-----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, IcjtQSaC0+c664mmFB/DzaP9gn509D86MI5hJyOR8RR/wcqnHRohHeV55V/wlPIC DPD2aFzllTrzp8lPvYLuzA== 0001047469-98-000159.txt : 19980107 0001047469-98-000159.hdr.sgml : 19980107 ACCESSION NUMBER: 0001047469-98-000159 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19980106 SROS: NASD GROUP MEMBERS: T9 ACQUISITION CORP. GROUP MEMBERS: TYCO INTERNATIONAL LTD /BER/ SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HOLMES PROTECTION GROUP INC CENTRAL INDEX KEY: 0000926764 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS BUSINESS SERVICES [7380] IRS NUMBER: 061070719 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-44351 FILM NUMBER: 98501213 BUSINESS ADDRESS: STREET 1: 440 9TH AVE CITY: NEW YORK STATE: NY ZIP: 10001 BUSINESS PHONE: 2127600630 MAIL ADDRESS: STREET 1: 440 9TH AVENUE CITY: NEW YORK STATE: NY ZIP: 10001 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: 4412928374 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 HOLMES PROTECTION GROUP, INC. (Name of Subject Company) ------------------------------ TYCO INTERNATIONAL LTD. T9 ACQUISITION CORP. (Bidders) ------------------------------ COMMON STOCK, PAR VALUE $.01 PER SHARE (Title of class of securities) ------------------------------ 436419105 (CUSIP number of class of securities) MARK H. SWARTZ, EXECUTIVE VICE PRESIDENT C/O TYCO INTERNATIONAL (US) INC. ONE TYCO PARK EXETER, NEW HAMPSHIRE 03833 (603) 778-9700 (Name, address and telephone number of person authorized to receive notices and communications on behalf of bidders) with a copy to: JOSHUA M. BERMAN, ESQ. KRAMER, LEVIN, NAFTALIS & FRANKEL 919 THIRD AVENUE NEW YORK, NEW YORK 10022 TELEPHONE: (212) 715-9100 CALCULATION OF FILING FEE
- ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ TRANSACTION VALUATION* AMOUNT OF FILING FEE** - ------------------------------------------------------------------------------------------------ $143,098,078 $28,620 - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------
* For purposes of calculating fee only. Assumes purchase of 8,417,534 shares of Common Stock, par value $.01 per share, of Holmes Protection Group, Inc. at $17.00 per share, representing 6,310,034 shares outstanding and 2,107,500 shares reserved for issuance pursuant to outstanding options, warrants and convertible debentures. ** 1/50th of 1% of Transaction Valuation. / / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount previously paid: Not applicable Form or registration no.: Not applicable. Filing party: Not applicable. Date filed: Not applicable. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Page 1 of 9 Pages Exhibit Index is located on Page 9 14D-1 Page 2 of 9 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 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 9 Pages 1 NAMES OF REPORTING PERSONS T9 ACQUISITION CORP. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)/ / (b)/ / 3 SEC USE ONLY 4 SOURCES OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS / / REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 6 AND ITEM 7 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) / / EXCLUDES CERTAIN SHARES SEE ITEM 6 AND ITEM 7 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) SEE ITEM 6 AND ITEM 7 10 TYPE OF REPORTING PERSON CO
This Statement relates to the offer by T9 Acquisition Corp., a Delaware corporation (the "Purchaser") and an indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company ("Tyco"), to purchase all outstanding shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of Holmes Protection Group, Inc., a Delaware corporation (the "Company"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 6, 1998, annexed hereto as Exhibit (a)(1) (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, constitute the "Offer"), at a purchase price of $17.00 per Share, net to each tendering stockholder in cash. The item numbers below and responses thereto are in accordance with the requirements of Schedule 14D-1. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Holmes Protection Group, Inc., a Delaware corporation. The address of the Company's principal executive offices is 440 Ninth Avenue, New York, New York 10001-1695. (b) The securities to which this statement relates are the Common Stock. The information set forth in the Introduction of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(g) This Statement is being filed by the Purchaser and Tyco (collectively, the "Reporting Persons"). The Purchaser is an indirect wholly-owned subsidiary of Tyco. The information set forth in Section 9 ("Certain Information Concerning Tyco and the Purchaser") and in Annex I and II of the Offer to Purchase is incorporated herein by reference. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introduction, Section 9 ("Certain Information Concerning Tyco and the Purchaser"), Section 11 ("Contacts with the Company; Background of the Offer") and Section 13 ("The Merger Agreement; Stockholder Agreement") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The information set forth in Section 10 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (b)-(c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER. (a)-(g) The information set forth in the Introduction and Sections 7 ("Effects of the Offer on the Market for Shares; Stock Quotations; Registration Under the Exchange Act") and 12 ("Purpose of the Offer; Short Form Merger; Plans for the Company; Dissenters' Rights; Going Private Transactions") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. The information set forth in Sections 9 ("Certain Information Concerning Tyco and the Purchaser") and 13 ("The Merger Agreement; Stockholder Agreement") of the Offer to Purchase is incorporated herein by reference. Page 4 of 9 Pages ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introduction and Sections 9 ("Certain Information Concerning Tyco and the Purchaser"), 11 ("Contacts with the Company; Background of the Offer"), 12 ("Purpose of the Offer; Short Form Merger; Plans for the Company; Dissenters' Rights; Going Private Transactions") and 13 ("The Merger Agreement; Stockholder Agreement") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in Sections 17 ("Fees and Expenses") and 18 ("Miscellaneous") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 9 ("Certain Information Concerning Tyco and the Purchaser") of the Offer to Purchase is incorporated herein by reference. The incorporation by reference herein of such financial information does not constitute an admission that such information is material to a decision by a stockholder of the Company whether to sell, tender or hold the Shares being sought in the Offer. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in Section 11 ("Contacts with the Company; Background of the Offer") and Section 13 ("The Merger Agreement; Stockholder Agreement") of the Offer to Purchase is incorporated herein by reference. (b)-(c) The information set forth in Section 16 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Sections 7 ("Effects of the Offer on the Market for Shares; Stock Quotations; Registration Under the Exchange Act") and 16 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (e) None (f) The information set forth in the Offer to Purchase and the related Letter of Transmittal, to the extent not otherwise set forth herein, is incorporated herein by reference. ITEM 11. MATERIALS TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase, dated January 6, 1998. (a)(2) Letter of Transmittal. (a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(4) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(5) Notice of Guaranteed Delivery. (a)(6) Text of Joint Press Release issued December 29, 1997. (a)(7) Form of Summary Advertisement, dated January 6, 1998. (a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (b) Not applicable. Page 5 of 9 Pages (c)(1) Confidentiality Agreement between Tyco and the Company, dated October 14, 1997. (c)(2) Agreement and Plan of Merger, dated as of December 28, 1997, among the Purchaser, Tyco and the Company. (c)(3) Stockholder Agreement, dated as of December 28, 1997, among Tyco, the Purchaser and HP Partners L.P. (d)-(f) Not applicable. Page 6 of 9 Pages SIGNATURE After due inquiry and to the best of the undersigned's knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. TYCO INTERNATIONAL LTD. By: /s/ MARK H. SWARTZ ----------------------------------------- Name: Mark H. Swartz Title: Executive Vice President and Chief Financial Officer Dated: January 6, 1998 Page 7 of 9 Pages SIGNATURE After due inquiry and to the best of the undersigned's knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. T9 ACQUISITION CORP. By: /s/ MARK H. SWARTZ ----------------------------------------- Name: Mark H. Swartz Title: Vice President Dated: January 6, 1998 Page 8 of 9 Pages EX-99.(A)(1) 2 OFFER TO PURCHASE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HOLMES PROTECTION GROUP, INC. AT $17.00 NET PER SHARE BY T9 ACQUISITION CORP., AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 3, 1998, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES (AS HEREINAFTER DEFINED) REPRESENTING AT LEAST 51% OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF HOLMES PROTECTION GROUP, INC. (THE "COMPANY") ON A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER. HP PARTNERS L.P., WHICH OWNS 1,515,886 ISSUED AND OUTSTANDING SHARES, CONSTITUTING APPROXIMATELY 18% OF THE SHARES ON A FULLY DILUTED BASIS (APPROXIMATELY 26% OF THE SHARES ON A FULLY DILUTED BASIS INCLUDING 685,714 SHARES ISSUABLE TO IT UPON THE EXERCISE OF WARRANTS), HAS AGREED TO TENDER ITS SHARES IN THE OFFER. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT (AS HEREINAFTER DEFINED), THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. ------------------------ IMPORTANT ANY STOCKHOLDER DESIRING TO TENDER ALL OR ANY PORTION OF SUCH STOCKHOLDER'S SHARES SHOULD EITHER (1) COMPLETE AND SIGN THE LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF TRANSMITTAL, MAIL OR DELIVER IT AND ANY OTHER REQUIRED DOCUMENTS TO THE DEPOSITARY AND EITHER DELIVER THE CERTIFICATE(S) FOR SUCH TENDERED SHARES TO THE DEPOSITARY ALONG WITH THE LETTER OF TRANSMITTAL OR TENDER SUCH SHARES PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER SET FORTH IN SECTION 2 OF THIS OFFER TO PURCHASE, OR (2) REQUEST SUCH STOCKHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE TRANSACTION FOR THE STOCKHOLDER. STOCKHOLDERS HAVING SHARES REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IF THEY DESIRE TO TENDER SUCH SHARES. A STOCKHOLDER WHO DESIRES TO TENDER SHARES AND WHOSE CERTIFICATE(S) FOR SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY WITH THE PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, MAY TENDER SUCH SHARES BY FOLLOWING THE PROCEDURES FOR GUARANTEED DELIVERY SET FORTH IN SECTION 2 OF THIS OFFER TO PURCHASE. QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION AGENT AT ITS ADDRESS AND TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS OFFER TO PURCHASE. REQUESTS FOR ADDITIONAL COPIES OF THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL AND THE NOTICE OF GUARANTEED DELIVERY MAY BE DIRECTED TO THE INFORMATION AGENT OR TO BROKERS, DEALERS, COMMERCIAL BANKS OR TRUST COMPANIES. ------------------------ THE INFORMATION AGENT FOR THE OFFER IS: [LOGO] January 6, 1998 TABLE OF CONTENTS
PAGE ----- Introduction............................................................................................... 1 The Tender Offer........................................................................................... 3 1. Terms of the Offer; Extension of Tender Period; Termination; Amendments............................... 3 2. Procedure for Tendering Shares........................................................................ 4 3. Withdrawal Rights..................................................................................... 7 4. Acceptance for Payment and Payment of Offer Price..................................................... 8 5. Certain Federal Income Tax Consequences............................................................... 9 6. Price Range of Shares; Dividends...................................................................... 9 7. Effects of the Offer on the Market for Shares; Stock Quotations; Registration Under the Exchange Act................................................................................................... 10 8. Certain Information Concerning the Company............................................................ 11 9. Certain Information Concerning Tyco and the Purchaser................................................. 13 10. Source and Amount of Funds........................................................................... 15 11. Contacts with the Company; Background of the Offer................................................... 15 12. Purpose of the Offer; Short Form Merger; Plans for the Company; Dissenters' Rights; Going Private Transactions......................................................................................... 17 13. The Merger Agreement; Stockholder Agreement.......................................................... 19 14. Dividends and Distributions.......................................................................... 29 15. Certain Conditions of the Offer...................................................................... 29 16. Certain Legal Matters................................................................................ 31 17. Fees and Expenses.................................................................................... 33 18. Miscellaneous........................................................................................ 33 Annex I Certain Information Concerning the Directors and Executive Officers of Tyco International Ltd...... 34 Annex II Certain Information Concerning the Directors and Executive Officers of the Purchaser.............. 38
TO THE HOLDERS OF COMMON STOCK OF HOLMES PROTECTION GROUP, INC. INTRODUCTION T9 Acquisition Corp., a Delaware corporation (the "Purchaser") and an indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company ("Tyco"), hereby offers to purchase all outstanding shares of common stock, par value $.01 per share (the "Shares"), of Holmes Protection Group, Inc., a Delaware corporation (the "Company"), at $17.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. However, any tendering stockholder or other payee who fails to complete and sign the Substitute Form W-9 that is included in the Letter of Transmittal may be subject to a required backup federal income tax withholding of 31% of the gross proceeds payable to such stockholder or other payee pursuant to the Offer. See Section 2. The Purchaser will pay all charges and expenses of Morrow & Co., Inc., as Information Agent (the "Information Agent"), and ChaseMellon Shareholder Services, L.L.C., as Depositary (the "Depositary"), incurred in connection with the Offer. See Section 17. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES REPRESENTING AT LEAST 51% OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF THE COMPANY ON A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER. HP PARTNERS L.P., WHICH OWNS 1,515,886 ISSUED AND OUTSTANDING SHARES, CONSTITUTING APPROXIMATELY 18% OF THE SHARES ON A FULLY DILUTED BASIS (APPROXIMATELY 26% OF THE SHARES ON A FULLY DILUTED BASIS INCLUDING 685,714 SHARES ISSUABLE TO IT UPON THE EXERCISE OF WARRANTS), HAS AGREED TO TENDER ITS SHARES IN THE OFFER. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS SET FORTH IN SECTION 15. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of December 28, 1997 (the "Merger Agreement"), among Tyco, the Purchaser and the Company. The Merger Agreement provides, among other things, that upon the terms and subject to the conditions therein, as soon as practicable after the consummation of the Offer, the Purchaser will be merged with and into the Company (the "Merger"), with the Company being the corporation surviving the Merger (the "Surviving Corporation"). At the effective time of the Merger (the "Effective Time"), each outstanding Share (other than Shares with respect to which appraisal rights are properly exercised under the Delaware General Corporation Law (the "DGCL") ("Dissenting Shares")) not held in the treasury of the Company or owned by any subsidiary of the Company, Tyco, the Purchaser or any other subsidiary of Tyco, will be converted into and represent the right to receive $17.00 in cash or any higher price that may be paid per Share in the Offer (the "Per Share Amount"), without interest. See Section 13. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. J.P. Morgan Securities Inc., the Company's financial advisor ("J.P. Morgan"), has delivered to the Company's Board of Directors its written opinion that the consideration to be received by the stockholders of the Company pursuant to the Offer and the Merger is fair to such stockholders from a financial point of view. A copy of such opinion is contained in the Company's Solicitation/Recommendation Statement on Schedule 14D-9 which is being distributed to the Company's stockholders herewith. The Merger Agreement provides that, promptly upon the purchase of Shares pursuant to the Offer, Tyco will be entitled to designate for election to the Company's Board of Directors a number of directors (rounded up to the next whole number) which equals the product of (i) the total number of directors on the Company's Board of Directors (giving effect to the directors appointed or elected pursuant to this provision) and (ii) the percentage that the aggregate number of Shares beneficially owned by Tyco or any affiliate of Tyco (including such Shares as are accepted for payment pursuant to the Offer, but excluding Shares held by the Company) bears to the total number of Shares outstanding. The Company has agreed, upon the request of Tyco, to increase the size of the Board of Directors of the Company or use its reasonable best efforts to secure the resignations of such number of directors as is necessary to enable Tyco's designees to be elected to the Board of Directors and to cause Tyco designees to be so elected. See Section 13. The Company has informed the Purchaser that as of December 28, 1997 there were 6,310,034 Shares outstanding and 2,107,500 Shares reserved for issuance pursuant to outstanding options, warrants and convertible debentures. As of the date hereof, Tyco, through an indirect wholly-owned subsidiary, beneficially owns 3,014 Shares (excluding Shares that Tyco or the Purchaser may be deemed to beneficially own by virtue of the Stockholder Agreement described herein). Based on such number of outstanding Shares, options, warrants and convertible debentures, if the Purchaser acquires at least 4,208,768 Shares as a result of the Offer (including the Shares beneficially owned by Tyco as of the date hereof), it will own a majority of the outstanding Shares on a fully diluted basis. In such event the Purchaser would have sufficient voting power to approve the Merger without the affirmative vote of any other stockholder. HP Partners L.P., which owns 1,550,886 issued and outstanding Shares, constituting approximately 18% of the Shares on a fully diluted basis (approximately 26% of the Shares on a fully diluted basis including 685,417 Shares issuable to it upon the exercise of warrants), has agreed to tender its Shares in the Offer. If the Purchaser acquires 90% or more of the outstanding Shares in the Offer, the Purchaser would be able to effect the Merger pursuant to the short form merger provisions of the DGCL, without the action of any other stockholder of the Company. