverage for events occurring or arising at or prior to the Effective Time (the "D&O INSURANCE") that is no less favorable than the existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage; PROVIDED, HOWEVER, that Parent and the Surviving Corporation shall not be required to pay an annual premium for the D&O Insurance in excess of 300% of the annual premium currently paid by the Company for such insurance, but in such case shall purchase as much such coverage as possible for such amount. (c) This SECTION 5.5 is intended to benefit the Indemnified Parties and shall be binding on all successors and assigns of Parent, Purchaser, the Company and the Surviving Corporation. Parent hereby guarantees the performance by the Surviving Corporation of the indemnified obligations pursuant to this SECTION 5.5, which guaranty is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the bankruptcy or insolvency of the Surviving Corporation or any other person. The Indemnified Parties shall be intended third-party beneficiaries of this SECTION 5.5. 5.6 VOTING OF SHARES. At any meeting of the Company's stockholders held for the purpose of voting upon the Company Proposals, all of the Shares then owned by Parent, Purchaser or any other subsidiaries of Parent shall be voted in favor of the Company Proposals. 5.7 GUARANTEE OF PARENT. Parent hereby guarantees the payment by Purchaser of the Common Per Share Amount, the Preferred Per Share Amount and any other amounts payable by Purchaser pursuant to this Agreement and will cause Purchaser to perform all of its other obligations under this Agreement in accordance with their terms. ARTICLE VI MERGER CONDITIONS The respective obligations of each party to effect the Merger shall be subject to the fulfillment or waiver at or prior to the Effective Time of the following conditions: 6.1 OFFER. The Offer shall have been consummated; provided that this condition shall be deemed to have been satisfied with respect to the obligation of Parent and Purchaser to effect the Merger if Parent fails to accept for payment or pay for Common Shares pursuant to the Offer in violation of the terms of the Offer or of this Agreement. 6.2 STOCKHOLDER APPROVAL. If required, the Company Proposals shall have been 42 approved at or prior to the Effective Time by the requisite vote of the stockholders of the Company in accordance with the Delaware Code. 6.3 NO INJUNCTION OR ACTION. No order, statute, rule, regulation, executive order, stay, decree, judgment or injunction shall have been enacted, entered, promulgated or enforced by any court or other Governmental Authority which prohibits or prevents the consummation of the Merger which has not been vacated, dismissed or withdrawn prior to the Effective Time. The Company and Parent shall use all reasonable best efforts to have any of the foregoing vacated, dismissed or withdrawn by the Effective Time. 6.4 GOVERNMENTAL APPROVALS. All Consents of any Governmental Authority required for the consummation of the Merger and the transactions contemplated by this Agreement shall have been obtained, except for those Consents the failure to obtain which will not have a material adverse effect on the business, assets, condition (financial or other), liabilities or results of operations of the Surviving Corporation and its subsidiaries taken as a whole. ARTICLE VII TERMINATION AND ABANDONMENT 7.1 TERMINATION. This Agreement may be terminated at any time prior to the Effective Time, whether before or after approval of the stockholders of the Company described herein: (a) by mutual written consent of Parent and the Company; (b) by either Parent or the Company if any Governmental Authority shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement and such order, decree or ruling or other action shall have become final and nonappealable; (c) by Parent if (i) the Company shall have breached or failed to perform in any material respect any of its covenants or other agreements contained in this Agreement, which breach or failure to perform is incapable of being cured or has not been cured within five (5) days after the giving of written notice thereof to the Company (but not later than the expiration of the twenty (20) business day period provided for the Offer under SECTION 1.1(b) hereof); (ii) any representation or warranty of the Company shall not have been true and 43 correct in all material respects when made; (iii) any representation or warranty of the Company shall cease to be true and correct in all material respects at any later date as if made on such date (other than representations and warranties made as of a specified date) other than as a result of a breach or failure to perform by the Company of any of its covenants or agreements under this Agreement; PROVIDED, HOWEVER, that such representation or warranty is incapable of being cured or has not been cured within five (5) days after the giving of written notice thereof to the Company (but not later than the expiration of the twenty (20) business day period provided for the Offer under SECTION 1.1(b) hereof); PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this SECTION 7.1(c) shall not be available to Parent if Purchaser or any other affiliate of Parent shall acquire shares of Company Common Stock pursuant to the Offer; (d) by Parent if, whether or not permitted to do so by this Agreement, (i) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified in a manner adverse to Parent or Purchaser its approval or recommendation of the Offer or any of the Company Proposals; (ii) the Board of Directors of the Company or any committee thereof shall have approved or recommended to the stockholders of the Company any Company Takeover Proposal or Alternative Transaction; (iii) the Board of Directors of the Company or any committee thereof shall have approved or recommended that the stockholders of the Company tender their Shares in any tender or exchange offer that is an Alternative Transaction; (iv) the Board of Directors of the Company or any committee thereof shall have taken any position or make any disclosures to the Company's stockholders permitted pursuant to SECTION 4.8(e) which has the effect of any of the foregoing; (v) the Board of Directors of the Company or any committee thereof shall have resolved to take any of the foregoing actions or (vi) the Board of Directors of the Company or any committee thereof shall have redeemed the Rights, or waived or amended any provision of the Rights Agreement, in any such case to permit or facilitate the consummation of any Company Takeover Proposal or Alternative Transaction; (e) by either Parent or the Company if, as the result of the failure of the Minimum Condition or any of the other conditions set forth in Annex I hereto, the Offer shall have terminated or expired in accordance with its terms without Purchaser having purchased any Shares pursuant to the Offer, provided that if the failure to satisfy any conditions set forth in Annex I shall be a basis for termination of this Agreement under any other clause of this Section 7.1, a termination pursuant to this clause (e) shall be deemed a termination under such other clause; (f) by either Parent or the Company if the Offer shall not have been consummated on or before March 31, 1999, PROVIDED that the right to terminate this 44 Agreement pursuant to this SECTION 7.1(f) shall not be available to any party whose failure to perform any of its obligations under this Agreement results in the failure of the Offer to be consummated by such time; (g) by the Company if Parent or Purchaser shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform is incapable of being cured or has not been cured within 5 days after the giving of written notice thereof to Parent; or (h) by the Company in accordance with SECTION 4.8(c) hereof; PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this SECTION 7.1(h) shall not be available (x) if the Company has breached in any material respect its obligations under SECTION 4.8 hereof, or (y) if the Company shall fail to pay when due the fees and expenses contemplated by SECTION 8.7 hereof. The party desiring to terminate this Agreement pursuant to the preceding paragraphs shall give written notice of such termination to the other party in accordance with SECTION 8.5 hereof. 7.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of this Agreement and the abandonment of the Offer or the Merger pursuant to this ARTICLE VII, this Agreement (other than SECTIONS 7.2, 8.1, 8.3, 8.5, 8.6, 8.7, 8.8, 8.10, 8.11, 8.12, 8.14 and 8.15 hereof) shall become void and of no effect with no liability on the part of any party hereto (or of any of its directors, officers, employees, agents, legal or financial advisors or other representatives); PROVIDED, HOWEVER, that no such termination shall relieve any party hereto from any liability for any willful breach of this Agreement prior to termination. If this Agreement is terminated as provided herein, each party shall use all reasonable best efforts to redeliver all documents, work papers and other material (including any copies thereof) of any other party relating to the transactions contemplated hereby, whether obtained before or after the execution hereof, to the party furnishing the same. ARTICLE VIII MISCELLANEOUS 8.1 CONFIDENTIALITY. (a) Unless (i) otherwise expressly provided in this Agreement, (ii) required by applicable Law or any listing agreement with, or the rules and regulations of, the AMEX or any other applicable securities exchange or the NASD, (iii) necessary to secure any required Consents as to which the other party has been advised or (iv) consented to in writing by Parent and the Company, all information (whether oral or written) and documents furnished in connection herewith together with analyses, compilations, studies or other documents prepared by such party which contain or otherwise reflect such information 45 shall be kept strictly confidential by the Company, Parent, Purchaser and their respective officers, directors, employees and agents. Prior to any disclosure permitted pursuant to the preceding sentence, the party intending to make such disclosure shall consult with the other party regarding the nature and extent of the disclosure. Nothing contained herein shall preclude disclosures to the extent necessary to comply with accounting, SEC and other disclosure obligations imposed by applicable Law. In the event the transactions contemplated by this Agreement are not consummated, each party shall return to the other any documents furnished by the other and all copies thereof that any of them may have made and will hold in confidence any information obtained from the other party except to the extent (a) such party is required to disclose such information by Law or such disclosure is necessary or desirable in connection with the pursuit or defense of a claim, (b) such information was known by such party prior to such disclosure (and PROVIDED that, except with respect to information referred to in the following clause (c), such party shall have advised the other party of such knowledge upon or promptly after its receipt of such information) or was thereafter developed or obtained by such party independent of such disclosure or (c) such information is or becomes generally available to the public other than by breach of this SECTION 8.1 (or, to such party's knowledge, breach of a confidentiality agreement with the other party). Prior to any disclosure of information pursuant to the exception in clause (a) of the preceding sentence, the party intending to disclose the same shall so notify the party which provided the same in order that such party may seek a protective order or other appropriate remedy should it choose to do so. (b) The Parent and the Company further acknowledge that certain of the business and activities of each of them is competitive with business and activities of the other party, and each of them therefore agrees that it will not use, or seek to obtain any competitive or other business advantage as a result of, the information or documents so received by it in connection herewith, such party acknowledging that such use would be unfair and materially detrimental to the other party, PROVIDED that the provisions of this SECTION 8.1(b) shall not apply to information referred to in clause (c) of SECTION 8.1(a) hereof. 8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified or supplemented only by a written agreement among the Company, Parent and Purchaser. 8.3 WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company on the one hand, or Parent and Purchaser on the other hand, to comply with any obligation, covenant, agreement or condition herein may be waived by Parent on the one hand, or the Company on the other hand, only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this SECTION 8.3. 8.4 SURVIVAL. The respective representations, warranties, covenants and 46 agreements of the Company and Parent contained herein or in any certificates or other documents delivered prior to or at the Closing shall survive the execution and delivery of this Agreement, notwithstanding any investigation made or information obtained by the other party, but shall terminate at the Effective Time, except for those contained in SECTIONS 1.7, 1.8, 1.9, 1.14, 5.4, 5.5, 5.7 and 8.8 hereof and this SECTION 8.4, which shall survive beyond the Effective Time. 8.5 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by facsimile, receipt confirmed, or on the next business day when sent by overnight courier or on the second succeeding business day when sent by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to the Company, to: Alarmguard Holdings, Inc. 125 Frontage Road Orange, CT 06477 Attention: Russell R. MacDonnell Telecopy: 203-795-9712 with a copy to: Latham & Watkins 701 "B" Street, Suite 2100 San Diego, California 92101 Attention: David A. Hahn, Esq. Telecopy: (619) 696-7419 Confirm: (619) 236-1234 47 (ii) if to Parent or Purchaser, to: Tyco International Ltd. The Gibbons Building 10 Queen Street, Suite 301 Hamilton HM11 Bermuda Attention: Secretary Telecopy: (441) 295-9647 Confirm: (441) 292-8674 with a copy to: Tyco International (US) Inc. One Tyco Park Exeter, New Hampshire 03833 Attention: Mark A Belnick, Esq. Telecopy: (603) 778-7700 Confirm: (603) 778-9700 and to Kramer Levin Naftalis & Frankel LLP 919 Third Avenue New York, New York 10022 Attention: Abbe L. Dienstag, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100 8.6 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto prior to the Effective Time without the prior written consent of the Company, in the case of a proposed assignment by Parent or Purchaser, or by Parent, in the case of a proposed assignment by the Company, except that Purchaser may assign its rights, interest and obligations hereunder to any other wholly-owned direct or indirect subsidiary of Parent, provided that the provisions of SECTION 5.7 hereof shall apply to such other subsidiary. 8.7 EXPENSES. (a) Except as provided in SECTION 8.7(b) or 8.7(C) hereof, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs or expenses. (b) The Company agrees that if this Agreement is terminated pursuant to 48 (i) SECTION 7.1(d); (ii) SECTION 7.1(h); or (iii) SECTION 7.1(e) OR 7.1(f) and, with respect to this clause (iii), at the time of such termination any person, entity or group (as defined in Section 13(d)(3) of the Securities Exchange Act) (other than Parent or any of its affiliates or any person identified in the Company's Proxy Statement dated April 30, 1998 and who has executed the Preferred Stock Purchase Agreement, provided that such person has not breached the terms of such Preferred Stock Purchase Agreement) shall have become the beneficial owner of more than 15% of the outstanding shares of Company Stock and such person, entity or group (or any affiliate of such person, entity or group) thereafter (x) shall make a Company Takeover Proposal and, in the case of a consensual transaction with the Company, shall substantially have negotiated the terms thereof, at any time on or prior to the date which is six months after such termination of this Agreement, and (y) shall consummate such Company Takeover Proposal at any time on or prior to the date which is one year after termination of this Agreement, in the case of a consensual transaction, or six months after termination of this Agreement, in the case of a non-consensual transaction, in each case with a value per share of Company Common Stock of at least $9.25 (with appropriate adjustments for reclassifications of capital stock, stock dividends, stock splits, reverse stock splits and similar events); then the Company shall pay to Parent the sum of (a) $4.5 million. Any payment required by this SECTION 8.7(b) shall be made as promptly as practicable but in no event later than two business days following termination of this Agreement pursuant to SECTION 7.1(d) OR 7.1(h) hereof, or, in the case of clause (iii) of this SECTION 8.7(b), upon consummation of such Company Takeover Proposal, and shall be made by wire transfer of immediately available funds to an account designated by Parent. (c) The Company further agrees that if this Agreement is terminated pursuant to SECTION 7.1(c)(i) hereof, (i) the Company will pay to Parent, as promptly as practicable but in no event later than two business days following termination of this Agreement, the amount of all documented and reasonable costs and expenses incurred by Parent, Purchaser and their affiliates (including but not limited to fees and expenses of counsel and accountants and out-of-pocket expenses (but not fees) of financial advisors) in an aggregate amount not to exceed $450,000 in connection with this Agreement or the transactions contemplated hereby ("PARENT EXPENSES"); and (ii) in the event that the Company consummates a Company Takeover Proposal (whether or not solicited in violation of this Agreement) which is publicly 49 announced within one year from the date of termination of this Agreement, the sum of $4.5 million, less the amount of any payment made pursuant to clause (i) of this SECTION 8.7(c), which payment shall be made not later than two business days following consummation of such Company Takeover Proposal. (d) The Company further agrees that if this Agreement is terminated pursuant to SECTION 7.1(c)(ii) hereof, the Company will pay to Parent, as promptly as practicable but in no event later than two business days following termination of this Agreement, the Parent Expenses. (e) The Company shall not be obligated to make any payments to Parent pursuant to SECTION 8.7(b)(iii) or SECTION 8.7(c)(ii) if the Company Takeover Proposal referenced therein is a transaction ("PERMITTED FINANCING") in which the Company sells equity securities for gross proceeds not in excess of $25,000,000; PROVIDED THAT the securities issued, or issuable upon exercise, conversion or exchange of the securities issued, in such Permitted Financing constitute or upon issuance would constitute less than forty (40%) percent of the outstanding voting power of the Company after such issuance, exercise, conversion or exchange. 