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 2 THE TENDER OFFER 1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and pay for all Shares which are validly tendered on or prior to the Expiration Date (as hereinafter defined) and not theretofore withdrawn as permitted by Section 3. The term "Expiration Date" means 12:00 Midnight, New York City time, on Tuesday, February 3, 1998, unless and until the Purchaser (subject to the terms and conditions of the Merger Agreement) shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. The Offer is conditioned upon, among other things, the satisfaction of the Minimum Condition (as defined in Section 15). Subject to the provisions of the Merger Agreement, the Purchaser reserves the right (but shall not be obligated) to waive or reduce the Minimum Condition or to waive any or all of the other conditions of the Offer. If, by 12:00 Midnight, New York City time, on Tuesday, February 3, 1998, or any subsequent Expiration Date, any or all of such conditions have not been satisfied or waived, subject to the provisions of the Merger Agreement, the Purchaser may elect to (i) terminate the Offer and return all tendered Shares to tendering stockholders, (ii) waive all of the unsatisfied conditions and, subject to any required extension, purchase all Shares validly tendered by the Expiration Date and not withdrawn, (iii) extend the Offer and, subject to the right of stockholders to withdraw Shares until the Expiration Date, retain the Shares that have been tendered until the expiration of the Offer as extended or (iv) delay acceptance for payment of, or payment for, the Shares, subject to complying with applicable law, until the satisfaction or waiver of the conditions of the Offer. Under the terms of the Merger Agreement, the Purchaser may not (except as described in the next sentence), without the prior written consent of the Company, (i) decrease the Per Share Amount or change the form of consideration payable in the Offer, (ii) decrease the number of Shares sought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition or (iv) impose additional conditions to the Offer or amend any other term of the Offer in any manner adverse to the holders of the Shares. Notwithstanding the foregoing, the Purchaser may, without the consent of the Company, extend the Offer at any time, and from time to time, (i) if at the then scheduled Expiration Date of the Offer any of the conditions to the Purchaser's obligation to accept for payment and pay for Shares shall not have been satisfied or waived, until such time as such conditions are satisfied or waived, (ii) for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "Commission") or its staff applicable to the Offer, or (iii) if all conditions to the Purchaser's obligation to accept for payment and pay for Shares are satisfied or waived but the number of Shares tendered is less than 90% of the then outstanding number of Shares, for an aggregate period of not more than ten (10) business days (for all such extensions) beyond the latest Expiration Date that would be permitted under clause (i) or (ii) of this sentence. Subject to the applicable regulations of the Commission and the provisions of the Merger Agreement, the Purchaser also expressly reserves the right, in its sole discretion, at any time or from time to time, to (i) delay acceptance for payment of or, regardless of whether such Shares were theretofore accepted for payment, payment for any Shares, (ii) terminate the Offer (whether or not any Shares have theretofore been accepted for payment) if any of the conditions referred to in Section 15 have not been satisfied or upon the occurrence of any of the events specified in Section 15 and (iii) waive any condition or otherwise amend the Offer in any respect, in each case by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcement thereof. If the Purchaser accepts for payment any Shares pursuant to the terms of the Offer, it will accept for payment all Shares validly tendered prior to the Expiration Date and not withdrawn and, subject to clause (i) above, will promptly pay for all Shares so accepted for payment. The Purchaser acknowledges that its reservation of the right to delay payment for Shares that it has accepted for payment is limited by Rule 14e-l(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which requires the Purchaser to pay 3 the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer. The rights reserved by the Purchaser in the preceding paragraph are in addition to the Purchaser's rights pursuant to Section 15. Any extension, delay, termination or amendment of the Offer will be followed as promptly as practicable by public announcement thereof, such announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date, in accordance with the public announcement requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that any material change in the information published, sent or given to stockholders in connection with the Offer be promptly disseminated to stockholders in a manner reasonably designed to inform stockholders of such change), and without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer (including the Minimum Condition), the Purchaser will disseminate additional tender offer materials (including by public announcement as set forth above) and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of the Offer, other than a change in price, percentage of securities sought or inclusion of or change to a dealer's soliciting fee, will depend upon the facts and circumstances, including the materiality, of the changes. In the Commission's view, an offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to stockholders, and, if material changes are made with respect to information that approaches the significance of price and share levels, a minimum of ten business days may be required to allow for adequate dissemination and investor response. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought or inclusion of or change to a dealer's soliciting fee, a minimum ten business day period from the date of such change is generally required to allow for adequate dissemination to stockholders. Accordingly, if, prior to the Expiration Date, the Purchaser decreases the number of Shares being sought or increases or decreases the consideration offered pursuant to the Offer, and if the Offer is scheduled to expire at any time earlier than the period ending on the tenth business day from the date that notice of such increase or decrease is first published, sent or given to holders of Shares, the Offer will be extended at least until the expiration of such ten business day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or a federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. In connection with the Offer, the Company has provided or will provide the Purchaser with the names and addresses of all record holders of Shares and security position listings of Shares held in stock depositories. This Offer to Purchase, the related Letter of Transmittal and other relevant materials will be mailed to registered holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. 2. PROCEDURE FOR TENDERING SHARES. Except as set forth below, in order for Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message (as hereinafter defined) in connection with a book-entry transfer of Shares, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, and either (i) certificates representing tendered Shares must be received by the Depositary, or such Shares must be tendered pursuant to the 4 procedure for book-entry transfer set forth below (and confirmation of receipt of such delivery must be received by the Depositary), in each case on or prior to the Expiration Date, or (ii) the guaranteed delivery procedures set forth below must be complied with. No alternative, conditional or contingent tenders will be accepted. SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of Transmittal (i) if such Letter of Transmittal is signed by the registered holder of the Shares tendered therewith, unless such holder has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" in the Letter of Transmittal, or (ii) if Shares are tendered for the account of a firm that is a member in good standing of the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program (each being hereinafter referred to as an "Eligible Institution"). See Instruction 1 of the Letter of Transmittal. If a certificate representing Shares is registered in the name of a person other than the signer of the Letter of Transmittal (or a facsimile thereof), or if payment is to be made, or Shares not accepted for payment or not tendered are to be returned to a person other than the registered holder, the certificate must be endorsed or accompanied by an appropriate stock power, in either case signed exactly as the name(s) of the registered holder(s) appears on the certificate, with the signature(s) on the certificate or stock power guaranteed by an Eligible Institution. If the Letter of Transmittal or stock powers are signed or any certificate is endorsed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by the Purchaser, proper evidence satisfactory to the Purchaser of their authority so to act must be submitted. See Instruction 5 of the Letter of Transmittal. BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect to the Shares at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Offer within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of the Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the Book-Entry Transfer Facility's procedure for such transfer. However, although delivery of Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message and any other required documents, must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the guaranteed delivery procedures described below must be complied with. The term "Agent's Message" means a message transmitted through electronic means by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a book-entry confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received, and agrees to be bound by, the terms of the Letter of Transmittal. Delivery of documents to the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures does not constitute delivery to the Depositary. GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's certificates representing Shares are not immediately available (or the procedures for book-entry transfer cannot be completed on a timely basis) or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such Shares may nevertheless be tendered, provided that all of the following conditions are satisfied: (a) such tender is made by or through an Eligible Institution; (b) the Depositary receives, prior to the Expiration Date, a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Purchaser; and 5 (c) the certificates representing all tendered Shares in proper form for transfer (or confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message) and any other documents required by the Letter of Transmittal are received by the Depositary within three trading days after the date of such Notice of Guaranteed Delivery. A "trading day" is any day on which the National Market of The Nasdaq Stock Market ("The Nasdaq National Market") is open for business. The Notice of Guaranteed Delivery may be delivered by hand, or may be transmitted by telegram, telex, facsimile transmission or mail, to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing such Shares (or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility), (ii) properly completed and duly executed Letter(s) of Transmittal (or facsimile(s) thereof), together with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message) and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when certificates representing Shares or confirmations of book-entry transfers of such Shares are actually received by the Depositary. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. DETERMINATION OF VALIDITY. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tendered Shares will be determined by the Purchaser in its sole discretion, and its determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any or all tenders of any Shares that it determines are not in appropriate form or the acceptance for payment of or payment for which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in any tender with respect to any particular Shares or any particular stockholder, and the Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the Instructions thereto) will be final and binding on all parties. No tender of Shares will be deemed to have been validly made until all defects or irregularities relating thereto have been expressly waived or cured to the satisfaction of the Purchaser. None of the Purchaser, Tyco, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any such notification. OTHER REQUIREMENTS. By executing the Letter of Transmittal, a tendering stockholder irrevocably appoints designees of the Purchaser as such stockholder's proxies, in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser (and any and all other Shares or other securities or rights issued or issuable in respect of such Shares on or after January 6, 1998), effective if, when and to the extent that the Purchaser accepts such Shares for payment pursuant to the Offer. Upon such acceptance for payment, all prior proxies given by such stockholder with respect to such Shares or other securities accepted for payment will, without further action, be revoked, and no subsequent proxies may be given by such stockholder nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). Such designees of the Purchaser will, with respect to such Shares and other securities or rights issuable in respect thereof, be empowered to exercise all voting 6 and other rights of such stockholder as they, in their sole discretion, may deem proper in respect of any annual, special or adjourned meeting of the Company's stockholders, action by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares the Purchaser must be able to exercise full voting rights with respect to such Shares. The Purchaser's acceptance for payment of Shares tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. TO PREVENT BACKUP WITHHOLDING OF FEDERAL INCOME TAX ON PAYMENTS MADE TO STOCKHOLDERS WITH RESPECT TO SHARES PURCHASED PURSUANT TO THE OFFER, EACH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT HE IS NOT SUBJECT TO BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. FOREIGN HOLDERS MUST SUBMIT A COMPLETED FORM W-8 TO AVOID BACKUP WITHHOLDING. THIS FORM MAY BE OBTAINED FROM THE DEPOSITARY. SEE INSTRUCTIONS 10 AND 11 OF THE LETTER OF TRANSMITTAL. 3. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer will be irrevocable, except that Shares tendered may be withdrawn at any time prior to the Expiration Date, and, unless theretofore accepted for payment by the Purchaser as provided herein, may also be withdrawn on or after March 8, 1998. For a withdrawal of Shares tendered to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name(s) in which the certificate(s) representing such Shares are registered, if different from that of the person who tendered such Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, the name of the registered holder and the serial numbers shown on the particular certificates evidencing such Shares to be withdrawn must also be furnished to the Depositary prior to the physical release of the Shares to be withdrawn. The signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution). If Shares have been tendered pursuant to the procedures for book-entry transfer set forth in Section 2, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with such withdrawn Shares and must otherwise comply with the Book-Entry Transfer Facility's procedures. If the Purchaser extends the Offer, is delayed in its acceptance for payment of any Shares tendered, or is unable to accept for payment or pay for Shares tendered pursuant to the Offer, for any reason whatsoever, then, without prejudice to the Purchaser's rights set forth herein, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that the tendering stockholder is entitled to and duly exercises withdrawal rights as described in this Section and as otherwise required by Rule 14e-1(c) under the Exchange Act. Any such delay will be accompanied by an extension of the Offer to the extent required by law. Withdrawals of tenders of Shares may not be rescinded, and Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following the procedures described in Section 2 at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, and its determination will be final and binding on all parties. None of the Purchaser, Tyco, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal, nor shall any of them incur any liability for failure to give any such notification. 7 4. ACCEPTANCE FOR PAYMENT AND PAYMENT OF OFFER PRICE. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any extension or amendment), the Purchaser will accept for payment and will pay for all Shares validly tendered prior to the Expiration Date (and not properly withdrawn in accordance with Section 3 above) as soon as practicable after the latest to occur of (a) the expiration or termination of the waiting period applicable to the acquisition of the Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (b) the Expiration Date, and (c) subject to compliance with Rule 14e-1(c) under the Exchange Act, the satisfaction or waiver of the conditions of the Offer set forth in Section 15. Any determination concerning the satisfaction of such terms and conditions shall be within the sole discretion of the Purchaser, and such determination shall be final and binding on all tendering stockholders. See Section 15. The Purchaser expressly reserves the right to delay acceptance for payment of, or payment for, Shares in order to comply in whole or in part with any applicable law. If the Purchaser desires to delay payment for Shares accepted for payment pursuant to the Offer, and such delay would otherwise be in contravention of Rule 14e-1(c) of the Exchange Act, the Purchaser will formally extend the Offer. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing such Shares (or a timely confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility, as described in Section 2), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message), and (iii) any other documents required by the Letter of Transmittal. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, tendered Shares when, as and if the Purchaser gives oral or written notice to the Depositary, as agent for the tendering stockholders, of the Purchaser's acceptance for payment of such Shares. Payment for Shares so accepted for payment will be made by the deposit of the purchase price therefor with the Depositary, which will act as agent for the tendering stockholders for the purpose of receiving such payment from the Purchaser and transmitting such payment to tendering stockholders. If, for any reason whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer is delayed, or the Purchaser is unable to accept for payment Shares tendered pursuant to the Offer, then, without prejudice to the Purchaser's rights under Section 1, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn, except to the extent that the tendering stockholders are entitled to withdrawal rights as described in Section 3 and as otherwise required by Rule 14e-1(c) under the Exchange Act. Under no circumstances will interest be paid on the purchase price by reason of any delay in making such payments. If any tendered Shares are not accepted for payment and paid for, certificates representing such Shares will be returned (or, in the case of Shares delivered by book-entry transfer with the Book-Entry Transfer Facility as permitted by Section 2, such Shares will be credited to an account maintained with the Book-Entry Transfer Facility) without expense to the tendering stockholder as promptly as practicable following the expiration or termination of the Offer. If, prior to the Expiration Date, the Purchaser increases the consideration to be paid for Shares pursuant to the Offer, the Purchaser will pay such increased consideration for all Shares accepted for payment pursuant to the Offer, whether or not such Shares have been tendered or accepted for payment prior to such increase in the consideration. The Purchaser reserves the right to transfer or assign in whole or in part to one or more affiliates of the Purchaser or Tyco the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 8 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares pursuant to the Offer (or in the Merger) will be a taxable transaction for federal income tax purposes (and may also be a taxable transaction under applicable state, local or other tax laws). In general, a stockholder will recognize gain or loss for such purposes equal to the difference between such stockholder's adjusted tax basis for the Shares such stockholder sells in such transaction and the amount of cash received therefor. Gain or loss must be determined separately for each block of Shares (i.e., Shares acquired at the same cost in a single transaction) sold pursuant to the Offer or converted to cash in the Merger. Such gain or loss will be capital gain or loss if the Shares are a capital asset in the hands of the stockholder and will be long term capital gain or loss if the Shares were held for more than one year on the date of sale (in the case of the Offer) or the effective time of the Merger (in the case of the Merger). The receipt of cash for Shares pursuant to the exercise of dissenters' rights, if any, will generally be taxed in the same manner described above. An individual stockholder's long-term capital gain will be taxed at the lowest applicable rate (generally 20%) if such stockholder held the Shares for more than eighteen months on the date of sale or the Effective Time of the Merger, whichever is the relevant date. Payments in connection with the Offer or the Merger may be subject to "backup withholding" at a rate of 31%. Backup withholding generally applies if the stockholder (a) fails to furnish such stockholder's social security number or TIN, (b) furnishes an incorrect TIN, or (c) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN provided is such stockholder's correct number and that such stockholder is not subject to backup withholding. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax. Certain persons generally are entitled to exemption from backup withholding, including corporations and financial institutions. Certain penalties apply for failure to furnish correct information and for failure to include reportable payments in income. Each stockholder should consult with his own tax advisor as to such stockholder's qualification for exemption from backup withholding and the procedure for obtaining such exemption. Tendering stockholders may be able to prevent backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. The foregoing discussion may not be applicable to a stockholder who acquired Shares pursuant to the exercise of employee stock options or otherwise as compensation, or to a stockholder who is not a citizen or resident of the United States or who is otherwise subject to special tax treatment under the Internal Revenue Code. In addition, the foregoing discussion does not address the tax treatment of holders of options or warrants to acquire Shares or of debentures convertible into Shares. The federal income tax discussion set forth above is included for general information only and is based upon present law. Stockholders are urged to consult their tax advisors with respect to the specific tax consequences of the Offer and the Merger to them, including the application and effect of the alternative minimum tax, and state, local or foreign income and other tax laws. 6. PRICE RANGE OF SHARES; DIVIDENDS. From March 27, 1995 through September 20, 1996, the Shares traded on the SmallCap Market of The Nasdaq Stock Market (the "Nasdaq SmallCap Market"). Since September 23, 1996, the Shares have traded on The Nasdaq National Market under the symbol "HLMS." The following table sets forth, for the periods indicated, the high and low per Share sales prices on The Nasdaq National Market or the Nasdaq SmallCap Market, as the case may be, each as reported by 9 published financial sources. The Company has not declared or paid any cash dividends with respect to the Shares for the periods indicated.
HIGH LOW --------- --------- Fiscal Year Ended December 31, 1996: First Quarter........................................................................... $ 9.000 $ 4.375 Second Quarter.......................................................................... 9.250 7.750 Third Quarter........................................................................... 11.750 9.000 Fourth Quarter.......................................................................... 15.125 11.250 Fiscal Year Ending December 31, 1997: First Quarter........................................................................... $ 16.750 $ 12.875 Second Quarter.......................................................................... 15.875 13.000 Third Quarter........................................................................... 20.750 13.500 Fourth Quarter.......................................................................... 20.000 13.000
On December 26, 1997, the last trading day prior to the public announcement of the terms of the Offer and the Merger, the closing per Share sales price on The Nasdaq National Market was $18.00. On January 5, 1998, the last trading day prior to commencement of the Offer, the closing per Share sales price on The Nasdaq National Market was $16.8125. Stockholders are urged to obtain a current market quotation for the Shares. 7. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; STOCK QUOTATIONS; REGISTRATION UNDER THE EXCHANGE ACT. The purchase of Shares pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly. Consequently, depending upon the number of Shares purchased and the number of remaining holders of Shares, the purchase of Shares pursuant to the Offer may adversely affect the liquidity and market value of the remaining Shares held by the public. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether it would cause future market prices to be greater or less than the Offer price. The Shares are currently listed and traded on The Nasdaq National Market, which constitutes the principal trading market for the Shares. Depending upon the aggregate market value and the number of Shares not purchased pursuant to the Offer, the Shares may no longer meet the quantitative maintenance criteria of the National Association of Securities Dealers, Inc. (the "NASD") for continued inclusion on The Nasdaq National Market and may cease to be authorized for quotation on such market. Pursuant to new maintenance criteria, beginning February 22, 1998 issuers on the Nasdaq National Market are required to have (i) (A) at least 750,000 publicly held shares, (B) at least 400 holders of round lots, (C) a market value of publicly held shares of at least $5 million, (D) a minimum bid price per share of $1, and (E) net tangible assets of at least $4 million or (ii) (A) at least 1.1 million publicly held shares, (B) at least 400 holders of round lots, (C) a market value of publicly held shares of at least $15 million, (D) a market capitalization of at least $50 million or total assets and total revenue of at least $50 million (each for the most recently completed fiscal year or two of the last three most recently completed fiscal years), (E) a minimum bid price per share of $5, and (F) at least four registered and active market makers for the Shares. Shares held directly or indirectly by directors, officers or beneficial owners of more than 10% of the Shares outstanding are not considered as being publicly held for this purpose. 10 If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the requirements of the NASD for continued inclusion in The Nasdaq National Market or in any other tier of The Nasdaq Stock Market, and the Shares are no longer included in The Nasdaq National Market or in any other tier of The Nasdaq Stock Market, the market for Shares could be adversely affected. In the event that the Shares no longer meet the requirements of the NASD for continued inclusion in any tier of The Nasdaq Stock Market, it is possible that Shares would continue to trade in the over-the-counter market and that price quotations would be reported by other sources. The extent of the public market for the Shares and the availability of such quotations would, however, depend upon the number of holders of Shares remaining at such time, the interest in maintaining a market in Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act, as described below, and other factors. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of the Company to the Commission if such Shares are not listed on a national securities exchange and there are fewer than 300 holders of record of the Shares. The termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and to the Commission, and would make certain of the provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) and the requirement of furnishing a proxy statement in connection with stockholders' meetings and the related requirement of an annual report to stockholders, and the requirements of Rule 13e-3 with respect to going private transactions, no longer applicable with respect to the Shares or to the Company. Furthermore, if registration of the Shares under the Exchange Act were terminated, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, may be impaired or, with respect to certain persons, eliminated. According to the Company, as of December 28, 1997, there were 1,500 holders of record of the Shares. The Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on such Shares as collateral. Depending on factors similar to those described above regarding listing and market quotations, it is possible the Shares would no longer constitute "margin securities" for purposes of the Federal Reserve Board's margin regulations and therefore could no longer be used as collateral for loans made by brokers. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities." 8. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set forth herein, the information concerning the Company contained in this Offer to Purchase, including financial information, has been furnished by the Company or has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. Although neither the Purchaser nor Tyco has any knowledge that would indicate that the statements contained herein based on such information are untrue, neither the Purchaser nor Tyco takes any responsibility for the accuracy or completeness of the information concerning the Company furnished by the Company or contained in such documents and records or for any failure by the Company to disclose events or information which may have occurred or may affect the significance or accuracy of any such information but which are unknown to the Purchaser or Tyco. The Company was incorporated in October 1982 under the laws of the State of Delaware under the name "Security Centres USA Inc." and changed its name to "Holmes Protection Group, Inc." in June 1986. The Company's principal executive offices are located at 440 Ninth Avenue, New York, New York 10001-1695 and its telephone number is (212) 760-0630. The following description of the Company's business has been taken from Amendment No. 1, dated December 29, 1997, to the Company's Registration Statement on Form S-3: 11 "[The Company] provides security alarm monitoring services and designs, sells, installs and services electronic security systems for commercial and mid- to high-end residential subscribers. These systems include event detection devices, surveillance equipment and access control devices which restrict access to specified areas. The Company currently provides its services in New York, New Jersey, Pennsylvania, Texas, Tennessee, California, Massachusetts and Florida, and conducts its operations primarily through 20 branch offices, ten National Account sales offices, eight central monitoring stations and 76 independent alarm service dealers and franchisees. According to the latest available survey, published in May 1997, the Company was the eleventh largest provider of electronic security services in the United States in terms of total 1996 revenues." Set forth below is a summary of certain consolidated financial information with respect to the Company and its consolidated subsidiaries, excerpted or derived from the information contained in the Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 1996 and its Quarterly Report on Form 10-Q/A for the quarter ended September 30, 1997. More comprehensive financial information is included in such reports and other documents filed by the Company with the Commission. The financial information summary set forth below is qualified in its entirety by reference to such reports and other documents filed with the Commission and all of the financial information and related notes contained therein. Such reports and other documents may be inspected and copies may be obtained from the offices of the Commission in the manner set forth below. SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED FISCAL YEAR ENDED SEPTEMBER 30, DECEMBER 31, ---------------------------- -------------------- 1997 1996 1996 1995 ------------- ------------- --------- --------- STATEMENT OF OPERATIONS: Total revenues.......................................... $ 48,709 $ 37,814 $ 51,424 $ 50,821 Operating loss.......................................... (6,871) (1,179) (2,963) (4,573) Loss before provision for income taxes.................. (7,713) (1,494) (3,218) (5,047) Net loss................................................ (5,399) (1,272) (2,185) (3,231) Net loss per share...................................... (0.90) (0.28) (0.45) (0.72) BALANCE SHEET: Working capital (deficit)............................... $ (19,968) $ (2,870) $ (6,054) Total assets............................................ 110,926 90,394 80,859 Long-term liabilities................................... 11,874 17,330 17,219 Stockholders' equity.................................... 58,197 58,628 45,638
OTHER INFORMATION. The Shares are registered under the Exchange Act. Accordingly, the Company is subject to the informational filing requirements of the Exchange Act and, in accordance therewith, is obligated to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be disclosed in such proxy statements and distributed to the Company's stockholders and filed with the Commission. Such reports, proxy statements and other information should be available for inspection at the public reference facilities at the Commission's principal office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the regional offices of the Commission located at 7 World Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The Commission maintains a site on the World Wide Web, and the reports, proxy 12 statements and other information filed by the Company with the Commission may be accessed electronically on the Web at http://www.sec.gov. Copies of such material may also be obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. 9. CERTAIN INFORMATION CONCERNING TYCO AND THE PURCHASER. The Purchaser is a newly formed Delaware corporation and an indirect wholly-owned subsidiary of Tyco. To date, the Purchaser has not conducted any business other than incident to its formation, the execution and delivery of the Merger Agreement and the commencement of the Offer. Until immediately prior to the time that the Purchaser purchases Shares pursuant to the Offer, it is not anticipated that Purchaser will have any significant assets or liabilities or engage in activities other than those incident to its formation and capitalization and the transactions contemplated by the Offer and the Merger. Since the Purchaser is newly formed and has minimal assets and capitalization, no meaningful financial information is available. The address of the principal office of the Purchaser is One Tyco Park, Exeter, New Hampshire 03833. Tyco is a diversified manufacturing and service company that, through its subsidiaries, operates in four segments: (i) the manufacture and distribution of disposable medical supplies and other specialty products, and the conduct of vehicle auctions and related services; (ii) the design, manufacture, installation and service of fire detection and suppression systems, and the installation, monitoring and maintenance of electronic security systems; (iii) the manufacture and distribution of flow control products; and (iv) the manufacture and distribution of electrical and electronic components, and the design, manufacture, installation and service of undersea cable communication systems. On July 2, 1997, Tyco International Ltd., a Massachusetts corporation ("Tyco (US)"), merged with a subsidiary of Tyco, and Tyco continued as the surviving public corporation. In connection with the merger, Tyco changed its name from ADT Limited ("ADT") to Tyco International Ltd. Tyco is a Bermuda company. Its registered offices are located at The Gibbons Building, 10 Queen Street, Hamilton HM11 Bermuda, and its telephone number is (441) 292-8674. The executive offices of the subsidiary that supervises the activities of the subsidiaries of Tyco in North America is located at One Tyco Park, Exeter, New Hampshire 03833, and its telephone number is (603) 778-9700. The following table was derived from Tyco's Transition Report on Form 10-K (the "Tyco 1997 Form 10-K") for the period ended September 30, 1997 ("Fiscal 1997"), and sets forth selected consolidated financial information of Tyco for the nine month fiscal year ended September 30, 1997 and the two years in the period ended December 31, 1996. The selected financial data reflects the combined results of operations and financial position of Tyco, Tyco (US) and Keystone International, Inc. ("Keystone"), which was acquired by Tyco in August 1997, restated for all periods presented pursuant to the pooling of interests method of accounting. The selected financial data prior to January 1, 1997 does not reflect the results of operations and financial position of INBRAND Corporation ("INBRAND"), which was acquired by Tyco in August 1997 and accounted for under the pooling of interests method of accounting, due to immateriality. The combination of Tyco and Tyco (US) and the transactions pursuant to which Tyco acquired Keystone and INBRAND are collectively referred to as the "Mergers." More comprehensive financial information is included in the Tyco 1997 Form 10-K and other documents filed by Tyco with the Commission, and the following summary is qualified in its entirety by reference to such report and such other documents and of the financial information (including any related notes) contained therein. Such report and other documents should be available for inspection and copies thereof should be obtainable in the manner set forth in Section 8. Such report and other documents should also be available for inspection at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005, where the common shares of Tyco are listed for trading. 13 SELECTED CONSOLIDATED FINANCIAL DATA OF TYCO INTERNATIONAL LTD. (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS YEAR ENDED DECEMBER ENDED 31, SEPTEMBER 30, -------------------- 1997(1) 1996 1995(5) ------------- --------- --------- Consolidated Statements of Operations Data: Net sales........................................................... $ 7,588.2 $ 8,103.7 $ 6,915.6 Operating (loss) income (2)(3)(4)................................... (476.5) (18.8) 649.6 (Loss) income from continuing operations............................ (776.8) (296.7) 267.5 (Loss) income per share from continuing operations (6).............. (1.50) (0.62) 0.57 Consolidated Balance Sheet Data: Total assets........................................................ $ 10,447.0 $ 8,471.3 $ 7,357.8 Long-term debt...................................................... 2,480.6 1,878.4 1,760.7 Convertible redeemable preferred shares............................. -- -- 4.9 Shareholders' equity................................................ 3,429.4 3,288.6 3,342.7
- ------------------------ (1) In September 1997, Tyco changed its fiscal year end from December 31 to September 30. Accordingly, the nine month transition period ended September 30, 1997 is presented. (2) Operating loss in Fiscal 1997 results include charges related to merger, restructuring and other non-recurring costs of $917.8 million and impairment of long-lived assets of $148.4 million primarily related to the Mergers and the integration of ADT, Tyco (US), Keystone and INBRAND. See Notes 11 and 15 to the Consolidated Financial Statements contained in the Tyco 1997 Form 10-K. Fiscal 1997 also includes a charge of $361.0 million for the write-off of purchased in-process research and development related to the acquisition of AT&T's submarine systems business. (3) Operating loss in 1996 includes non-recurring charges of $744.7 million related to the adoption of Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets to be Disposed Of," $237.3 million related principally to the restructuring of ADT's electronic security services business in the United States and United Kingdom and $8.8 million of fees and expenses related to ADT's 1996 merger with Automated Security (Holdings) plc. See Notes 11 and 15 to the Consolidated Financial Statements contained in the Tyco 1997 Form 10-K. (4) Operating income in 1995 included a loss of $65.8 million on the disposal of Tyco's European auto auction business and a gain of $31.4 million from the disposal of the Tyco's European electronic article surveillance business. See Note 3 to the Consolidated Financial Statements contained in the Tyco 1997 Form 10-K. Operating income also includes non-recurring charges of $97.1 million for restructuring charges at ADT and at Keystone and for the fees and expenses related to Tyco (US)'s 1994 merger with Kendall International, Inc., as well as a charge of $8.2 million relating to the divestiture of certain assets by Keystone. See Notes 11 and 15 to the Consolidated Financial Statements contained in the Tyco 1997 Form 10-K. (5) Prior to the Mergers, ADT and Keystone had a calendar year end and Tyco (US) had a June 30 fiscal year end. The historical results have been combined using a calendar year end for ADT, Keystone and Tyco (US) for the year ended December 31, 1996. For 1995, the results of operations and financial position reflect the combination of ADT and Keystone with a calendar year end and Tyco (US) with a June 30 fiscal year end. Net sales and net income for Tyco (US) for the period July 1, 1995 through December 31, 1995 (which results are not included in the historical combined results) were $2.46 billion and $136.4 million, respectively. 14 (6) Per share amounts for all periods presented have been restated to give effect to the Mergers, including a reverse stock split in the ratio of 0.48133:1 on July 2, 1997 in connection with the merger of Tyco and Tyco (US), and a two-for-one stock split distributed on October 22, 1997 effected in the form of a stock dividend. The name, citizenship, business address, present principal occupation or employment and five year employment history of each of the directors and executive officers of Tyco and the Purchaser are set forth in Annex I and Annex II hereto, respectively. Other than the 3,014 Shares owned by an indirect wholly-owned subsidiary of Tyco, none of Tyco, the Purchaser or, to the best of their knowledge, any of the persons listed on Annex I or Annex II hereto, or any associate or majority-owned subsidiary of Tyco, the Purchaser or any of the persons so listed, owns or has the right to acquire any Shares (except pursuant to the Stockholder Agreement described in Section 13) or has effected any transaction in the Shares during the past 60 days. Except as set forth in this Offer to Purchase, none of Tyco, the Purchaser or, to the best of their knowledge, any of the persons listed in Annex I or Annex II hereto, (a) has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss, or the giving or withholding of proxies, (b) has engaged in contacts, negotiations or transactions with the Company or its affiliates concerning a merger, consolidation, acquisition, tender offer or other acquisition of securities, election of directors or a sale or other transfer of a material amount of assets or (c) has had any other transaction with the Company or any of its executive officers, directors or affiliates that would require disclosure under the rules and regulations of the Commission applicable to the Offer. 10. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by Tyco and the Purchaser to purchase all Shares that may be tendered pursuant to the Offer and in the Merger, and to pay related fees and expenses, is estimated to be approximately $144 million. The Purchaser will obtain all such funds from Tyco or its affiliates. Tyco has sufficient financial resources to satisfy its and the Purchaser's obligations under the Offer and the Merger Agreement. This Offer is not conditioned upon any financing arrangements. 11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER. In early October 1997, Tyco was contacted by J.P. Morgan to solicit Tyco's interest in acquiring the Company. On October 14, 1997, Tyco and J.P. Morgan, as the representative of the Company, executed a confidentiality agreement regarding the furnishing of non-public information concerning the Company to Tyco. At a regular scheduled meeting of the Board of Directors of Tyco on October 29, 1997, management of Tyco made a presentation concerning a possible acquisition of the Company. Although the Tyco Board discussed the possibility of such an acquisition, no action in this regard was proposed or taken at the meeting. Thereafter, on November 3, 1997, Tyco delivered to J.P. Morgan a letter containing a non-binding indication of interest to acquire the Company in an all cash transaction at a price in the range of $17.50 to $19.50 per Share. The letter also requested access to information, management and facilities of the Company to allow Tyco to conduct its due diligence investigation. On November 13 and 14, 1997, representatives of Tyco met with the Company's management and reviewed diligence materials on the Company. On November 21, 1997, Tyco submitted its non-binding proposal to acquire the Company in an all-cash tender offer at a price of $19.625 per Share, subject to the negotiation of definitive documentation, including a customary break-up fee, regulatory approvals and the approval of the transaction by the Tyco Board. The proposal also contemplated Tyco's receiving a "lock-up" agreement from the Company's major insider stockholders. In consideration of the Tyco proposal, the Company agreed that it would not solicit or discuss an acquisition proposal with any party other than Tyco, or in connection with such a 15 proposal allow any other party access to the Company's properties and records, through 6:00 p.m. EST on November 26, 1997. On November 24 and 25, counsel for Tyco and the Company conducted negotiations on the form of a draft merger agreement between the parties. On November 24, 1997, the Company informed Tyco that it had received a comment letter from the staff of the Commission relating to a registration statement previously filed by the Company. In the letter, the Commission staff requested that the Company restate its financial statements with respect to the recognition of customer revenues realized in connection with the installation of security systems for customers, consistent with the method used by the Company prior to an accounting change adopted in 1995. The staff also requested that the Company depreciate company-owned equipment installed at its customers' premises over the life of the related security services contract, and not over an average estimated life, and write-off the undepreciated capitalized costs of such equipment at the time any such contract is terminated. On November 26, 1997, Tyco informed J.P. Morgan that it was unable to proceed with its acquisition proposal until Tyco had had an opportunity to review the Company's October operating results and until the Company had resolved the comments of the Commission staff. On December 1, 1997, representatives of Tyco met with management of the Company to discuss the letter from the Commission staff and the Company's results of operations for October, which were below certain projections that had been furnished to Tyco. During the period through December 18, 1997, Tyco continued to conduct discussions with the Company's management and representatives concerning matters related to the acquisition proposal. At a regularly scheduled meeting of the Board of Directors of Tyco held on December 10, 1997, management of Tyco updated the Tyco Board concerning the possible acquisition of the Company. The Board then authorized management to proceed with such an acquisition, at a price per Share to be determined by Tyco management but not in excess of the range of prices that had previously been proposed. On December 16, 1997, the Company filed with the Commission a current report on Form 8-K stating, among other things, that in addition to its previously announced failure to comply with the financial covenants under its bank credit agreement for the month of October 1997, the Company did not expect to be in compliance with such covenants for the months of November and December 1997 and that the Company did not have any remaining loan availability under the credit agreement. On December 18, 1997, representatives of J.P. Morgan informed Tyco that the Company and the Commission staff had reached agreement on the issues raised in the staff's comment letter. The Company agreed to restate its financial statements with respect to the recognition of installation revenue and to commission a study regarding the Company's policy of utilizing an average 12-year life in its composite depreciation method for equipment installed on customer premises. Following the Company's resolution of these matters with the Commission and based upon Tyco's review of the Company's recent operating results, Tyco called J.P. Morgan on December 19, 1997 to propose an acquisition of the Company for $16.00 per Share in cash. At the same time, Tyco requested financial information regarding the Company's November 1997 operating results and certain other information concerning the Company. Thereafter, Tyco conducted further discussions concerning the proposed acquisition with the Company and J.P. Morgan, received the additional requested information and, on December 23, 1997, indicated its willingness to increase the purchase price under its acquisition proposal to $17.00 per Share in cash. On December 26, 1997, the Board of Directors of the Company, with the participation of all but one of the Company's directors, held a telephonic Board Meeting to consider the Offer, the Merger and the Merger Agreement. J.P. Morgan delivered its oral opinion to the Company's Board (subsequently confirmed in writing) that, as of such date, the consideration proposed to be paid to the stockholders of the 16 Company in the Offer and the Merger was fair to the stockholders from a financial point of view. Thereafter, the Company's Board of Directors, by unanimous vote of the directors present, approved the Offer, the Merger and the Merger Agreement and determined to recommend the Offer and the Merger to the Company's stockholders. A representative of the Company then contacted Tyco to inform it of the Board's determination. Counsel for Tyco and the Company conducted additional negotiations concerning the Merger Agreement on December 26 prior to the Company Board meeting and completed final negotiations on the document on December 28, 1997. The Merger Agreement and the Stockholder Agreement were executed by the respective parties on December 28, 1997. A joint press release announcing the execution of the Merger Agreement was released by the parties prior to the opening of the U.S. financial markets on December 29, 1997. 12. PURPOSE OF THE OFFER; SHORT FORM MERGER; PLANS FOR THE COMPANY; DISSENTERS' RIGHTS; GOING PRIVATE TRANSACTIONS. PURPOSE OF THE OFFER. The purpose of the Offer is for the Purchaser to acquire control of, and a majority equity interest in, the Company. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer. The acquisition of the entire equity interest in the Company has been structured as a cash tender offer followed by a cash merger in order to provide a prompt and orderly transfer of ownership of the Company from the public stockholders to Tyco and to provide stockholders with cash for all of their Shares. Under the DGCL and the Company's Certificate of Incorporation, the approval of the Board of Directors of the Company and the affirmative vote of a majority of the holders of outstanding Shares are required to approve and adopt the Merger Agreement and the Merger. The Board of Directors of the Company has approved the Offer, the Merger and the Merger Agreement and the transactions contemplated thereby, and, unless the Merger is consummated pursuant to the short-form merger provisions under the DGCL described below, the only remaining required corporate action of the Company is the approval and adoption of the Merger Agreement and the Merger by the affirmative vote of the holders of a majority of the outstanding Shares. If the Minimum Condition is satisfied, the Purchaser will have sufficient voting power to cause the approval and adoption of the Merger Agreement and the Merger without the affirmative vote of any other stockholder. HP Partners L.P., which owns 1,515,886 issued and outstanding Shares, constituting approximately 18% of the Shares on a fully diluted basis (approximately 26% of the Shares on a fully diluted basis including 685,714 Shares issuable to it upon the exercise of warrants), has agreed to tender its Shares in the Offer. The Merger Agreement provides that, if approval of the Merger by the stockholders of the Company is required by law, the Company will, as soon as possible following payment for Shares in the Offer, duly call and hold a meeting of stockholders for the purpose of obtaining stockholder approval of the Merger, and the Company, through its Board of Directors, will recommend to stockholders that such approval be given. SHORT FORM MERGER. Under the DGCL, if the Purchaser acquires at least 90% of the outstanding Shares, the Purchaser will be able to approve the Merger without a vote of the Company's other stockholders. The Merger Agreement provides that if the Purchaser, or any other direct or indirect subsidiary of Tyco, acquires at least 90% of the outstanding Shares, Tyco, the Purchaser and the Company will take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the expiration of the Offer without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL. In the event that all of the conditions to the Purchaser's obligation to purchase Shares in the Offer are satisfied or waived and the number of Shares tendered is less than 90% of the outstanding Shares, the Purchaser may, subject to the limitations set forth in the Merger Agreement, extend the Offer for an aggregate period of not more than 10 business days (for all such extensions) without the consent of the Company. See Section 1. If the Purchaser does not acquire at 17 least 90% of the outstanding Shares, a significantly longer period of time may be required to effect the Merger, because a vote of the Company's stockholders would be required under the DGCL. PLANS FOR THE COMPANY. Except as otherwise set forth in this Offer to Purchase, it is expected that, initially following the Merger, the business and operations of the Company will be continued by the Surviving Corporation substantially as they are currently being conducted. The directors of the Purchaser will be the initial directors of the Surviving Corporation, and the officers of the Company and such other persons as are designated by Tyco will be the initial officers of the Surviving Corporation. Upon completion of the Offer, Tyco intends to conduct a detailed review of the Company and its assets, corporate structure, capitalization, operations, policies, management and personnel. After such review, Tyco will determine what actions or changes, if any, would be desirable in light of the circumstances which then exist, and reserves the right to effect such actions or changes. Except as described in this Offer to Purchase, neither Tyco nor the Purchaser has any present plans or proposals that would relate to or result in (i) any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries, (ii) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries, (iii) any change in the Company's Board of Directors or management, (iv) any material change in the Company's capitalization or dividend policy, (v) any other material change in the Company's corporate structure or business, (vi) a class of securities of the Company being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, or (vii) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g) of the Exchange Act. DISSENTERS' RIGHTS. No dissenters' rights are available in connection with the Offer. However, if the Merger is consummated, stockholders of the Company may have certain rights under the DGCL to dissent, and demand appraisal of, and to obtain payment for the fair value of their Shares. Such rights, if the statutory procedures were complied with, could lead to a judicial determination of the fair value of the Shares (excluding any element of value arising from the accomplishment or expectation of the Merger) to be required to be paid in cash to such dissenting holders for their Shares. In addition, such dissenting stockholders would be entitled to receive payment of a fair rate of interest from the date of consummation of the Merger on the amount determined to be the fair value of their Shares. In determining the fair value of the Shares, a Delaware court would be required to take into account all relevant factors. Accordingly, such determination could be based upon considerations other than, or in addition to, the market value of the Shares, including, among other things, asset value and earning capacity. In WEINBERGER V. UOP, INC., the Delaware Supreme Court stated, among other things, that "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered in an appraisal proceeding. Therefore, the value so determined in any appraisal proceeding could be different from the price being paid in the Offer. GOING PRIVATE TRANSACTIONS. The Merger would have to comply with any applicable Federal law operative at the time. The Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger or another business combination following the purchase of Shares pursuant to the Offer in which the Purchaser or Tyco seeks to acquire the remaining Shares not held by it. The Purchaser believes, however, that Rule 13e-3 will not be applicable to the Merger. If applicable, Rule 13e-3 requires, among other things, that certain financial information concerning the Company and certain information relating to the fairness of such transaction and the consideration offered to minority stockholders in such transaction be filed with the Commission and disclosed to stockholders prior to the consummation of such transaction. 18 13. THE MERGER AGREEMENT; STOCKHOLDER AGREEMENT. THE MERGER AGREEMENT The following summary of certain provisions of the Merger Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 referred to in Section 18, is qualified in its entirety by reference to the text of the Merger Agreement. Capitalized terms used in the following summary and not otherwise defined in this Offer to Purchase shall have the meanings set forth in the Merger Agreement. THE OFFER. The Merger Agreement provides that the Purchaser will commence the Offer and that, upon the terms and subject to the prior satisfaction or waiver of the conditions of the Offer, the Purchaser will purchase all Shares validly tendered pursuant to the Offer. The Merger Agreement provides that, without the written consent of the Company, the Purchaser will not (i) decrease the Per Share Amount or change the form of consideration payable in the Offer, (ii) decrease the number of Shares sought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition or (iv) impose additional conditions to the Offer or amend any other term of the Offer in any manner adverse to the holders of Shares, except that if on the initially scheduled Expiration Date all conditions to the Offer shall not have been satisfied or waived, the Purchaser may, from time to time, in its sole discretion, extend the Expiration Date. The Merger Agreement provides that if, immediately prior to the Expiration Date, as it may be extended, the Shares tendered and not withdrawn pursuant to the Offer equal less than 90% of the outstanding Common Stock, the Purchaser may extend the Offer for a period not to exceed 10 business days. THE MERGER. The Merger Agreement provides that, following the consummation of the Offer and subject to the terms and conditions thereof, at the effective time of the Merger (the "Effective Time") the Purchaser shall be merged with and into the Company and, as a result of the Merger, the separate corporate existence of the Purchaser shall cease, and the Company shall continue as the Surviving Corporation and an indirect subsidiary of Tyco. The respective obligations of Tyco and the Purchaser, on the one hand, and the Company, on the other hand, to effect the Merger are subject to the satisfaction at or prior to the Effective Time of each of the following conditions: (i) Tyco or the Purchaser or their affiliates shall have consummated the Offer, unless such failure to purchase is a result of a breach of Tyco's or the Purchaser's obligations under the Merger Agreement, (ii) the Merger, the Merger Agreement and the transactions contemplated thereby (the "Company Proposals") shall have been approved by the requisite vote of the stockholders, if required by applicable law, in order to consummate the Merger, (iii) no order, statute, rule, regulation, executive order, stay, decree, judgment or injunction shall have been enacted, entered, promulgated or enforced by any court or other governmental authority which prohibits or prevents the consummation of the Merger which has not been vacated, dismissed or withdrawn prior to the Effective Time, and (iv) all consents of any governmental authority required for the consummation of the Merger and the transactions contemplated by the Merger Agreement shall have been obtained other than those consents the failure to obtain which will not have a material adverse effect on the business, assets, condition (financial or other), liabilities or results of operations (a "Material Adverse Effect") of the Surviving Corporation and its subsidiaries taken as a whole. At the Effective Time of the Merger, (i) each issued and outstanding Share (other than Shares that are held by stockholders properly exercising dissenters' rights under the DGCL) shall be canceled and extinguished and be converted into the right to receive the Per Share Amount in cash payable to the holder thereof, without interest, (ii) each Share held in the treasury of the Company and each Share owned by Tyco or any direct or indirect wholly owned subsidiary of Tyco immediately before the Effective Time shall be canceled and extinguished, and no payment or other consideration shall be made with respect thereto and (iii) the shares of Purchaser common stock outstanding immediately prior to the Merger shall be converted into 1,000 shares of the common stock of the Surviving Corporation which shares shall 19 constitute all of the issued and outstanding capital stock of the Surviving Corporation and shall be owned by an indirect subsidiary of Tyco. THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that promptly upon the purchase by Tyco of Shares pursuant to the Offer (and provided that the Minimum Condition has been satisfied), Tyco shall be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as will give Tyco, subject to compliance with Section 14(f) of the Exchange Act, representation on the Board of Directors of the Company equal to at least that number of directors which equals the product of the total number of directors on the Board of Directors of the Company (giving effect to the directors appointed or elected pursuant to this sentence and including current directors serving as officers of the Company) multiplied by the percentage that the aggregate number of Shares beneficially owned by Tyco or any affiliate of Tyco (including such Shares as are accepted for payment pursuant to the Offer, but excluding Shares held by the Company) bears to the number of Shares outstanding. At such time, if requested by Tyco, the Company will also cause each committee of the Board of Directors of the Company to include persons designated by Tyco constituting the same percentage of each such committee as Tyco's designees are of the Board of Directors of the Company. The Company shall, upon request by Tyco, promptly increase the size of the Board of Directors of the Company or exercise reasonable best efforts to secure the resignations of such number of directors as is necessary to enable Tyco's designees to be elected to the Board of Directors of the Company in accordance with the terms of this section and to cause Tyco's