8.8 GOVERNING LAW. This Agreement shall be deemed to be made in, and in all respects shall be interpreted, construed and governed by and in accordance with the laws of, the State of New York. 8.9 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 8.10 INTERPRETATION. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. As used in this Agreement, (i) the term "PERSON" shall mean and include an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an association, an unincorporated organization, a Governmental Authority and any other entity, (ii) unless otherwise specified herein, the term "AFFILIATE," with respect to any person, shall mean and include any person controlling, controlled by or under common control with such person and (iii) the term "SUBSIDIARY" of any specified person shall mean any corporation 50 percent or more of the outstanding voting power of which, or any partnership, joint venture, limited liability company or other entity 50 percent or more of the total equity interest of which, is directly or indirectly owned by such specified person. 8.11 ENTIRE AGREEMENT. This Agreement and the documents or instruments referred to herein including, but not limited to, the Annex(es) attached hereto and the Company Disclosure Letter referred to herein, which Annex(es) and Company Disclosure 50 Letter are incorporated herein by reference, embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants, or undertakings other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter. Notwithstanding the foregoing provisions of this SECTION 8.11, the provisions of the letter agreement dated November 2, 1998 between Tyco International (US) Inc. and Donaldson, Lufkin & Jenrette Securities Corporation, as agent for the Company, shall remain in effect in accordance with its terms. 8.12 SEVERABILITY. (a) In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. (b) Parent and the Company agree that the payments to Parent provided in SECTION 8.7 are fair and reasonable in the circumstances, considering not only the consideration payable to the holders of Shares in the Offer and the Merger but also the outstanding funded indebtedness (including capital leases) of the Company and the Company Subsidiaries and Parent's anticipated costs, including lost opportunity costs, if the Offer and Merger are not consummated. If a court of competent jurisdiction shall nonetheless, by a final, non-appealable judgment, determine that the amount of such payments exceed the maximum amount permitted by law, then the amount of such payments shall be reduced to the maximum amount permitted by law in the circumstances, as determined by such court of competent jurisdiction. 8.13 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties further agree that each party shall be entitled to an injunction or restraining order to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity. 8.14 THIRD PARTIES. Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person that is not a party hereto or thereto or a successor or permitted assign of such a party; PROVIDED HOWEVER, that the parties hereto specifically acknowledge that the provisions of SECTION 5.5 hereof are intended to be for the benefit of, and shall be enforceable by, the Indemnified Parties. 51 8.15 DISCLOSURE LETTER. Parent acknowledges that the Company Disclosure Letter (i) relates to certain matters concerning the disclosures required and transactions contemplated by this Agreement, (ii) is qualified in its entirety by reference to specific provisions of this Agreement, (iii) is not intended to constitute and shall not be construed as indicating that any such matter is required to be disclosed, nor shall such disclosure be construed as an admission that such information is material with respect to the Company, except to the extent required by this Agreement. [SIGNATURE PAGE FOLLOWS] 52 IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement to be signed and delivered by their respective duly authorized officers as of the date first above written. TYCO INTERNATIONAL LTD. By: /s/ Mark A. Belnick --------------------------------------------- Name: Mark A. Belnick Title: Executive Vice President Chief Corporate Counsel T16 ACQUISITION CORP. By: /s/ Mark A. Belnick --------------------------------------------- Name: Mark A. Belnick Title: President ALARMGUARD HOLDINGS, INC. By: /s/ Russell R. MacDonnell --------------------------------------------- Name: Russell R. MacDonnell Title: Chairman, CEO 53 ANNEX I CONDITIONS TO THE OFFER. Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the Securities Exchange Act (relating to Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and (subject to any such rules or regulations) may delay the acceptance for payment of any tendered Shares and (except as provided in this Agreement) amend or terminate the Offer as to any Shares not then paid for if (i) the conditions that (1) there shall be validly tendered and not withdrawn prior to the expiration of the Offer a number of Common Shares which represents at least 51% of the total number of issued and outstanding Common Shares and (2) the number of Common Shares tendered pursuant to the Offer together with the Preferred Shares subject to the Preferred Stock Purchase Agreement constitute at least 51% of the total voting power of the Company on a fully diluted basis, shall not each have been satisfied (the "MINIMUM CONDITION") or (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer or (iii) at any time after the date of this Agreement and before the time of payment for any such Common Shares (whether or not any Common Shares have theretofore been accepted for payment or paid for pursuant to the Offer), any of the following conditions exists: (a) there shall be in effect an injunction or other order, decree, judgment or ruling by a Governmental Authority of competent jurisdiction or a Law shall have been promulgated, or enacted by a Governmental Authority of competent jurisdiction which in any such case (i) restrains or prohibits the making or consummation of the Offer or the consummation of the Merger or the consummation of the purchase of the Company Preferred Stock pursuant to the Preferred Stock Purchase Agreement, (ii) prohibits or restricts the ownership or operation by Parent (or any of its affiliates or subsidiaries) of any portion of the Company's business or assets, or Parent's business or assets relating to the security services business, which is material to the security services business of all such entities taken as a whole or which would substantially deprive Parent and/or its affiliates or subsidiaries of the benefit of ownership of the Company's business or assets, or compels Parent (or any of its affiliates or subsidiaries) to dispose of or hold separate any portion of the Company's business or assets, or Parent's business or assets relating to the security services business, which is material to the security services business of all such entities taken as a whole or which would substantially deprive Parent and/or its affiliates or subsidiaries of the benefit of ownership of the Company's business or assets, (iii) imposes material limitations on the ability of Purchaser effectively to acquire or to hold or to exercise full rights of ownership of the Shares, including, without limitation, the right to vote Shares purchased by Purchaser pursuant to the Offer, the Merger or the Preferred Stock Purchase Agreement on all matters properly presented to the stockholders of the Company, or (iv) imposes any material limitations on the ability of Parent and/or its affiliates or subsidiaries effectively to control in any material A-1 respect the business and operations of the Company, or (v) seeks to restrict any future business activity by Parent (or any of its affiliates) relating to the security services business, including, without limitation, by requiring the prior consent of any person or entity (including any Governmental Authority) to future transactions by Parent (or any of its affiliates); or (b) there shall have been instituted, pending or threatened an action by a Governmental Authority seeking to restrain or prohibit the making or consummation of the Offer, the consummation of the Merger or the purchase of Preferred Shares pursuant to the Preferred Stock Purchase Agreement or to impose any other restriction, prohibition or limitation referred to in the foregoing paragraph (a); or (c) this Agreement shall have been terminated by the Company or Parent in accordance with its terms; or (d) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in the Common Shares on the AMEX, (ii) a declaration of a banking moratorium or any general suspension of payments in respect