designees so to be elected; PROVIDED, HOWEVER, that, in the event that Tyco's designees are appointed or elected to the Board of Directors of the Company, until the Effective Time the Board of Directors of the Company shall have at least two directors who are directors on the date of the Merger Agreement and each of whom is neither an officer of the Company nor a designee, shareholder, affiliate or associate (within the meaning of the federal securities laws) of Tyco (such directors, the "Independent Directors"); PROVIDED FURTHER, that if no Independent Directors remain, the other directors shall designate one person to fill one of the vacancies who shall be neither an officer of the Company nor a designee, shareholder, affiliate or associate of Tyco, and such person shall be deemed to be an Independent Director for purposes of the Merger Agreement. Notwithstanding anything in the Merger Agreement to the contrary, prior to the Effective Time, the affirmative vote of a majority of the Independent Directors shall be required to (i) amend or terminate the Merger Agreement on behalf of the Company, (ii) exercise or waive any of the Company's rights or remedies thereunder, (iii) extend the time for performance of Tyco's obligations thereunder, (iv) take any other action by the Company in connection with the Merger Agreement required to be taken by the Board of Directors of the Company or (v) amend the Company's Certificate of Incorporation or the Company's Bylaws, each as in effect on December 28, 1997. STOCKHOLDERS' MEETING. Pursuant to the Merger Agreement, the Company will, if required by applicable law in order to consummate the Merger, duly call, give notice of, convene and hold a special meeting of its stockholders as promptly as practicable following the consummation of the Offer for the purpose of voting upon the Company Proposals. The Merger Agreement provides that the Company will, if required by applicable law in order to consummate the Merger, prepare and file with the Commission and, when cleared by the Commission, will mail to stockholders, a proxy statement in connection with a meeting of the Company's stockholders to vote upon the Company Proposals, or an information statement, as appropriate, satisfying all requirements of the Exchange Act. If Purchaser acquires at least a majority of the Shares, it will have sufficient voting power to approve the Merger, even if no other stockholder votes in favor of the Merger. The Merger Agreement provides that in the event that Tyco or the Purchaser acquires at least 90% of the Shares, pursuant to the Offer or otherwise, Tyco, the Purchaser and the Company will take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of stockholders of the Company, in accordance with the DGCL. 20 OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES. The Merger Agreement provides that each of the Company and Tyco shall take all reasonable actions necessary to provide that all then outstanding options to purchase Shares, whether or not then exercisable or vested (i) under the Company's 1996 Stock Incentive Plan and (ii) if and to the extent required by the terms of the Company Option Plans (as hereinafter defined) other than the Company's 1996 Stock Incentive Plan, under such other Company Option Plans, shall become fully exercisable and vested upon the consummation of the Offer. Holders of options under the Company Option Plans ("Company Options") that become fully exercisable and vested upon the consummation of the Offer in accordance with the provisions of the preceding sentence will have a period of sixty days following the consummation of the Offer to surrender their options to the Company in exchange for cash equal to the excess of (A) the aggregate value of the Shares underlying the options, based on the Per Share Amount, over (B) the aggregate exercise price for the Shares underlying the options. Each of the Company and Tyco shall take all reasonable actions necessary to provide that, upon consummation of the Merger, all then outstanding Company Options, whether or not then exercisable or vested if and to the extent so provided in the applicable Company Option Plan, shall be converted into the right to receive, at the election of the holder, either (1) in cash, the aggregate value of the Shares underlying the options, based on the Per Share Amount, less the aggregate exercise price for the Shares underlying the options or (2) options, exercisable on the same terms and conditions as the surrendered options (except that the option received in exchange shall be immediately exercisable) to acquire that number of common shares, par value $.20, of Tyco ("Tyco Shares") determined by multiplying, in the case of each option, (a) the number of Shares for which the surrendered option was exercisable immediately prior to the Effective Time by (b) a fraction, the numerator of which is the Per Share Amount and the denominator of which is the closing price per Tyco Share on the New York Stock Exchange on the trading day immediately preceding the Closing Date. The exercise price per Tyco Share for each new option issued pursuant to the foregoing clause (2) shall be an amount equal to the aggregate exercise price for the Shares underlying the surrendered option divided by the number of Tyco Shares for which such new option is exercisable. "Company Option Plans" shall mean the Company's Amended and Restated Senior Executives' Option Plan, the Company's 1992 Directors' Option Plan and the Company's 1996 Stock Incentive Plan. The Merger Agreement provides that each of the Company and Tyco shall take all reasonable actions necessary so that the warrants expiring August 30, 2002 (except as otherwise provided therein) to purchase 166,666 Shares at a price of $9.75 per Share, subject to adjustment (the "Bank Warrants"), shall be exercisable, from and after the Effective Time, for an amount of cash equal in the aggregate to the Per Share Amount multiplied by the number of Shares for which such warrants were exercisable immediately prior to the Effective Time. Each of the Company and Tyco shall take all reasonable actions necessary so that the warrants expiring August 13, 2002 to purchase 203,033 Shares at a price of $10.16 per Share, subject to adjustment, and the warrants expiring August 1 2004 to purchase 685,714 Shares at a price of $4.58 per Share, subject to adjustment (collectively, the "Other Warrants" and, with the Bank Warrants, the "Company Warrants"), shall be exercisable, from and after the Effective Time, at the election of the holder as provided in the applicable Other Warrant, for either (i) an amount of cash equal in the aggregate to the Per Share Amount multiplied by the number of Shares for which such warrants were exercisable immediately prior to the Effective Time or (ii) a number of Tyco Shares equal to the product of (A) the number of Shares for which such warrants were exercisable immediately prior to the Effective Time and (B) a fraction, the numerator of which is the Per Share Amount and the denominator of which is the Current Market Price (as defined in the applicable Other Warrant) of the Tyco Shares on the trading day immediately preceding the Closing Date. The exercise price per Tyco Share under each Other Warrant, as adjusted pursuant to the foregoing clause (ii), shall be an amount equal to the aggregate exercise price for the Shares for which such warrant was exercisable prior to such adjustment divided by the number of Tyco Shares for which such warrant is exercisable as a result of such adjustment. Notwithstanding the forgoing provisions, any holder exercising Company Warrants for cash in accordance with the provisions of this paragraph shall not be required to pay the exercise price thereof and instead may receive in the aggregate 21 upon exercise the difference between (A) the Per Share Amount multiplied by the number of Shares for which such warrants were exercisable immediately prior to the Effective Time and (B) the aggregate exercise price for the Shares underlying such warrants. The Merger Agreement provides that each of the Company and Tyco shall take all reasonable actions necessary so that the Company's Subordinated Convertible Debentures convertible into 24,810 shares of Company Stock, subject to adjustment (the "Company Debentures"), shall be convertible, from and after the Effective Time, into an amount of cash equal to the product of the number of Shares into which such Company Debentures were convertible immediately prior to the Effective Time multiplied by the Per Share Amount. INTERIM OPERATIONS; COVENANTS. Pursuant to the Merger Agreement, the Company has agreed that, except as expressly contemplated or provided by the Merger Agreement or in the Company Disclosure Letter delivered by the Company to Tyco and the Purchaser in connection with the Merger Agreement or agreed to in writing by Tyco, after the date of execution of the Merger Agreement, and prior to the Effective Time, (i) the Company shall conduct, and it shall cause the Company Subsidiaries to conduct, its or their businesses in the ordinary course and consistent with past practice, and the Company shall, and it shall cause the Company Subsidiaries to, use its or their reasonable best efforts to preserve substantially intact its business organization, to keep available the services of its present officers and employees and to preserve the present commercial relationships of the Company and the Company Subsidiaries with persons with whom the Company or the Company Subsidiaries do significant business and (ii) without limiting the generality of the foregoing, neither the Company nor any of the Company Subsidiaries will: (A) amend or propose to amend its Certificate of Incorporation or Bylaws in any material respect; (B) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any shares of, or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any shares of, the capital stock or other securities of the Company or any of the Company Subsidiaries, including, but not limited to, any securities convertible into or exchangeable for shares of stock of any class of the Company or any of the Company Subsidiaries, except for (a) the issuance of shares pursuant to the exercise of Company Options outstanding on the date of the Merger Agreement in accordance with their present terms, (b) the issuance of shares upon the exercise of Company Warrants, or conversion of the Company Debentures, outstanding on the date of the Merger Agreement in accordance with their present terms and (c) the issuance of not more than an aggregate of 15,000 Shares to the sellers under the agreements pursuant to which the Company acquired certain businesses to the extent required pursuant to the terms of such agreements; (C) split, combine or reclassify any shares of its capital stock or declare, pay or set aside any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, other than dividends or distributions to the Company or a subsidiary of the Company, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any shares of its capital stock or other securities; (D) create, incur or assume any indebtedness for borrowed money or issue any debt securities, except pursuant to the Company's bank credit agreement, or make any loans (except as provided in paragraph (E) (b) below); (E) other than in the ordinary course of business consistent with past practice, (a) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for the obligations of any person (other than the Company or a Company Subsidiary); (b) make any capital expenditures (it being understood that the acquisition of the stock or substantially all the assets of any other person shall not be deemed a "capital expenditures" for these purposes) or make any advances or capital contributions to, or investments in, any other person (other than to a Company Subsidiary); (c) voluntarily incur any material liability or obligation (absolute, accrued, contingent or otherwise); or 22 (d) sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any assets or properties, real, personal or mixed, material to the Company and the Company Subsidiaries taken as a whole other than to secure debt permitted under paragraph (D); (F) increase in any manner the compensation of any of its officers or employees (other than, except with respect to employees who are executive officers or directors, in the ordinary course of business consistent with past practice) or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any stockholder, officer, director, employee, consultant or affiliate other than, in any such case referred to above, as may be required by Law or as required pursuant to the terms of agreements in effect on the date of the Merger Agreement and other than arrangements with new employees (other than employees who will be officers of the Company) hired in the ordinary course of business consistent with past practice and providing for compensation (other than equity-based compensation) and other benefits consistent with those provided for similarly situated employees of the Company as of the date hereof; (G) alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any subsidiary or the Company; (H) except as may be required as a result of a change in law or as required by the Commission, change any of the accounting principles or practices used by it; (I) make any material tax election or settle or compromise any material income tax liability; (J) pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in, or contemplated by, the financial statements (or the notes thereto) of the Company or incurred in the ordinary course of business consistent with past practice; (K) except to the extent necessary for the exercise of its fiduciary duties by the Board of Directors of the Company as set forth in, and consistent with the provisions of the Merger Agreement described below under "NO SOLICITATION," waive, amend or allow to lapse any term or condition of any confidentiality or "standstill" agreement to which the Company or any subsidiary is a party; or (L) take, or agree in writing or otherwise to take, any of the foregoing actions or any action which would make any of the representations or warranties of the Company contained in the Merger Agreement untrue or incorrect in any material respect at or prior to the Effective Time. NO SOLICITATION. The Merger Agreement provides that the Company shall, and shall cause its officers, directors, employees, representatives and agents to, immediately cease any discussions or negotiations with any parties that may be ongoing with respect to a Company Takeover Proposal (as hereinafter defined). The Company shall not, nor shall it permit any of its subsidiaries to, nor shall it authorize or permit any of its officers, directors or employees or any investment banker, financial advisor, attorney, accountant or other representative retained by it or any of its subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage (including by way of furnishing information), or take any other action designed or reasonably likely to facilitate, any inquiries or the making of any proposal which constitutes, or may reasonably be expected to lead to, any Company Takeover Proposal or (ii) participate in any discussions or negotiations regarding any Company Takeover Proposal; PROVIDED, HOWEVER, that if, at any time prior to the Effective Time, the Board of Directors of the Company determines in good faith, with the advice of outside counsel, that the failure to do so could reasonably be determined to be a breach of its fiduciary duties to the Company's stockholders under applicable law, the Company may (and may authorize or permit any of the 23 other persons referred to above in this paragraph to), in response to a Company Takeover Proposal, and subject to compliance with the second succeeding paragraph), (x) furnish information with respect to the Company or its subsidiaries to any person pursuant to a confidentiality agreement similar in form to that between an affiliate of Tyco and the Company and (y) participate in discussions or negotiations regarding such Company Takeover Proposal. "Company Takeover Proposal" means any inquiry, proposal or offer, in each case not solicited in violation of the Merger Agreement, from any person or persons relating to any direct or indirect acquisition or purchase of a substantial amount of the assets of the Company and its subsidiaries or 10% or more of any class of equity securities of the Company or any Company Subsidiary, any tender offer or exchange offer that if consummated would result in any person or group of related persons beneficially owning 10% or more of any class of equity securities of the Company or any Company Subsidiary or any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or any Company Subsidiary, other than the transactions contemplated by the Merger Agreement. Except as set forth in this section, neither the Board of Directors of the Company nor any committee thereof shall (i) withdraw or modify, or indicate publicly its intention to withdraw or modify, in a manner adverse to Tyco, the approval or recommendation by such Board of Directors or such committee of the Offer or the Company Proposals, (ii) approve or recommend, or indicate publicly its intention to approve or recommend, any Company Takeover Proposal or (iii) cause the Company to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, a "Company Acquisition Agreement") related to any Company Takeover Proposal. Notwithstanding the foregoing, in the event that prior to the Effective Time the Board of Directors of the Company determines in good faith, with the advice of outside counsel, that the failure to do so could reasonably be determined to be a breach of its fiduciary duties to the Company's stockholders under applicable law, the Board of Directors of the Company may (subject to this and the following sentences) (x) withdraw or modify its approval or recommendation of the Offer or the Company Proposals or (y) approve or recommend a Company Superior Proposal (as hereinafter defined) or terminate the Merger Agreement (and concurrently with or after such termination, if it so chooses, cause the Company to enter into any Company Acquisition Agreement with respect to any Company Superior Proposal), but in each of the cases set forth in this clause (y), only at a time that is after the third business day following Tyco's receipt of written notice advising Tyco that the Board of Directors of the Company has received a Company Superior Proposal and, in the case of any previously received Company Superior Proposal that has been materially modified or amended, such modification or amendment and specifying the material terms and conditions of such Company Superior Proposal, modification or amendment (PROVIDED that such material terms shall not be deemed to include the identity of the person or persons making such Company Superior Proposal). "Company Superior Proposal" means any bona fide proposal, not solicited in violation of the Merger Agreement, made by a third party or third parties to acquire, directly or indirectly, for consideration consisting of cash and/or securities, more than 50% of the combined voting power of the Shares then outstanding or all or substantially all the assets of the Company and otherwise on terms which the Board of Directors of the Company determines in its good faith judgment (based on the advice of its advisors) to be more favorable to the Company's stockholders than the Offer and the Merger (taking into account all factors relating to such proposed transaction deemed relevant by the Board of Directors of the Company, including, without limitation, the financing thereof, the proposed timing thereof and all other conditions thereto). In addition to the obligations of the Company set forth in the two preceding paragraphs, the Company shall promptly advise Tyco orally and in writing of any request for information, or for access to information, or of any Company Takeover Proposal and the material terms and conditions of such request or Company Takeover Proposal or any amendment or modification thereto (PROVIDED that such material terms shall not be deemed to include the identity of the person or persons making such request or Company Takeover Proposal). 