of banks in the United States or (iii) in the case of any of the foregoing existing at the time of the execution of this Agreement, a material acceleration or worsening thereof; or (e) Parent and the Company shall have agreed that Purchaser shall amend the Offer to terminate the Offer or postpone the payment for Common Shares pursuant thereto; or (f) any of the representations and warranties made by the Company in the Merger Agreement shall not have been true and correct in all material respects when made, or shall thereafter have ceased to be true and correct in all material respects as if made as of such later date (other than representations and warranties made as of a specified date), or the Company shall not in all material respects have performed each obligation and agreement and complied with each covenant to be performed and complied with by it under this Agreement, PROVIDED, however, that such breach or failure to perform is incapable of being cured or has not been cured within 5 days after the giving of written notice thereof to the Company, PROVIDED, however, that no such 5-day cure period shall require extension of the Offer beyond the twenty (20) business days provided under SECTION 1.1(b) of the Agreement; or (g) the Company's Board of Directors shall have modified or amended its recommendation of the Offer in any manner adverse to Parent or shall have withdrawn its recommendation of the Offer, or shall have recommended acceptance of any Company Takeover Proposal or shall have resolved to do any of the foregoing; or (h) (i) any corporation, entity or "group" (as defined in Section 13(d)(3) of the Securities Exchange Act) ("PERSON/GROUP"), other than Parent and Purchaser and any person/group identified in the Company's Proxy Statement dated April 30, 1998 and who has executed the Preferred Stock Purchase Agreement, provided that such person/group has not A-2 breached the terms of such Preferred Stock Purchase Agreement, shall have acquired beneficial ownership of more than 15% of the outstanding Shares, or shall have been granted any options or rights, conditional or otherwise, to acquire a total of more than 15% of the outstanding Shares and which, in each case, does not tender the Common Shares beneficially owned by it in the Offer; (ii) any new group shall have been formed which beneficially owns more than 15% of the outstanding Shares and which does not tender the Common Shares beneficially owned by it in the Offer; or (iii) any person/group (other than Parent or one or more of its affiliates) shall have entered into an agreement in principle or definitive agreement with the Company with respect to a tender or exchange offer for any Shares or a merger, consolidation or other business combination with or involving the Company; or (i) any change, development, effect or circumstance shall have occurred or be threatened that would reasonably be expected to have a Material Adverse Effect with respect to the Company; or (j) the Company shall commence a case under any chapter of Title XI of the United States Code or any similar law or regulation; or a petition under any chapter of Title XI of the United States Code or any similar law or regulation is filed against the Company which is not dismissed within 2 business days; or (k) a Distribution Date shall have occurred under the Rights Agreement. The foregoing conditions are for the sole benefit of Parent and Purchaser and may be asserted by Parent or Purchaser regardless of the circumstances giving rise to any such condition and may be waived by Parent or Purchaser, in whole or in part, at any time and from time to time, in the sole discretion of Parent. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any right, the waiver of such right with respect to any particular facts or circumstances shall not be deemed a waiver with respect to any other facts or circumstances, and each right shall be deemed an ongoing right which may be asserted at any time and from time to time. Should the Offer be terminated pursuant to the foregoing provisions, all tendered Common Shares not theretofore accepted for payment shall forthwith be returned to the tendering stockholders. A-3 GLOSSARY OF DEFINED TERMS
Section TERM WHERE DEFINED - ----- ------------- "1997 Balance Sheet" 2.10 "Acquiring Person" 2.33 "Advance" 1.3 "Advance Director" 1.3 "affiliate" 8.10 "Agreement" the recitals "Alternative Transaction" 4.8(a) "AMEX" 2.5 "arranger liability" 2.23(b) "Certificate of Merger" 1.4 "Change in Control Agreements" 5.4(b) "Closing" 1.5 "Closing Date" 1.5 "Code" 2.15(a) "Common Per Share Amount" the recitals "Common Shares" the recitals "Company" the recitals "Company Acquisition Agreement" 4.8(c) "Company Common Stock" the recitals "Company Disclosure Letter" Article II "Company Financial Statements" 2.8 "Company Intellectual Property Rights" 2.17 "Company Material Contracts" 2.14 "Company Options" 1.9(a) "Company Permits" 2.12 "Company Preferred Stock" the recitals "Company Proposals" 1.13(a) "Company Securities Filings" 2.7 "Company Stock" the recitals "Company Subsidiary" 2.1 "Company Takeover Proposal" 4.8(a) "Company Warrants" 1.9(b) "Consent" 2.5 "consenting corporation" 2.16(c) "Credit Agreement" 2.21
G1
Section TERM WHERE DEFINED - ---- ------------- "Current Preferred Director Condition" 1.3 "Current Preferred Holders" 1.3 "D&O Insurance" 5.5(b) "Delaware Code" 1.4 "disqualified person" 5.4(a) "Dissenting Shares" 1.7(a) "Effective Time" 1.5 "Employee Plans" 2.15(a) "Enforceability Exceptions" 2.4 "Environmental Claim" 2.23(e)(i) "Environmental Laws" 2.23(e)(i) "ERISA" 2.15(a) "ERISA Affiliate" 2.15(a) "excess parachute payments" 2.16(c) "Exchange Agent" 1.8(a) "Fairness Advisor" 1.2(a) "Fairness Opinion" 1.2(a) "Governmental Authority" 2.5 "group" paragraph (h) of Annex I "HSR Act" 2.5 "Indemnified Parties" 5.5(a) "Independent Directors" 1.3 "IRS" 2.15(b) "ISO" 2.15(c) "Law" 2.6 "leased employees" 2.15(b) "Lehman Warrants" 1.9(b) "Liens" 2.21 "Litigation" 2.13 "Majority of Current Preferred" 1.3 "Material Adverse Effect" 1.17 "Materials of Environmental Concern" 2.23(e)(iii) "Merger" the recitals "Minimum Condition" the introductory paragraph of Annex I "multiemployer plan" 2.15(b) "NASD" 4.2 "Offer" the recitals "Offer Documents" 1.1(c)
G2
Section TERM WHERE DEFINED - ---- ------------- "Offer to Purchase" 1.1(c) "Parent" the recitals "Parent Benefit Plan" 5.4(a) "Parent Expenses" 8.7(c)(i) "Parent Information" 3.5 "party in interest" 2.15(b) "Patricof Warrants" 1.9(b) "Permitted Financing" 8.7(e) "Per Share Amount" the recitals "person" 8.10 "person/group" paragraph (h) of Annex I "Preferred Per Share Amount" the recitals "Preferred Shares" the recitals "Preferred Stock Purchase Agreement" the recitals "Proxy Statement" 1.13(a) "Purchaser" the recitals "Rights" the recitals "Rights Agreement" the recitals "SEC" 1.1(b) "Securities Act" 2.7 "Securities Exchange Act" 1.1(a) "Shares" the recitals "Schedule 14D-1" 1.1(c) "Schedule 14D-9" 1.2(b) "Standard Form Service Contract" 2.34 "Subordinated Debt Warrants" 1.9(b) "subsidiary" 8.10 "Superior Proposal" 4.8(a) "Surviving Corporation" 1.4 "Surviving Corporation Common Stock" 1.6(d) "Takeover Statute" 4.10 "Tax" 2.16(b) "Tax-exempt use property" 2.16(c) "Tax Return" 2.16(b)
G3 EX-99.C(3) 12 EX. 99.C(3) PREF. STOCK PURCHASE AGREE. DTD 1/8/99 EXHIBIT 99(c)(3) PREFERRED STOCK PURCHASE AGREEMENT PREFERRED STOCK PURCHASE AGREEMENT, (this "AGREEMENT") dated as of January 8, 1999, by and among T16 Acquisition Corp. ("BUYER"), a Delaware corporation and an indirect, wholly-owned subsidiary of Tyco International Ltd., a Bermuda company ("TYCO"), the persons listed on SCHEDULE I hereto (such persons being herein referred to individually as a "SELLER," and, collectively, as "SELLERS"), American Stock Transfer & Trust Company, as escrow agent ("AGENT") and, solely with respect to SUBSECTIONS 11(d) and (f), Alarmguard Holdings, Inc., a Delaware corporation ("ISSUER"). W I T N E S S E T H: WHEREAS, Sellers are the registered and beneficial owners of issued and outstanding shares of Series A Preferred Stock (the "SERIES A PREFERRED STOCK") and Series B Preferred Stock (the "SERIES B PREFERRED STOCK" and, together with the Series A Preferred Stock, the "PREFERRED STOCK") of Issuer, in such respective series and amounts as are set forth in SCHEDULE I and on the signature pages hereto; and WHEREAS, Buyer, Tyco and Issuer have entered into an Agreement and Plan of Merger, dated as of January 8, 1999, a copy of which is annexed hereto as ANNEX A (the "MERGER AGREEMENT"), pursuant to which Buyer will commence an offer (the "OFFER") to acquire all of the outstanding shares of common stock, par value $0.0001 per share, of Issuer (the "COMMON STOCK"), and, following the consummation of the Offer and subject to applicable securities laws and the Delaware General Corporation Law, Buyer will be merged with and into Issuer (the "MERGER"), and Issuer will become an indirect, wholly-owned subsidiary of Tyco; and WHEREAS, subject to and upon consummation of the Offer, each Seller desires to sell to Buyer, and Buyer desires to purchase from each Seller all right, title and interest of such Seller in and to such Seller's Preferred Stock free and clear of all liens, claims, charges or encumbrances of any kind (all such right, title and interest being collectively referred to herein as the "ASSIGNED RIGHTS"). NOW, THEREFORE, in consideration of the premises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. DELIVERY OF CERTIFICATES. Prior to the execution and delivery of this Agreement, each Seller has delivered to Agent, with copies to Buyer, the original certificates evidencing such Seller's Preferred Stock, together with, in each case, stock powers duly endorsed in blank, accompanied by such power-of-attorneys, certified board of directors resolutions or other documentation as may be required for the registration of transfer to Buyer of such Preferred Stock pursuant to the terms and conditions of this Agreement (all such certificates, powers, powers of attorney, certified board resolutions and other documents being referred to as the "PREFERRED STOCK DOCUMENTATION"), to be held by Agent in escrow in accordance with the terms of this Agreement. Signatures on the stock powers shall be guaranteed by a firm that is a participant in the Security Transfer Agents Medallion Program or the Stock Exchange Medallion Program. Section 2. SALE AND PURCHASE OF PREFERRED STOCK. (a) Within one (1) business day following the date on which Buyer first makes payment for shares of Common Stock that Buyer has accepted for payment pursuant to the Offer, Buyer shall pay to each Seller the purchase price of $1,400 per share of Preferred Stock together with accrued and unpaid dividends to and including the date of the Effective Time (as defined below) delivered in accordance with SECTION 1 hereof by such Seller to Agent (the "PURCHASE PRICE") by wire transfer of immediately available funds to the account designated by such Seller on its respective signature page hereto. Upon payment of the Purchase Price to each Seller, such Seller shall irrevocably sell, transfer, grant and convey (collectively, "TRANSFER") to Buyer, without representation or warranty except as provided in this Agreement, and Buyer shall purchase, the Assigned Rights of such Seller (the time of such transfer and purchase of the Assigned Rights of a Seller as aforesaid is referred to as the "EFFECTIVE TIME" with respect to such Seller). Promptly upon delivery by Buyer to Agent of written evidence, consisting of a Federal Reserve Wire Network Reference Number, the time processed and the value date, of payment of the Purchase Price to a Seller, Agent shall release and deliver to Buyer the Preferred Stock Documentation of such Seller held by Agent. (b) If (v) Buyer or its affiliate shall not publicly announce the commencement of the Offer within seven (7) business days from the date of this Agreement, or (w) Buyer or its affiliate or Issuer shall publicly announce that the Merger Agreement has been terminated in accordance with its terms, or (x) Buyer or its affiliate shall publicly announce that the Offer has expired without Buyer having purchased any shares of Common Stock thereunder or (y) Buyer shall publicly announce that it has increased the per share price payable to the holders of Common Stock in the Offer and the Merger to an amount in excess of $9.25 and such announcement shall not state that the holders of at least 75% of the outstanding shares of Preferred Stock have consented to such increase or (z) Buyer shall not furnish to Agent evidence of payment of the Purchase Price to any Seller or Sellers on or before March 31, 1999, then, in the case of clauses (v), (w), (x) and (y), Agent shall promptly thereafter return the Preferred Stock Documentation to all Sellers or, in the case of clause (z), Agent shall promptly thereafter return to the affected Seller(s), their respective Preferred Stock Documentation. (Any event referred to in the preceding sentence is hereinafter referred to as a "TERMINATION EVENT," except that any event referred to in clause (z) shall be deemed to be a Termination Event only with respect to the affected Sellers(s).) Nothing in this SUBSECTION 2(b) or elsewhere in this 2 Agreement shall relieve Buyer of its obligation to purchase and pay for the shares of Preferred Stock in accordance with SUBSECTION 2(a) if Buyer has accepted shares of Common Stock for payment pursuant to the Offer. (c) Upon delivery of all of the Preferred Stock Documentation to Buyer and/or each Seller as provided in SUBSECTIONS 2(a) or 2(b), Agent shall have no further duties or obligations under this Agreement. Section 3. SELLERS' REPRESENTATIONS. Each Seller, severally and not jointly, hereby represents and warrants to Buyer and its successors and assigns, as of the date hereof, and as of the Effective Time with respect to such Seller, that: (a) POWER AND AUTHORITY. Such Seller has full power and authority to assign its Assigned Rights and to enter into and perform this Agreement. This Agreement (i) has been duly authorized, executed and delivered by such Seller and (ii) is (subject to the application of bankruptcy, insolvency or receivership laws to such Seller and equitable principles generally) legal, valid and binding and enforceable against such Seller in accordance with its terms; (b) TITLE. Such Seller is the sole legal and beneficial owner of the Assigned Rights and has good title thereto, free and clear of all liens, claims, charges and encumbrances of any kind and at the Effective Time will transfer to Buyer such good title, free and clear of any liens, claims, charges and encumbrances of any kind; (c) NO OTHER CONSENT. No consent, approval, waiver, authorization, notice, declaration or filing ("CONSENT") is required to be received by such Seller from or made by such Seller with any governmental or regulatory authority, agency, department, board, commission or instrumentality or any court, tribunal or arbitrator and any self-regulatory organization (collectively, "GOVERNMENTAL AUTHORITY"), or any other person, in connection with the execution or delivery by such Seller of this Agreement or the transfer by such Seller of such Seller's Assigned Rights pursuant to this Agreement other than such Consents that have heretofore been made or obtained; (d) NO VIOLATIONS. Such Seller's execution and delivery of this Agreement, the consummation by such Seller of the transactions contemplated hereby and compliance by such Seller with any of the provisions hereof will not (i) conflict with or result in any breach of any provision of the Certificate of Incorporation, Bylaws or other charter document of such Seller, (ii) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of, any material contract, agreement, note, indenture, mortgage, lease, license or other arrangement or understanding to which such Seller is a party or by which such Seller or any of its assets are bound, (iii) result in the creation or imposition of any lien or encumbrance of any kind upon the Assigned Rights of such Seller, or (iv) violate any applicable provision of any statute, law, rule or regulation or any order, decision, injunction, judgment, award or decree to which such Seller or its assets or properties are subject; 3 (e) LITIGATION. There is no suit, action or proceeding pending or, to the knowledge of such Seller, threatened, nor is there any judgment, decree, injunction, rule or order of any Governmental Authority against such Seller or with respect to its Assigned Rights which, individually or in the aggregate, would reasonably be expected adversely to affect such Seller's transfer of its Assigned Rights pursuant to this Agreement or otherwise to affect its ability to perform its obligations under this Agreement; (f) SOPHISTICATED SELLER. (i) Such Seller is a sophisticated seller with respect to its Assigned Rights, and has adequate information concerning the business and financial condition of Issuer to make an informed decision regarding the sale of its Assigned Rights and has independently and without reliance upon Buyer and based on such information as such Seller has deemed appropriate, made its own analysis and decision to sell its Assigned Rights and to enter into this Agreement; (ii) Buyer has not given any investment advice or rendered any opinion as to whether the sale of the Assigned Rights is prudent; and (iii) such Seller acknowledges that if the Effective Time with respect to such Seller shall occur, the transfer of the Assigned Rights to Buyer hereunder shall be irrevocable and without any recourse to Buyer except with respect to breaches of representations, warranties and covenants expressly set forth in this Agreement, and pursuant to the indemnities contained herein; (g) BUYER'S ACCESS TO INFORMATION. Such Seller acknowledges that Buyer and Buyer's affiliates may have received material non-public information concerning Issuer (the "BUYER UNDISCLOSED INFORMATION") in the course of its due diligence investigation of Issuer conducted in connection with the negotiation of the Merger Agreement. Such Seller acknowledges that the Buyer Undisclosed Information may have caused Buyer to enter into this Agreement to purchase the Assigned Rights and, if disclosed, could have a material affect on such Seller's decision to transfer the Assigned Rights; (h) INSOLVENCY. Such Seller is not insolvent or otherwise in any condition that would entitle any creditor of such Seller, any person acting or purporting to act under authority of