24 Nothing in the foregoing provisions shall prohibit the Company from taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure to the Company's stockholders if, in the good faith judgment of the Board of Directors of the Company, with the advice of outside counsel, failure so to disclose could be determined to be a breach of its fiduciary duties to the Company's stockholders under applicable law; PROVIDED, HOWEVER, that neither the Company nor its Board of Directors nor any committee thereof shall, except as permitted by the second preceding paragraph, withdraw or modify, or indicate publicly its intention to withdraw or modify, its position with respect to the Offer or the Company Proposals or approve or recommend, or indicate publicly its intention to approve or recommend, a Company Takeover Proposal. INDEMNIFICATION AND INSURANCE. From and after the Effective Time, the Surviving Corporation shall indemnify and hold harmless all past and present officers and directors (the "Indemnified Parties") of the Company and of its subsidiaries to the full extent such persons may be indemnified by the Company pursuant to Delaware law, the Company's Certificate of Incorporation and Bylaws, as each is in effect on the date of the Merger Agreement, for acts and omissions (x) arising out of or pertaining to the transactions contemplated by the Merger Agreement or arising out of the Offer Documents or (y) otherwise with respect to any acts or omissions occurring or arising at or prior to the Effective Time and shall advance reasonable litigation expenses incurred by such persons in connection with defending any action arising out of such acts or omissions, PROVIDED that such persons provide the requisite affirmations and undertaking, as set forth in applicable provisions of the DGCL. In addition, Tyco will provide, or cause the Surviving Corporation to provide, for a period of not less than six years after the Effective Time, the Company's current directors and officers an insurance and indemnification policy that provides coverage for events occurring or arising at or prior to the Effecting Time (the "D&O Insurance") that is no less favorable than the existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage; PROVIDED, HOWEVER, that Tyco and the Surviving Corporation shall not be required to pay an annual premium for the D&O Insurance in excess of 300% of the annual premium currently paid by the Company for such insurance, but in such case shall purchase as much such coverage as possible for such amount. The Merger Agreement provides that the foregoing provisions are intended to benefit the Indemnified Parties and shall be binding on all successors and assigns of Tyco, Purchaser, the Company and the Surviving Corporation. In the Merger Agreement, Tyco has agreed to guarantee the performance by the Surviving Corporation of the indemnified obligations set forth therein, which guaranty is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the bankruptcy or insolvency of the Surviving Corporation or any other person. The Indemnified Parties shall be intended third-party beneficiaries of the foregoing provisions on indemnification and insurance. REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the Company has made customary representations and warranties to Tyco and the Purchaser with respect to, among other things, its organization, capitalization, authority relative to the Merger, financial statements, public filings, conduct of business, employee benefit plans, intellectual property, employment matters, compliance with laws, tax matters, litigation, environmental matters, material contracts, brokers' fees, real property, insurance, undisclosed liabilities, information in the Proxy Statement and the absence of any Material Adverse Effect on the Company since December 31, 1996, except as disclosed. TERMINATION; FEES. The Merger Agreement provides that it may be terminated at any time prior to the Effective Time, whether before or after approval of the stockholders of the Company described therein: (a) by mutual written consent of Tyco and the Company; (b) by either Tyco or the Company if any governmental authority shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting 25 the consummation of the transactions contemplated by the Merger Agreement and such order, decree or ruling or other action shall have become final and nonappealable; (c) by Tyco if (i) the Company shall have breached or failed to perform in any material respect any of its covenants or other agreements contained in the Merger Agreement, which breach or failure to perform is incapable of being cured or has not been cured within five days after the giving of written notice thereof to the Company (but not later than the expiration of the 20 business day period for which the Offer will be initially open); (ii) any representation or warranty of the Company shall not have been true and correct in all material respects when made; (iii) any representation or warranty of the Company shall cease to be true and correct in all material respects at any later date as if made on such date (other than representations and warranties made as of a specified date) other than as a result of a breach or failure to perform by the Company of any of its covenants or agreements under the Merger Agreement; PROVIDED, that the right to terminate the Merger Agreement pursuant to the provisions described in this clause (c) shall not be available to Tyco if Purchaser or any other affiliate of Tyco shall acquire Shares pursuant to the Offer; (d) by Tyco if (i) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified in a manner adverse to Tyco its approval or recommendation of the Offer or any of the Company Proposals or shall have approved or recommended any Company Takeover Proposal or (ii) the Board of Directors of the Company or any committee thereof shall have resolved to take any of the foregoing actions; (e) by either Tyco or the Company if the Offer shall have expired or been terminated without any Shares being purchased thereunder by Purchaser as a result of a failure of any of the conditions thereto set forth in the Merger Agreement; (f) by either the Company or Tyco if either (x) as the result of the failure of the Minimum Condition or any of the other conditions thereto set forth in the Merger Agreement, the Offer shall have terminated or expired in accordance with its terms without Purchaser having purchased any Shares pursuant to the Offer or (y) the Offer shall not have been consummated on or before March 31, 1998, PROVIDED that the right to terminate this Agreement pursuant to the provisions described in this clause (f) shall not be available to any party whose failure to perform any of its obligations under the Merger Agreement results in the failure of the Offer to be consummated by such time; (g) by the Company if Tyco or Purchaser shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the Merger Agreement, which breach or failure to perform is incapable of being cured or has not been cured within 5 days after the giving of written notice thereof to Tyco; or (h) by the Company in accordance with the provisions of the Merger Agreement described above under "NO SOLICITATION;" PROVIDED that the right to terminate the Merger Agreement pursuant to the provisions described in this clause (h) shall not be available (x) if the Company has breached in any material respect its obligations under the provisions described above under "NO SOLICITATION", or (y) if the Company shall fail to pay when due the fees and expenses provided for in the Merger Agreement. The Company agrees that if the Merger Agreement is terminated pursuant to (i) the provisions described in clause (d) above; (ii) the provisions described in clause (h) above; or 26 (iii) the provisions described in clause (f) above, and, with respect to this clause (iii), at the time of such termination any person, entity or group (as defined in Section 13(d)(3) of the Exchange Act) (other than Tyco or any of its affiliates or any person identified in the Company's Proxy Statement dated April 30, 1997 and who has executed a Stockholder Agreement with Tyco and Purchaser, PROVIDED that such person has not breached the terms of such Stockholder Agreement) shall have become the beneficial owner of more than 20% of the Shares and such person, entity or group (or any affiliate of such person, entity or group) thereafter (x) shall make a Company Takeover Proposal and, in the case of a consensual transaction with the Company, shall substantially have negotiated the terms thereof, at any time on or prior to the date which is six months after such termination of the Merger Agreement, and (y) shall consummate such Company Takeover Proposal at any time on or prior to the date which is one year after termination of the Merger Agreement, in the case of a consensual transaction, or six months after termination of the Merger Agreement, in the case of a non-consensual transaction, in each case with a value per Share of at least $17.00 (with appropriate adjustments for reclassifications of capital stock, stock dividends, stock splits, reverse stock splits and similar events); then the Company shall pay to Tyco the sum of (a) $3.5 million, as promptly as practicable but in no event later than two business days following termination of the Merger Agreement pursuant to the provisions described in clause (d) or (h) above, or, in the case of clause (iii) of this paragraph, upon consummation of such Company Takeover Proposal. The Company further agrees that if the Merger Agreement is terminated pursuant to the provisions described in clause (c)(i) above, (A) the Company will pay to Tyco, as promptly as practicable but in no event later than two business days following termination of the Merger Agreement, the amount of all documented and reasonable costs and expenses incurred by Tyco, Purchaser and their affiliates (including but not limited to fees and expenses of counsel and accountants and out-of-pocket expenses (but not fees) of financial advisors) in an aggregate amount not to exceed $350,000 in connection with the Merger Agreement or the transactions contemplated hereby ("Tyco Expenses"); and (B) in the event that the Company consummates a Company Takeover Proposal (whether or not solicited in violation of the Merger Agreement) within one year from the date of termination of the Merger Agreement, the sum of $3.5 million, less the amount of any payment made pursuant to the preceding clause (i), which payment shall be made not later than two business days following consummation of such Company Takeover Proposal. The Company further agrees that if the Merger Agreement is terminated pursuant to the provisions described in clause (c)(ii) above, the Company will pay to Tyco, as promptly as practicable but in no event later than two business days following termination of the Merger Agreement, the Tyco Expenses. GUARANTEE. Tyco has guaranteed the payment by Purchaser of the Per Share Amount and any other amounts payable by Purchaser pursuant to the Merger Agreement and has agreed to cause Purchaser to perform all of its other obligations under the Merger Agreement in accordance with its terms. STOCKHOLDER AGREEMENT As an inducement to Tyco and the Purchaser entering into the Merger Agreement with the Company, HP Partners L.P. (the "Stockholder"), which beneficially owns 1,515,886 issued and outstanding Shares, constituting approximately 18% of the Shares on a fully diluted basis (approximately 26% of the Shares on a fully diluted basis including 685,714 Shares issuable to it upon the exercise of warrants), has entered into a Stockholder Agreement (the "Stockholder Agreement") with Tyco and the Purchaser, pursuant to which it has agreed to tender its Shares in the Offer. 27 The following summary of certain provisions of the Stockholder Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1, is qualified in its entirety by reference to the text of the Stockholder Agreement. AGREEMENT TO TENDER. The Stockholder has agreed to tender its Shares in the Offer and not to withdraw any Shares so tendered unless the Offer (i) is withdrawn in accordance with the terms of the Merger Agreement or (ii) expires and the conditions set forth in Section 15 have not been satisfied or waived by Tyco or the Purchaser. In connection therewith, the Company has agreed with, and covenanted to, Tyco that the Company will not register the transfer of any certificate representing the Stockholder's Shares, unless such transfer is made to Tyco or the Purchaser or otherwise in compliance with the Stockholder Agreement. GRANT OF IRREVOCABLE PROXY. The Stockholder has irrevocably granted to, and appointed, Tyco and individuals designated by Tyco as such Stockholder's proxy and attorney-in-fact, to vote such Stockholder's Shares, or grant a consent or approval in respect of such Shares, at any meeting of stockholders of the Company or at any adjournment thereof or in any other circumstances upon which such Stockholder's vote, consent or other approval is sought, against (i) any merger agreement or merger (other than the Merger Agreement and the Merger), consolidation, combination, sale of substantial assets, reorganization, joint venture, recapitalization, dissolution, liquidation or winding up of or by the Company and (ii) any amendment of the Company's Certificate of Incorporation or bylaws or other proposal or transaction (including any consent solicitation to remove or elect any directors of the Company) involving the Company or any of its subsidiaries, which amendment or other proposal or transaction would in any manner impede, frustrate, prevent or nullify, or result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under or with respect to, the Offer, the Merger, the Merger Agreement or any of the other transactions contemplated by the Merger Agreement. REPRESENTATIONS, WARRANTIES, COVENANTS AND OTHER AGREEMENTS. The Stockholder has made certain representations and warranties in the Stockholder Agreement, including with respect to (i) ownership of the Shares, (ii) the absence of liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances on or in respect of its Shares, and (iii) an acknowledgement of Tyco's reliance upon such Stockholder's execution of the Stockholder Agreement in entering into, and causing the Purchaser to enter into, the Merger Agreement. In addition, the Stockholder has agreed not to (i) transfer, or consent to any transfer of, any or all of such Stockholder's Shares or any interest therein (except as contemplated by the Stockholder Agreement), (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of such Shares or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization or consent in or with respect to such Shares, (iv) deposit such Shares into a voting trust or enter into a voting agreement or arrangement with respect to such Shares or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations under the Stockholder Agreement or the transactions contemplated thereby. The Stockholder has also agreed not to, directly or indirectly, (i) solicit, initiate or encourage the submission of any Company Takeover Proposal or (ii) participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Company Takeover Proposal, provided that the foregoing restrictions shall not be applicable in any case to the extent that, pursuant to the Merger Agreement, such restrictions would not be applicable to the Company. TERMINATION. The Stockholder Agreement, and all rights and obligations thereunder and the proxy provided therein, shall terminate upon the earlier of (i) the date upon which termination of the Merger Agreement is terminated in accordance with its terms or (ii) the date that Tyco or the Purchaser shall have purchased and paid for the Shares of the Stockholder pursuant to the terms of the Stockholder Agreement. 28 14. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that neither the Company nor any of the Company Subsidiaries will (i) split, combine or reclassify any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (ii) declare, pay or set aside any dividend or other distribution in respect of its capital stock, other than dividends or distributions to the Company or a subsidiary of the Company by a direct or indirect wholly-owned subsidiary of the Company to its parent or (iii) redeem, purchase or otherwise acquire any shares of its capital stock or other securities thereof. If on or after the date of the Merger Agreement and notwithstanding the provisions thereof, the Company should (i) split, combine or otherwise change the Shares or its capitalization, (ii) acquire presently outstanding Shares or otherwise cause a reduction in the number of outstanding Shares or (iii) issue or sell any shares of any class or any securities convertible into any such shares, or any rights, warrants or options to acquire any such shares or convertible securities (other than Shares issued pursuant to, and in accordance with the terms in effect on the date of the Merger Agreement of, stock options, warrants or convertible debentures issued prior to such date and other than the issuance of up to 15,000 Shares in connection with an acquisition as permitted by the Merger Agreement), then, without prejudice to the Purchaser's rights under the Merger Agreement, the Purchaser (subject to the Merger Agreement), in its sole discretion, may make such adjustments in the Offer price and other terms of the Offer as it deems appropriate to reflect such action. If, on or after the date of the Merger Agreement and notwithstanding the provisions thereof, the Company should declare or pay any cash, non-cash or stock dividend or other distribution on, or issue any rights with respect to, the Shares, payable or distributable to stockholders of record on a date prior to the transfer to the name of the Purchaser or its nominees or transferees on the Company's stock transfer records of the Shares purchased pursuant to the Offer, then, without prejudice to the Purchaser's rights under the Merger Agreement, (i) the price per Share payable by the Purchaser pursuant to the Offer may, subject to the provisions of the Merger Agreement, in the sole discretion of the Purchaser, be reduced by the amount of any such cash dividend or distribution and (ii) any non-cash dividend, distribution or right to be received by the tendering stockholders will (a) be received and held by the tendering stockholders for the account of the Purchaser and will be required to be promptly remitted and transferred by each tendering stockholder to the Depositary for the account of the Purchaser, accompanied by appropriate documentation of transfer or (b) at the direction of the Purchaser, be exercised for the benefit of the Purchaser, in which case the proceeds of such exercise will promptly be remitted to the Purchaser. Pending such remittance, the Purchaser will be entitled, subject to applicable law, to all rights and privileges as owner of any such non-cash dividend, distribution or right or such proceeds and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser in its sole discretion. 15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer, the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) promulgated under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and (subject to any such rules or regulations) may delay the acceptance for payment of any tendered Shares and (except as provided in this Agreement) amend or terminate the Offer as to any Shares not then paid for if (i) the condition that there shall be validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares which represents at least 51% of the total number of Shares on a fully- diluted basis shall not have been satisfied (the "Minimum Condition"), (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer or (iii) at any time after the date of this Agreement and before the time of payment for any such Shares (whether or not any Shares have theretofore been accepted for payment or paid for pursuant to the Offer), any of the following conditions exists: 29 (a) there shall be in effect an injunction or other order, decree, judgment or ruling by a Governmental Authority (as defined in the Merger Agreement) of competent jurisdiction or a Law (as defined in the Merger Agreement) shall have been promulgated, or enacted by a Governmental Authority of competent jurisdiction which in any such case (i) restrains or prohibits the making or consummation of the Offer or the consummation of the Merger, (ii) prohibits or restricts the ownership or operation by Tyco (or any of its affiliates or subsidiaries) of any portion of the Company's business or assets, or Tyco's business or assets relating to the security services business, which is material to the security services business of all such entities taken as a whole, or compels Tyco (or any of its affiliates or subsidiaries) to dispose of or hold separate any portion of the Company's business or assets, or Tyco's business or assets relating to the security services business, which is material to the security services business of all such entities taken as a whole, (iii) imposes material limitations on the ability of the Purchaser effectively to acquire or to hold or to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by the Purchaser on all matters properly presented to the stockholders of the Company, (iv) imposes any material limitations on the ability of Tyco or any of its affiliates or subsidiaries effectively to control in any material respect the business and operations of the Company or (v) seeks to restrict any future business activity by Tyco (or any of its affiliates) relating to the security services business, including, without limitation, by requiring the prior consent of any person or entity (including any Governmental Authority) to future transactions by Tyco (or any of its affiliates); or (b) there shall have been instituted, pending or threatened an action by a Governmental Authority seeking to restrain or prohibit the making or consummation of the Offer or the consummation of the Merger or to impose any other restriction, prohibition or limitation referred to in the foregoing paragraph (a); or (c) the Merger Agreement shall have been terminated by the Company or Tyco in accordance with its terms; or (d) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in the Shares on The Nasdaq National Market, (ii) any decline, measured from the date of the Merger Agreement, in the Dow Jones Industrial Average or Standard & Poor's 500 Index by an amount in excess of 15%, (iii) a declaration of a banking moratorium or any general suspension of payments in respect of banks in the United States or (iv) in the case of any of the foregoing existing at the time of the execution of the Merger Agreement, a material acceleration or worsening thereof; or (e) Tyco and the Company shall have agreed that the Purchaser shall amend the Offer to terminate the Offer or postpone the payment for Shares pursuant thereto; or (f) any of the representations and warranties made by the Company in the Merger Agreement shall not have been true and correct in all material respects when made, or shall thereafter have ceased to be true and correct in all material respects as if made as of such later date (other than representations and warranties made as of a specified date), or the Company shall not in all material respects have performed each obligation and agreement and complied with each covenant to be performed and complied with by it under the Merger Agreement, provided, however, that such breach or failure to perform is incapable of being cured or has not been cured within 5 days after the giving of written notice thereof to the Company; PROVIDED, HOWEVER, that no such 5-day cure period shall require extension of the Offer beyond its initial twenty (20) business days period; or (g) the Company's Board of Directors shall have modified or amended its recommendation of the Offer in any manner adverse to Tyco or shall have withdrawn its recommendation of the Offer, or shall have recommended acceptance of any Company Takeover Proposal or shall have resolved to do any of the foregoing; or 30 (h) any corporation, entity or "group" (as defined in Section 13(d)(3) of the Exchange Act) (a "person"), other than Tyco, the Purchaser and any person identified in the Company's Proxy Statement dated April 30, 1997 and who has executed a Stockholder Agreement (provided that such person has not breached the terms of such Stockholder Agreement), shall have acquired beneficial ownership of more than 20% of the outstanding Shares, or shall have been granted any options or rights, conditional or otherwise, to acquire a total of more than 20% of the outstanding Shares; (ii) any new group shall have been formed which beneficially owns more than 20% of the outstanding Shares; or (iii) any person (other than Tyco or one or more of its affiliates) shall have entered into an agreement in principle or definitive agreement with the Company with respect to a tender or exchange offer for any Shares or a merger, consolidation or other business combination with or involving the Company; or (i) any change, development, effect or circumstance shall have occurred or be threatened that would reasonably be expected to have a Material Adverse Effect (as defined in the Merger Agreement) with respect to the Company; or (j) the Company shall commence a case under any chapter of Title XI of the United States Code or any similar law or regulation, or a petition under any chapter of Title XI of the United States Code or any similar law or regulation is filed against the Company which is not dismissed within two business days. The foregoing conditions are for the sole benefit of Tyco and the Purchaser and may be asserted by Tyco or the Purchaser regardless of the circumstances giving rise to any such condition and may be waived by Tyco or the Purchaser, in whole or in part, at any time and from time to time, in the sole discretion of Tyco and the Purchaser. The failure by Tyco or the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any right, the waiver of such right with respect to any particular facts or circumstances shall not be deemed a waiver with respect to any other facts or circumstances, and each right shall be deemed an ongoing right which may be asserted at any time and from time to time. 16. CERTAIN LEGAL MATTERS. GENERAL. Except as described in this Section 16, based on a review of publicly available filings by the Company with the Commission and other publicly available information concerning the Company, neither Tyco nor the Purchaser is aware of any license or regulatory permit that appears to be material to the business of the Company and that might be adversely affected by the Purchaser's acquisition of Shares pursuant to the Offer, or of any approval or other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required for the acquisition or ownership of Shares by the Purchaser pursuant to the Offer. Should any such approval or other action be required, it is presently contemplated that such approval or action would be sought, except as described below under "State Takeover Laws." While the Purchaser does not currently intend to delay acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if required, would be obtained without substantial conditions or that adverse consequences would not result to the Company's business or that certain parts of the Company's business would not have to be disposed of in the event that such approvals were not obtained or such other actions were not taken or in order to obtain any such approval or other action. If certain types of adverse action are taken with respect to the matters discussed below, the Purchaser may decline to accept for payment or pay for any Shares tendered. See Section 15. STATE TAKEOVER LAWS. The Company and certain of its subsidiaries conduct business in a number of states throughout the United States, some of which have adopted laws and regulations applicable to offers to acquire shares of corporations that are incorporated or have substantial assets, stockholders and/or a principal place of business in such states. In EDGAR V. MITE CORP., the Supreme Court of the United States held that the Illinois Business Takeover Statute, which involved state securities laws that made the takeover 31 of certain corporations more difficult, imposed a substantial burden on interstate commerce and was therefore unconstitutional. In CTS CORP. V. DYNAMICS CORP. OF AMERICA, however, the Supreme Court of the United States held that a state may, as a matter of corporate law and, in particular, those laws concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions, in particular, that the corporation has a substantial number of stockholders in and is incorporated under the laws of such state. The Company is incorporated under the laws of the State of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents an "interested stockholder" (including a person who owns or has the right to acquire 15% or more of the corporation's outstanding voting stock) from engaging in a "business combination" (defined to include mergers and certain other actions) with a Delaware corporation for a period of three years following the date such person became an interested stockholder. The Board of Directors of the Company has taken all appropriate action so that neither Tyco nor the Purchaser is an "interested stockholder" pursuant to Section 203. Neither Tyco nor the Purchaser has determined whether any other state takeover laws and regulations will by their terms apply to the Offer, and, except as set forth above, neither Tyco nor the Purchaser has presently sought to comply with any state takeover statute or regulation. Tyco and the Purchaser reserve the right to challenge the applicability or validity of any state law or regulation purporting to apply to the Offer or the Merger, and neither anything in this Offer nor any action taken in connection herewith is intended as a waiver of such right. In the event it is asserted that one or more state takeover statutes is applicable to the Offer or the Merger and an appropriate court does not determine that such statute is inapplicable or invalid as applied to the Offer or the Merger, Tyco or the Purchaser might be required to file certain information with, or to receive approval from, the relevant state authorities, and the Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in consummating the Offer. ANTITRUST. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the U.S. Department of Justice (the "Antitrust Division") and the FTC and certain waiting period requirements have been satisfied. The acquisition of Shares by the Purchaser pursuant to the Offer is subject to such requirements. See Section 15. Under the provisions of the HSR Act applicable to the purchase of Shares pursuant to the Offer, purchases may not be consummated until the expiration of a 15-calendar day waiting period after the filing of certain required information and documentary material with the Antitrust Division and the FTC with respect to the Offer (unless earlier terminated pursuant to a request therefor, which Tyco will make). If, within such 15-day waiting period, either the Antitrust Division or the FTC requests additional information or documentary material relevant to the Offer from Tyco, the waiting period will be extended for an additional period of 10 calendar days following the date of substantial compliance with such request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the rules promulgated under the HSR Act. Thereafter, such waiting period may be extended only by court order or by agreement of Tyco. A request for additional information issued to the Company cannot extend the waiting period. Tyco expects to file, or cause to be filed, a Notification and Report Form with respect to the Offer under the HSR Act on January 6, 1998, and, in such event, the required waiting period with respect to the Offer will expire at 11:59 p.m., New York City time, on January 21, 1998, unless Tyco receives a request for additional information or documentary material or the Antitrust Division or the FTC terminates the waiting period prior thereto. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the proposed purchase of Shares by the Purchaser pursuant to the Offer. At any time before or after such purchase, the Antitrust Division or the FTC could take such action under the antitrust 32 laws as it deems necessary or desirable in the public interest, including seeking to enjoin the transaction or seeking divestiture of the Shares so acquired or divestiture of substantial assets of Tyco or its subsidiaries. Litigation seeking similar relief could also be brought by private persons and the state attorneys general. Based upon an examination of publicly available information relating to the businesses in which Tyco and the Company are engaged, Tyco and the Purchaser do not believe that consummation of the Offer will result in violation of any applicable antitrust laws. However, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made, or, if such a challenge is made, what the result would be. See Section 15 for certain conditions to the Offer, including conditions with respect to certain judicial or governmental actions. 17. FEES AND EXPENSES. The Purchaser has retained Morrow & Co., Inc. to act as the Information Agent and ChaseMellon Shareholder Services, L.L.C. to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telecopy and personal interview and may request brokers, dealers and other nominee stockholders to forward the Offer materials to beneficial owners. The Information Agent and the Depositary will receive reasonable and customary compensation for services relating to the Offer and will be reimbursed for certain out-of-pocket expenses. The Purchaser and Tyco have also agreed to indemnify the Information Agent and the Depositary against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. Neither Tyco nor the Purchaser will pay any fees or commissions to any broker or dealer or any other person (other than to the Information Agent) for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. 18. MISCELLANEOUS. The Offer is being made to all holders of Shares. The Purchaser is not aware of any jurisdiction where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a good faith effort to comply with any such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Purchaser cannot comply with any such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. No person has been authorized to give any information or make any representation on behalf of Tyco, the Purchaser or the Company not contained in this Offer to Purchase or in the related Letter of Transmittal and, if given or made, such information or representation must not be relied upon as having been authorized. Tyco and the Purchaser have filed with the Commission a Tender Offer Statement on Schedule 14D-1, together with all exhibits thereto, pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, furnishing certain additional information with respect to the Offer. Such Tender Offer Statement and any amendments thereto, including exhibits, may be inspected and copies may be obtained from the offices of the Commission in the manner set forth in Section 8 (except that they will not be available at the regional offices of the Commission). T9 ACQUISITION CORP. January 6, 1998 33 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 has been Chairman of the Board of Directors of Tyco (US) since 1993 and has been Chief Executive Officer of Tyco (US) since 1992 and President of Tyco (US) since 1989. Michael A. Ashcroft................... P.O. Box 1598 Mr. Ashcroft has been non- executive Director Belize City, Belize Chairman of BHI Corporation since 1987. He was Chairman of the Board of Directors and Chief Executive Officer of ADT Limited (now Tyco International Ltd.) from 1984 to 1997. Mr. Ashcroft is a citizen of Belize. Joshua M. Berman,..................... 919 Third Avenue Mr. Berman has been counsel to the law Director and Vice President New York, NY 10022 firm of Kramer, Levin, Naftalis & Frankel since 1985. Richard S. Bodman,.................... 2 Wisconsin Circle Mr. Bodman has been Managing General Director Suite 610 Partner of AT&T Ventures LLC since Chevy Chase, MD 20815 1996. Previously, since 1990, he was Senior Vice President, Corporate Strategy and Development, of AT&T Corporation.
34
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY - -------------------------------------- --------------------------------- -------------------------------------- John F. Fort,......................... 2003 Milford Street Mr. Fort was Chairman of the Board and Director Houston, TX 77098 Chief Executive Officer of Tyco (US) from 1982 to 1992. Stephen W. Foss,...................... 380 Lafayette Road Mr. Foss has been President of Foss Director Hampton, NH 03842 Manufacturing Company, Inc. a manufacturer of non-woven fabrics, since 1969. Richard A. Gilleland,................. 2829 Townsgate Road Mr. Gilleland was President and Chief Director Suite 101 Executive Officer of Amsco West Lake Village, CA 91361 International, Inc., a manufacturer of infection control products, from 1995 to 1996 and Senior Vice President of Tyco (US) from 1994 to 1995. From 1990 to 1994, he was President and Chief Executive Officer of Kendall International, Inc., a manufacturer of medical products, which was acquired by Tyco (US) in 1994. Philip M. Hampton,.................... 399 Park Avenue Mr. Hampton has been Chairman of Director 32nd Floor Metzler Corporation, an investment New York, NY 10022 bank, since 1989. James S. Pasman, Jr................... 29 The Trillium Mr. Pasman was President and Chief Director Pittsburgh, PA 15238 Operating Officer of National Intergroup, Inc., an industrial holding company, from 1989 to 1991 and was Chairman and Chief Executive Officer of Kaiser Aluminum and Chemical Corp. from 1987 to 1989. W. Peter Slusser...................... One Citicorp Center Mr. Slusser has been the President of Director Suite 5100 Slusser Associates, Inc., a private 153 East 53rd Street investment banking firm, since 1988. New York, NY 10022 Frank E. Walsh, Jr.,.................. 330 South Street Mr. Walsh has been Chairman of the Director Morristown, NJ Sandyhill Foundation, a charitable 07962-1975 foundation, since 1996. Previously, from 1982 to 1996, he was Chairman of Wesray Capital Corporation.
35
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY - -------------------------------------- --------------------------------- -------------------------------------- Jerry R. Boggess,..................... Three Tyco Park Mr. Boggess has been Vice President of Vice President of Tyco (US) Exeter, NH 03833 Tyco (US) since 1996 and President of the Grinnell Fire Protection Division of Tyco (US)'s Grinnell Corporation subsidiary ("Grinnell") since 1993. Previously, from 1989, he was Executive Vice President of Grinnell. David P. Brownell,.................... One Tyco Park Mr. Brownell has been Senior Vice Senior Vice President Exeter, NH 03833 President of Tyco since July 1997. He has been Senior Vice President of Tyco (US) since 1993. Previously, he served as Executive Vice President of the Flow Control Division of Grinnell from 1991 to 1993. Robert P. Mead,....................... Three Tyco Park Mr. Mead has been Vice President of Vice President of Tyco (US) Exeter, NH 03833 Tyco (US) and President of Grinnell's Flow Control Division since 1993. From 1992 to 1993, he was Executive Vice President of Tyco (US)'s Allied Tube and Conduit Corp. subsidiary. He served as Managing Director of Tyco (US)'s Asia-Pacific operations from 1991 to 1992. Richard J. Meelia,.................... 15 Hampshire Street Mr. Meelia has been Vice President of Vice President of Tyco (US) Mansfield, MA 02048 Tyco (US) since 1996 and President of the Kendall Company (a Tyco (US) subsidiary) since 1995. From 1991 to 1995, he was Group President of Kendall Healthcare. Barbara S. Miller,.................... One Tyco Park Ms. Miller has been Vice President and Vice President and Treasurer Exeter, NH 03833 Treasurer of Tyco since July 1997. She has been Vice President of Tyco (US) since 1996 and Treasurer of Tyco (US) since 1993. She was Assistant Corporate Controller of Tyco (US) from 1989 to 1993.
36
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND POSITION HELD CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY - -------------------------------------- --------------------------------- -------------------------------------- Mark H. Swartz,....................... One Tyco Park Mr. Swartz has been Executive Vice Executive Vice President and Chief Exeter, NH 03833 President and Chief Financial Officer Financial Officer of Tyco since July 1997. He has been Vice President and Chief Financial Officer of Tyco (US) since 1995. From 1993 to 1995, he was Tyco (US)'s Director of Mergers and Acquisitions, and previously since 1991 was associated with Tyco (US) in other capacities.
37 ANNEX II CERTAIN INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER The following table sets forth the name, current business address, present principal occupation or employment, and material occupations, positions, offices or employment for the past five years of each director and executive officer of the Purchaser. Each such person is a citizen of the United States of America. None of the listed persons, during the past five years, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.