any legislation pertaining to bankruptcy or creditors' rights or any banking authority, to require that such Seller divest itself of the purchase price in respect of the assignment hereunder; (i) ACCREDITED INVESTOR. Such Seller is an "accredited investor" as that term is defined in Rule 501 ("RULE 501") of Regulation D promulgated under the United States Securities Act of 1933, as amended, (together with the rules and regulations promulgated thereunder, the "SECURITIES ACT"); (j) NO PRIOR ASSIGNMENT. Such Seller has made no prior transfer of its Assigned Rights or of any interest therein; (k) UNPAID OBLIGATIONS. There is no payment obligation of any kind (whether fixed, contingent, conditional or otherwise) in respect of its Assigned Rights that such Seller is or shall be required to pay or otherwise perform that such Seller has not paid or otherwise 4 performed in full; and (l) NO BROKER OR FINDER. Such Seller has not engaged, consented to or authorized any broker, finder or intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by this Agreement other than Donaldson, Lufkin & Jenrette Securities Corp. Section 4. BUYER'S REPRESENTATIONS. Buyer hereby represents and warrants to each Seller and such Seller's successors and assigns, as of the date hereof, and as of the Effective Time with respect to such Seller that: (a) POWER AND AUTHORITY. Buyer has full power and authority to purchase such Seller's Assigned Rights and to enter into and perform this Agreement. This Agreement (i) has been duly authorized, executed and delivered by Buyer (ii) is (subject to the application of bankruptcy, insolvency or receivership laws to Buyer and equitable principles generally) legal, valid and binding and enforceable against Buyer in accordance with its terms; (b) NO OTHER CONSENTS. No Consent is required to be received by Buyer from or made by Buyer with any Governmental Authority or any other person in connection with the execution or delivery by Buyer of this Agreement or the purchase by Buyer of such Seller's Assigned Rights pursuant to this Agreement other than such Consents that have heretofore been obtained or made or will be obtained or made prior to the Effective Time; (c) NO VIOLATIONS. Buyer's execution and delivery of this Agreement, the consummation by Buyer of the transactions contemplated hereby and compliance by Buyer with any of the provisions hereof will not (i) conflict with or result in any breach of any provision of the Certificate of Incorporation, Bylaws or other charter document of Buyer, (ii) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of, any material contract, agreement, note, indenture, mortgage, lease, license or other arrangement or understanding to which Buyer is a party or by which Buyer or any of its assets or property is subject, (iii) result in the creation or imposition of any material lien or encumbrance of any kind upon any of the assets of Buyer or any subsidiary of Buyer or (iv) violate any applicable provision of any statute, law, rule or regulation or any order, decision, injunction, judgment, award or decree to which Buyer or its assets or properties are subject; (d) LITIGATION. There is no suit, action or proceeding, pending or, to the knowledge of Buyer, threatened, nor is there any judgment, decree, injunction, rule or order of any Governmental Authority against Buyer or any of its affiliates which, individually or in the aggregate, would reasonably be expected adversely to affect Buyer's ability to perform its obligations under this Agreement. (e) SOPHISTICATED BUYER. (i) Buyer is a sophisticated buyer with respect to the Assigned Rights, and has adequate information concerning the business and financial condition 5 of Issuer to make an informed decision regarding the purchase of the Assigned Rights and has independently and without reliance upon such Seller and based on such information as Buyer has deemed appropriate, made its own analysis and decision to acquire the Assigned Rights and to enter into this Agreement; (ii) such Seller has not given any investment advice or rendered any opinion as to whether the purchase of the Assigned Rights is prudent; and (iii) Buyer acknowledges that if the Effective Time with respect to such Seller shall occur, the transfer of the Assigned Rights by such Seller hereunder is irrevocable and without any recourse to such Seller except with respect to breaches of representations, warranties and covenants expressly set forth in this Agreement, and pursuant to the indemnities contained herein; (f) SELLER'S ACCESS TO INFORMATION. Buyer acknowledges that such Seller may possess material non-public information concerning Issuer (the "SELLER UNDISCLOSED INFORMATION") by virtue of such Seller's relationship to Issuer. Buyer acknowledges that the Seller Undisclosed Information may have caused such Seller to enter into this Agreement to transfer the Assigned Rights and, if disclosed, could have a material affect on Buyer's decision to purchase the Assigned Rights; (g) BUSINESS ACTIVITIES. Buyer is a newly formed Delaware corporation and has conducted no business, except such business activities as are contemplated by or incident to the performance of Buyer's obligations under the Merger Agreement, the Offer and this Agreement; (h) ACCREDITED INVESTOR; RESALE. Buyer, together with its affiliates, is an "accredited investor" within the meaning of Rule 501. Buyer acknowledges that the Assigned Rights are not being acquired with a view to resale that would violate any applicable securities law; (i) NO BROKER OR FINDER. Buyer has not engaged, consented to or authorized any broker, finder or intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by this Agreement. (j) FINANCING ARRANGEMENTS. Buyer and Tyco (including for this purpose one or more of its wholly-owned subsidiaries) have funds available to them sufficient to enable Buyer to purchase such Seller's Assigned Rights in accordance with the terms of this Agreement. Section 5. COVENANTS OF SELLERS. Each Seller, severally and not jointly, covenants and agrees that unless a Termination Event shall have occurred: (a) AGREEMENT TO VOTE SHARES. At every meeting of the stockholders or of the holders of any class or series of stock of Issuer called with respect to any of the following, and at every adjournment thereof, and on every action or approval by written consent of the stockholders or of the holders of any class or series of stock of Issuer with respect to any of the following, such Seller shall cast any votes that it may have at the time against (x) approval of any Company Takeover Proposal (as defined in the Merger Agreement), (y) any merger 6 (including, without limitation, an Alternative Transaction (as defined in the Merger Agreement)), consolidation, sale of assets requiring stockholder approval or the approval of the holders of any class or series of stock, reorganization or recapitalization of Issuer, with any other person other than Buyer or its affiliates, and (z) any liquidation or winding up of Issuer (each of the foregoing is hereinafter referred to as an "OPPOSING PROPOSAL"); (b) AGREEMENT NOT TO SOLICIT. Such Seller will not, and will not permit any entity under its control to: (1) solicit proxies or become a "participant" in a "solicitation" (as such terms are defined in Regulation 14A under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) with respect to an Opposing Proposal or otherwise encourage or assist any person in taking or planning any action that would constitute an Opposing Proposal; or (2) initiate a vote or action by written consent of Issuer's stockholders or of the holders of any class or series of stock with respect to an Opposing Proposal; (c) AGREEMENT NOT TO TRANSFER SHARES. Such Seller shall not effect a transfer or any pledge or other encumbrance of any of its Assigned Rights to or in favor of any person, other than to an affiliate of such Seller who shall have agreed in a writing, in form and substance acceptable to Buyer in its sole discretion, for the benefit of and delivered to Buyer, to be bound by all provisions of this Agreement applicable to such Seller. (d) TENDER OF COMMON STOCK. Such Seller agrees to tender all shares of Common Stock now owned or hereafter acquired by such Seller in the Offer. Section 6. COVENANT OF BUYER. Buyer covenants and agrees that Buyer or its affiliate shall make a prompt public announcement of: (i) the Merger Agreement is terminated in accordance with its terms; or (ii) the Offer expires without Buyer having purchased any shares of Common Stock thereunder; or (iii) the consideration payable to the holders of the Common Stock in the Offer and the Merger has been increased to an amount in excess of $9.25. Section 7. NO OTHER REPRESENTATIONS. Each Seller and Buyer acknowledge and represent and warrant to each other that no party has made any representation or warranty, whether express or implied, of any kind or character except as expressly set forth or implied in this Agreement. Section 8. PAYMENT AND DELIVERY BY SELLERS. Each Seller, severally and not jointly, agrees to cause any distributions with respect to Preferred Stock ("DISTRIBUTIONS") owned by such Seller paid or delivered after the Effective Time to be paid or delivered directly to Buyer. In the event that a Seller nevertheless receives any such Distributions after the Effective Time with respect to such Seller, (i) such Seller agrees to accept the same as agent on behalf of and for the sole benefit of Buyer, and to pay or deliver the same forthwith to Buyer (free of any withholding, set-off or deduction of any kind) in the same form received, with the endorsement of such Seller, without recourse, when necessary or appropriate; and (ii) no Seller shall have any legal, equitable or beneficial interest in such Distributions. 7 Section 9. INDEMNITIES. (a) Each Seller, severally and not jointly, agrees to indemnify, defend and hold Buyer and its officers, directors, employees, agents and controlling persons and their successors and assigns (collectively, the "BUYER INDEMNITEES") harmless from and against any and all expenses, losses, claims, judgments, damages, liabilities or obligations (collectively, "LIABILITIES") which are incurred by the Buyer Indemnitees or any of them, including without limitation reasonable attorneys' fees and expenses, caused by, or in any way resulting from or relating to such Seller's breach of any of the representations, warranties, covenants or agreements of such Seller set forth in this Agreement. (b) Buyer agrees to indemnify, defend and hold each Seller and such Seller's officers, directors, employees, agents and controlling persons and their successors and assigns (collectively, the "SELLER INDEMNITEES") harmless from and against any and all Liabilities which are incurred by or threatened against the Seller Indemnitees or any of them, including without limitation reasonable attorneys' fees and expenses, caused by, or in any way resulting from or relating to Buyer's breach of any of the representations, warranties, covenants or agreements of Buyer set forth in this Agreement. Section 10. FILINGS AND FURTHER ASSURANCES. From and after the Effective Time, each Seller agrees to take such other reasonable steps as may be requested by Buyer to effect the transfer of the Assigned Rights of such Seller to Buyer. Each party further agrees to execute and deliver, or to cause to be executed and delivered, all such instruments (including all necessary endorsements) and to take all such action as any other party may reasonably request in order to effectuate the intent and purposes, and to carry out the terms, of this Agreement. Section 11. CERTAIN AGENT MATTERS. (a) Agent shall receive, hold and distribute the Preferred Stock Documentation in accordance with SECTIONS 1 and 2. (b) Agent shall be entitled to rely, and shall be protected in acting in reliance, upon any instructions and directions furnished pursuant to and in accordance with this Agreement. (c) Agent shall be entitled to treat as genuine, and as the document it purports to be, any letter, paper, notice or other document furnished to it by Buyer or any Seller and believed by Agent to be genuine and to have been signed and presented by the proper party or parties, without being required to determine the authenticity or correctness of any fact stated therein, the propriety or validity thereof, or the authority or authorization of the party or parties making and/or delivering the same to do so. (d) Buyer and Issuer, jointly and severally, agree to pay Agent upon demand all reasonable expenses incurred by Agent in connection with its duties hereunder, including any reasonable attorneys fees or other legal costs, expenses and disbursements. (e) Neither Agent nor any of its directors, officers, partners, employees, controlling persons or agents, direct or indirect, shall be liable to Buyer or any Seller or any other person or entity for or in respect to any loss, claim, damage, or liability resulting from, or 8 arising out of, any action taken or omitted by Agent in connection with this Agreement, except for any loss, claim, damage or liability which shall finally be adjudicated to be the result of gross negligence or willful bad faith on the part of Agent or any such director, officer, partner, employee, controlling person or agent. (f) Buyer and Issuer, jointly and severally, covenant and agree to reimburse, indemnify and hold harmless Agent from and against any and all claims, actions, judgments, damages, losses, liabilities, costs, transfer or other taxes, and expenses (including without limitation reasonable attorneys' fees and expenses) incurred or suffered by Agent, or to which Agent may become subject and not resulting from any negligence, bad faith or willful misconduct on Agent's part, arising out of or incident to this Agreement or the administration of Agent's duties hereunder, or arising out of or incident to Agent's compliance with the instructions set forth herein or with any instructions delivered to Agent pursuant hereto, or as a result of Agent defending itself against any claim or liability resulting from Agent's actions as Agent, including any claim against Agent by any Seller, which covenant and agreement shall survive the termination hereof. Agent hereby represents that Agent will notify each of Buyer and Issuer by letter, or facsimile confirmed by letter, of any receipt by Agent of a written assertion of a claim against Agent, or any action commenced against Agent, within ten (10) business days after Agent's receipt of written notice of such assertion or Agent's having been served with the summons or other first legal process giving information as to the nature and basis of any such action. However, Agent's failure to so notify Buyer and Issuer shall not operate in any manner whatsoever to relieve Buyer and Agent from any liability which they may have on account of this SUBSECTION 11(f) if no prejudice occurs. At their election, Buyer and/or Issuer may assume the conduct of Agent's defense in any such action or claim at their joint cost and expense. In the event that Buyer and/or Issuer elect to assume the defense of any such action or claim and confirm to Agent in writing that the indemnity provided for in this SUBSECTION 11(f) applies to such action or claim, neither Buyer nor Issuer shall be liable for the fees and expenses of any counsel thereafter retained by Agent. (g) This Agreement sets forth exclusively the duties and obligations of Agent with respect to any and all matters pertinent to its acting as such hereunder. Agent shall not be obligated to refer to, and shall not be bound by, any other document or agreement. Section 12. MISCELLANEOUS. (a) COSTS AND FEES. Except as otherwise expressly provided for herein, each party to this Agreement shall bear its own costs and expenses, including, but not limited to, attorneys' fees and expenses, in connection with the transactions contemplated hereby. (b) INTEGRATION. This Agreement constitutes the complete agreement of the parties hereto with respect to the subject matters referred to herein and supersedes all prior or contemporaneous negotiations, promises, covenants, agreements or representations of every nature whatsoever with respect thereto, all of which have become merged and finally integrated into this Agreement. Notwithstanding the foregoing, the confidentiality letters between Issuer and each Seller shall survive the execution and delivery of this Agreement. 9 (c) AMENDMENT. This Agreement cannot be amended, modified or supplemented except by an instrument in writing executed by the parties hereto that are to be bound thereby. Furthermore, this Agreement cannot be amended to increase the purchase price payable to any Seller to greater than $1,400 per share of Preferred Stock together with accrued and unpaid dividends to and including the date of the Effective Time without such increased purchase price being offered to each Seller. (d) NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by facsimile, receipt confirmed, or on the next business day when sent by overnight courier or on the third succeeding business day when sent by registered or certified mail (postage prepaid, return receipt requested) to Agent or Buyer at the following addresses or to any Seller at the address set forth on such Seller's signature page hereto (or at such other address for a party as shall be specified by like notice): (i) if to Agent, to: American Stock Transfer Company 6201 15th Avenue Brooklyn, NY 11219 Attention: Barry Rosenthal Telecopy: (718) 259-1144 Confirm: (718) 921-8380 with a copy to: American Stock Transfer Company 6201 15th Avenue Brooklyn, NY 11219 Attention: Herbert Lemmer Telecopy: (718) 331-1852 Confirm: (718) 921-8209 (ii) if to Buyer, to: c/o Tyco International (US) Inc. One Tyco Park Exeter, New Hampshire 03833 Attention: Mark A Belnick, Esq. Telecopy: (603) 778-7700 Confirm: (603) 778-9700 with a copy to Kramer Levin Naftalis & Frankel LLP 10 919 Third Avenue New York, New York 10022 Attention: Abbe L. Dienstag, Esq. Telecopy: (212) 715-8000 Confirm: (212) 715-9100. (e) CHOICE OF LAW, CHOICE OF FORUM. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to any conflicts of laws provisions thereof. Each party to this Agreement hereby irrevocably consents to the jurisdiction of the United States Court for the Southern District of New York and the courts of the State of New York located in the City of New York (collectively, the "COURTS") in any action to enforce, interpret or construe any provision of this Agreement or of any other agreement or document delivered in connection with this Agreement, and also hereby irrevocably waives any defense of improper venue, forum non conveniens or lack of personal jurisdiction to any such action brought in those Courts. Each party further irrevocably agrees that any action to enforce, interpret or construe any provision of this Agreement will be brought only in such Courts. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. (f) SPECIFIC PERFORMANCE. The parties hereto agree that irreparable harm would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached. Accordingly the parties further agree that each party shall be entitled to injunctions or restraining orders to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any of the Courts, this being in addition to any other remedy to which they are entitled at law or in equity. (g) COUNTERPARTS. This Agreement may be executed in counterparts, each of which when so executed shall be an original, but all such counterparts shall together constitute but one and the same instrument. (h) BUSINESS DAY. The term "BUSINESS DAY" means any day other than a day on which the commercial banking institutions in the City of New York, Borough of Manhattan are authorized or required by law to remain closed. (i) BINDING EFFECT; ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing, including without limitation the delivery of the Preferred Stock Documentation to Buyer, Seller or Agent in accordance with SECTIONS 1 or 2, shall relieve any party from any liability for such party's willful breach of this Agreement or under the indemnification provisions of SECTION 9. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Seller prior to the Effective Time without the prior written consent of Buyer. Buyer may assign its rights, interest and obligations hereunder to any other wholly-owned direct or indirect subsidiary of Tyco, provided 11 that the provisions of the Guarantee immediately following the signature pages hereto shall apply to such other subsidiary. (j) THIRD PARTIES. Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person that is not a party hereto or thereto or a successor or permitted assign of such a party; PROVIDED HOWEVER, that (i) the parties hereto specifically acknowledge that the provisions of SECTION 9 hereof are intended to be for the benefit of, and shall be enforceable by, the Buyer Indemnitees and the Seller Indemnitees and (ii) Tyco shall be deemed a third party beneficiary of this Agreement with respect to the rights of Buyer. Section 13. CONSENT. Each Seller irrevocably consents to any necessary amendment, modification and/or waiver of (x) Section 8.1 of the Preferred Stock Purchase Agreement, dated as of February 2, 1998 (the "INITIAL PURCHASE AGREEMENT"), to provide that neither this Agreement or the Merger Agreement, nor the transactions contemplated hereby or thereby, shall be deemed to violate or impair the ability of Issuer to perform its obligations under any provision of the Initial Purchase Agreement and (y) Section 4H of the Certificate of Designations of the Preferred Stock to provide that in no event shall the amount payable to the holder of any share of Preferred Stock as a result of the consummation of the Offer or the merger contemplated by the Merger Agreement be other than $1,400 per share of Preferred Stock together with accrued and unpaid dividends to and including the date of the Effective Time. Such consent shall be effective immediately prior to the Effective Time. Each Seller's consent contained in this SECTION 13 shall be void and of no effect if a Termination Event shall occur with respect to such Seller without such Seller's Assigned Rights being transferred to Buyer. Section 14. EFFECTIVENESS. This Agreement shall not be effective unless it is executed by Buyer and by the holders of not less than seventy-five percent (75%) in principal amount of the Preferred Stock and the Guarantee annexed hereto is executed by Tyco. 12 [SIGNATURE PAGES AND GUARANTEE FOLLOW] 13 IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Agreement as of the date first stated above. T16 ACQUISITION CORP. By: /s/ Mark A. Belnick ---------------------------------- Name: Mark A. Belnick Title: President ALARMGUARD HOLDINGS, INC. signing solely with respect to SUBSECTIONS 11(d) and (f) By: /s/ Russell R. MacDonnell ---------------------------------- Name: Russell R. MacDonnell Title: Chairman, CEO [SIGNATURE PAGES OF SELLERS AND GUARANTEE FOLLOW] 14 FORM OF SIGNATURE PAGE OF SELLER TO PREFERRED STOCK PURCHASE AGREEMENT [NAME OF SELLER] By: /s/ ------------------------------- Name: Title: Number of shares of Series A Preferred Stock: --------------------------- Number of shares of Series B Preferred Stock: --------------------------- Wire Payment Instructions: Bank ------------------------- ABA No. ------------------------- Account No. ------------------------- Account Name ------------------------- Address for Notices: ------------------------- ------------------------- ------------------------- Facsimile No.: --------------------- Confirm No.: --------------------- Attention: --------------------- with a copy to: ------------------------- ------------------------- ------------------------- Facsimile No.: --------------------- Confirm No.: --------------------- Attention: --------------------- 15 GUARANTEE Tyco International Ltd., a Bermuda company, hereby guarantees the full and timely performance by Buyer of each and every obligation of Buyer or any permitted assignee of Buyer under the foregoing Agreement. This is a guaranty of payment and performance, and not of collection, and Tyco International Ltd. acknowledges and agrees that this guarantee is unconditional, and no release or extinguishment of the obligations or liabilities of Buyer or its permitted assignee under this Agreement, whether by reason of bankruptcy or otherwise, shall affect the continuing validity and enforceability of this guarantee. The provisions of Section 11 of the Agreement shall apply to this Guarantee mutatis mutandum, except that the address for notices and other communications to Tyco International Ltd. is: Tyco International Ltd. The Gibbons Building 10 Queen Street, Suite 301 Hamilton HM11 Bermuda Attention: Secretary Telecopy: (441) 295-9647 Confirm: (441) 292-8674 TYCO INTERNATIONAL LTD. By: /s/ Mark A. Belnick --------------------------- Name: Mark A. Belnick Title: Executive Vice President Chief Corporate Counsel G-1 SCHEDULE I
- -------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------- SELLER SHARES OF SERIES A SHARES OF SERIES B PURCHASE PRICE* PREFERRED STOCK PREFERRED STOCK - -------------------------------------------------------------------------------------------- Ziff Asset Manage- 7,250 $10,150,000.00 ment, L.P. - -------------------------------------------------------------------------------------------- Canaan Equity L.P. 5,000 7,000,000.00 - -------------------------------------------------------------------------------------------- BF Partners 400 560,000.00 - -------------------------------------------------------------------------------------------- Paul Finkelstein 100 140,000.00 - -------------------------------------------------------------------------------------------- David Heidecorn 75 105,000.00 - -------------------------------------------------------------------------------------------- Russell MacDonnell 125 175,000.00 - -------------------------------------------------------------------------------------------- Exeter Capital 2,500 3,500,000.00 Partners IV, L.P. - -------------------------------------------------------------------------------------------- Aetna Life Insurance 5,000 7,000,000.00 Company - -------------------------------------------------------------------------------------------- Advance Capital 1,726 2,416,400.00 Offshore Partners - -------------------------------------------------------------------------------------------- Advance Capital 5,524 7,733,600.00 Partners, L.P. - -------------------------------------------------------------------------------------------- Elliott Associates, 2,000 2,800,000.00 L.P. - -------------------------------------------------------------------------------------------- OZ Master Fund, Ltd. 2,000 2,800,000.00 - -------------------------------------------------------------------------------------------- Lehman Brothers 5,000 7,000,000.00 Capital Partners III, L.P. - -------------------------------------------------------------------------------------------- IBJ Schroder Bank & 200 280,000.00 Trust Company, NY - -------------------------------------------------------------------------------------------- Granite Properties 1,500 2,100,000.00 Management Corp. - -------------------------------------------------------------------------------------------- Westgate 2,000 2,800,00.00 International, L.P. - -------------------------------------------------------------------------------------------- Credit Suisse 200 280,000.00 - -------------------------------------------------------------------------------------------- Kenneth Gross 100 140,000.00 - -------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------
* Purchase price does not include accrued and unpaid dividends. -----END PRIVACY-ENHANCED MESSAGE-----