PRESENT PRINCIPAL CURRENT BUSINESS OCCUPATION OR EMPLOYMENT NAME AND POSITION HELD ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------- ----------------------- ------------------------------------------- L. Dennis Kozlowski,....................... One Tyco Park * President Exeter, NH 03833 Mark H. Swartz,............................ One Tyco Park * Director and Vice President Exeter, NH 03833 Barbara S. Miller,......................... One Tyco Park * Director, Vice President and Treasurer Exeter, NH 03833 M. Brian Moroze,........................... One Tyco Park Mr. Moroze has been General Counsel of Tyco Director, Vice President and Secretary Exeter, NH 03833 (US) since 1994 and served as Associate General Counsel from 1986 to 1994. Jerry R. Boggess,.......................... Three Tyco Park * Vice President Exeter, NH 03833
- ------------------------ * Please see the information set forth in Annex I. 38 Manually signed facsimile copies of the Letter of Transmittal will be accepted. Letters of Transmittal and certificates for Shares should be sent or delivered by each stockholder of the Company or his broker, dealer, commercial bank or trust company to the Depositary at one of its addresses set forth below: THE DEPOSITARY FOR THE OFFER IS: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. BY HAND OR BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE: ChaseMellon ChaseMellon (201) 329-8936 Shareholder Services, L.L.C. Shareholder Services, L.L.C. (For Eligible Institutions Only) P.O. Box 3301 120 Broadway, 13th Floor South Hackensack, NJ 07606 New York, NY 10271 CONFIRM BY TELEPHONE: (201) 296-4209
Any questions or requests for assistance may be directed to the Information Agent at its address and telephone numbers set forth below. Requests for additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent or the Depositary. Stockholders may also contact their brokers, dealers, commercial banks or trust companies for assistance concerning the Offer. The Information Agent for the Offer is: [LOGO] 909 Third Avenue New York, New York 10022 (212) 754-8000 (call collect) or CALL TOLL-FREE (800) 566-9061 Bank and Brokerage Firms Call (800) 662-5200 39 EX-99.(A)(2) 3 LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF HOLMES PROTECTION GROUP, INC. PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 6, 1998 OF T9 ACQUISITION CORP., AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 3, 1998, UNLESS THE OFFER IS EXTENDED. THE DEPOSITARY FOR THE OFFER IS: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. BY HAND OR BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE: ChaseMellon ChaseMellon (201) 329-8936 Shareholder Services, L.L.C. Shareholder Services, L.L.C. (For Eligible Institutions Only) P.O. Box 3301 120 Broadway, 13th Floor South Hackensack, NJ 07606 New York, NY 10271 CONFIRM BY TELEPHONE: (201) 296-4860
------------------------ DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by stockholders either if certificates representing Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Instruction 2) is utilized, if delivery is to be made by book-entry transfer to the account maintained by the Depositary at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 2 of the Offer to Purchase. Stockholders whose certificates are not immediately available, or who cannot deliver their certificates or confirmation of the book-entry transfer of their Shares into the Depositary's account at the Book-Entry Transfer Facility ("Book- Entry Confirmation") and all other documents required hereby to the Depositary on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), must tender their Shares according to the guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution: _____________________________________________ Account Number: ____________________________________________________________ Transaction Code Number: ___________________________________________________ / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s): ___________________________________________ Date of Execution of Notice of Guaranteed Delivery: ________________________ Name of Institution that Guaranteed Delivery: ______________________________ If Delivered by Book-Entry Transfer: Name of Tendering Institution: _____________________________________________ Account Number: ____________________________________________________________ Transaction Code Number: ___________________________________________________ - -------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED CERTIFICATE(S) TENDERED (ATTACH ADDITIONAL LISTS IF NECESSARY) ------------------------------------------------- TOTAL NUMBER OF SHARES REPRESENTED NUMBER OF NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE BY SHARES (PLEASE FILL IN, IF BLANK) NUMBER(S)* CERTIFICATE(S) TENDERED** - ------------------------------------------------------------------------------------------------------ ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- TOTAL SHARES - ------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered hereby. See Instruction 4. The names and addresses of the registered holders should be printed, if not already printed above, exactly as they appear on the certificates representing Shares tendered hereby. The certificates and number of Shares that the undersigned wishes to tender should be indicated in the appropriate boxes. 2 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to T9 Acquisition Corp., a Delaware corporation (the "Purchaser") and an indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company ("Tyco"), the above-described shares of common stock, par value $.01 per share (the "Shares"), of Holmes Protection Group, Inc., a Delaware corporation (the "Company"), pursuant to the Purchaser's offer to purchase all of the outstanding Shares at a price of $17.00 per Share, net to the tendering stockholder in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 6, 1998 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the "Offer"). The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to Tyco or to one or more affiliates of Tyco, the right to purchase Shares tendered pursuant to the Offer. Subject to, and effective upon, acceptance for payment of and payment for the Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer, the undersigned hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby (and any and all other Shares or other securities or rights issued or issuable in respect thereof on or after January 6, 1998) and irrevocably appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and any such other Shares or securities or rights), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates representing such Shares (and any such other Shares or securities or rights), or transfer ownership of such Shares (and any such other Shares or securities or rights) on the account books maintained by the Book-Entry Transfer Facility, together in either such case with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser upon receipt by the Depositary, as the undersigned's agent, of the purchase price (adjusted, if appropriate, as provided in the Offer to Purchase), (b) present such Shares (and any such other Shares or securities or rights) for registration and transfer on the books of the Company, and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any such other Shares or securities or rights), all in accordance with the terms of the Offer. The undersigned hereby irrevocably appoints Jeffrey D. Mattfolk and M. Brian Moroze and each of them or any other designee of the Purchaser, the attorneys and proxies of the undersigned, each with full power of substitution, to vote in such manner as each such attorney and proxy or his substitute shall, in his sole discretion, deem proper, and otherwise act (including pursuant to written consent) with respect to all the Shares tendered hereby which have been accepted for payment by the Purchaser prior to the time of such vote or action (and any and all other Shares or securities or rights issued or issuable in respect thereof on or after January 6, 1998), which the undersigned is entitled to vote at any meeting of stockholders (whether annual or special and whether or not an adjourned meeting) of the Company, or consent in lieu of any such meeting, or otherwise. This proxy and power of attorney is coupled with an interest in the Shares tendered hereby and is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares (and any such other Shares or securities or rights) by the Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke all prior proxies granted by the undersigned at any time with respect to such Shares (and any such other Shares or securities or rights) and no subsequent proxies will be given (and if given will be deemed not to be effective) with respect thereto by the undersigned. The undersigned acknowledges that in order for Shares to be deemed validly tendered, immediately upon the acceptance for payment of such Shares, the Purchaser or the Purchaser's designee must be able to exercise full voting and other rights of a record and beneficial holder with respect to such Shares. 3 The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any and all other Shares or securities or rights issued or issuable in respect thereof on or after January 6, 1998), and that, when the same are accepted for payment by the Purchaser, the Purchaser will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and the same will not be subject to any adverse claim. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and any such other Shares or securities or rights). No authority herein conferred or agreed to be conferred in this Letter of Transmittal shall be affected by, and all such authority shall survive, the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 2 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. The undersigned recognizes that, under certain circumstances set forth in the Offer to Purchase, the Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or return any certificates representing Shares not tendered or accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and/or return any certificates representing Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the registered holder(s) appearing under "Description of Shares Tendered" at the address shown below such registered holder(s) name(s). In the event that either or both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or return any certificates representing Shares not tendered or accepted for payment in the name(s) of, and deliver such check and/or return such certificates to, the person or persons so indicated. Stockholders tendering Shares by book entry transfer may request that any Shares not accepted for payment be returned by crediting such account maintained at the Book-Entry Transfer Facility as such stockholder may designate by making an appropriate entry under "Special Payment Instructions." The undersigned recognizes that the Purchaser has no obligation pursuant to the Special Payment Instructions to transfer any Shares from the name of the registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares so tendered hereby. 4 - ------------------------------------------------ SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificates representing Shares not tendered or not purchased and/or the check for the purchase price of Shares purchased are to be issued in the name of someone other than the undersigned, or if Shares tendered by book-entry transfer which are not purchased are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than that account designated above. Issue check and/or certificate(s) to: Name: -------------------------------------- (Please Print) Address: ------------------------------------- -------------------------------------------- -------------------------------------------- (Include Zip Code) --------------------------------------------------------- (Tax Identification or Social Security No.) Credit unpurchased Shares tendered by book-entry transfer to the Book-Entry Transfer Facility account set forth below. -------------------------------------------- (Account Number) - ------------------------------------------------------------ - ------------------------------------------------------------ SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificates representing Shares not tendered or not purchased and/or the check for the purchase price of Shares purchased are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown under "Description of Shares Tendered." Issue check and/or certificate(s) to: Name: -------------------------------------- (Please Print) Address: ------------------------------------- -------------------------------------------- -------------------------------------------- (Include Zip Code) - ----------------------------------------------------- 5 SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE) Signature(s) of Holder(s) of Shares ____________________________________________ ________________________________________________________________________________ Dated: ______________, 1998 (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, agents, officers of corporations or others acting in a fiduciary or representative capacity, please set forth the full title and see Instruction 5.) Name(s) ________________________________________________________________________ (Please Print) Capacity (full title) __________________________________________________________ Address ________________________________________________________________________ (Including Zip Code) (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: ______________ , 1998 6 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of Transmittal is required (i) if this Letter of Transmittal is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) tendered herewith, unless such holder has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on this Letter of Transmittal, or (ii) if such Shares are tendered for the account of a firm that is a member in good standing of the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program (each being hereinafter referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of Transmittal is to be completed by stockholders either if certificates representing Shares are to be forwarded herewith to the Depositary or, unless an Agent's Message (as defined below) is utilized, if tenders of Shares are to be made pursuant to the procedures for delivery by book-entry transfer set forth in Section 2 of the Offer to Purchase. Certificates representing all physically tendered Shares, or any book-entry confirmation of Shares, as the case may be, together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or, in connection with a book-entry transfer, an Agent's Message, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). If a stockholder's certificate(s) representing Shares are not immediately available (or the procedure for the book-entry transfer cannot be completed on a timely basis) or time will not permit all required documents to reach the Depositary on or prior to the Expiration Date, such stockholder's Shares may nevertheless be tendered if the procedures for guaranteed delivery set forth in Section 2 of the Offer to Purchase are followed. Pursuant to such procedure, (i) such tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Purchaser, must be received by the Depositary on or prior to the Expiration Date, and (iii) the certificates representing all tendered Shares, in proper form for transfer, or Book-Entry Confirmation of Shares, as the case may be, in each case together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three Nasdaq National Market trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in Section 2 of the Offer to Purchase. The term "Agent's Message" means a message transmitted through electronic means by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a book-entry confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received, and agrees to be bound by, this Letter of Transmittal. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATE(S) REPRESENTING SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER. THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF SUCH DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted, and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal (or facsimile thereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate signed schedule attached hereto. 7 4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER SHARES BY BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any certificate submitted are to be tendered, fill in the number of Shares that are to be tendered in the box entitled "Number of Shares Tendered." In such case, new certificate(s) representing the remainder of the Shares that were represented by the old certificate(s) will be sent to the registered holder(s), unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by certificate(s) delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face(s) of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and tendered hereby, no endorsements of certificates or separate stock powers are required, unless payment or certificates for Shares not tendered or accepted for payment are to be issued to a person other than the registered holder(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any certificates or stock powers are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Purchaser of such person's authority so to act must be submitted. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the certificates. Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution, unless the signature is that of an Eligible Institution. 6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the Purchaser will pay or cause to be paid any stock transfer taxes with respect to the transfer and sale of purchased Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificates representing Shares not tendered or accepted for payment are to be registered in the name of, any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such other person) payable on account of the transfer to such person will be deducted from the purchase price, unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or certificates representing Shares not tendered or accepted for payment are to be issued in the name of a person other than the signer of this Letter of Transmittal or if a check is to be sent and/or such certificates are to be returned to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Stockholders tendering Shares by book-entry transfer may request that Shares not accepted for payment be credited to such account maintained at the Book-Entry Transfer Facility as such stockholder may designate hereon. If no such instructions are given, such Shares not accepted for payment will be returned by crediting the account at the Book-Entry Transfer Facility designated above. 8. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s) representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify the Depositary. The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. 9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the Purchaser, in whole or in part, at any time and from time to time in the Purchaser's sole discretion, in the case of any Shares tendered hereby. 8 10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN"), generally the stockholder's social security or federal employer identification number, on Substitute Form W-9, which is provided below, and to certify whether the stockholder is subject to backup withholding of Federal income tax. If a tendering stockholder is subject to backup withholding, the stockholder must cross out item (2) of the Certification box of the Substitute Form W-9. Failure to provide the information on the Substitute Form W-9 may subject the tendering stockholder to 31% Federal income tax withholding on the payment of the purchase price. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the stockholder should write "Applied For" in the space provided for the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price until a TIN is provided to the Depositary. 11. FOREIGN HOLDERS. Foreign holders must submit a completed IRS Form W-8 to avoid backup withholding. IRS Form W-8 may be obtained by contacting the Depositary at one of the addresses on the face of this Letter of Transmittal. 12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may be directed to the Information Agent at the address set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 may be obtained from the Information Agent at the address set forth below or from your broker, dealer, commercial bank or trust company. IMPORTANT: This Letter of Transmittal (or a facsimile thereof), together with certificates representing Shares or confirmation of book-entry transfer and all other required documents, or the Notice of Guaranteed Delivery, must be received by the Depositary on or prior to the Expiration Date. IMPORTANT TAX INFORMATION Under federal income tax law, a stockholder whose tendered Shares are accepted for payment is required to provide the Depositary (as payer) with such stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is an individual, the TIN is such person's social security number. The TIN of a resident alien who does not have and is not eligible to obtain a social security number is such person's IRS individual taxpayer identification number. If a tendering stockholder is subject to backup withholding, the stockholder must cross out item (2) of the Certification box on the Substitute Form W-9. If the Depositary is not provided with the correct TIN, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service ("IRS"). In addition, payments that are made to such stockholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding. Certain stockholders (including, among others, all corporations and certain foreign individuals) are not subject to backup withholding. In order for a foreign individual to qualify as an exempt recipient, that stockholder must submit to the Depositary a properly completed IRS Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. Such forms may be obtained from the Depositary. Exempt stockholders, other than foreign individuals, should furnish their TIN, write "Exempt" on the face of the Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the stockholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS. 9 PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of such stockholder's correct TIN by completing the Substitute Form W-9 below certifying that the TIN provided on such form is correct (or that such stockholder is awaiting a TIN) and that (i) such holder is exempt from backup withholding, (ii) such holder has not been notified by the IRS that such holder is subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has notified such holder that such holder is no longer subject to backup withholding (see Part 2 of Substitute Form W-9). WHAT NUMBER TO GIVE THE DEPOSITARY The stockholder is required to give the Depositary the social security number, individual taxpayer identification number, or employer identification number of the record owner of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidelines on which number to report. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, such stockholder should write "Applied For" in the space provided for in the TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is written in Part 1 and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price until a TIN is provided to the Depositary. 10
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT ------------------------- FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW SOCIAL SECURITY NUMBER OR ------------------------ Employer identification number (If awaiting TIN write "Applied For")
PART 2--For Payees exempt from backup withholding, see the enclosed Taxpayer Identification Number (TIN) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as instructed therein. CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: DEPARTMENT OF (1) The number shown on this form is my correct Taxpayer Identification THE TREASURY Number (or a Taxpayer Identification Number has not been issued to me) and INTERNAL REVENUE either (a) I have mailed or delivered an application to receive a SERVICE Taxpayer Identification Number to the appropriate Internal Revenue Service ("IRS") or Social Security Administration office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number within sixty (60) days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number; and (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, (b) I have not been notified by the IRS that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. PAYER'S REQUEST FOR CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been TAXPAYER IDENTIFICATION notified by the IRS that you are currently subject to backup withholding because NUMBER (TIN) AND you have failed to report all interest and dividends on your tax return. If CERTIFICATION after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9). NAME: (please print) ADDRESS: (please print) SIGNATURE DATE , 1998
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION. THE INFORMATION AGENT FOR THE OFFER IS: [LOGO] 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 Toll Free (800) 566-9061 Banks and Brokerage Firms please call: (800) 662-5200 EX-99.(A)(3) 4 LETTER TO BROKERS, DEALERS, TRUST CO. & NOMINEES OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HOLMES PROTECTION GROUP, INC. AT $17.00 NET PER SHARE BY T9 ACQUISITION CORP., AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 3, 1998, UNLESS THE OFFER IS EXTENDED. January 6, 1998 To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees: We have been appointed by T9 Acquisition Corp. (the "Purchaser"), a Delaware corporation and an indirect wholly-owned subsidiary of Tyco International Ltd. ("Tyco"), a Bermuda company, to act as Information Agent in connection with the Purchaser's offer to purchase all of the outstanding shares of common stock, par value $.01 per share (the "Shares"), of Holmes Protection Group, Inc., a Delaware corporation (the "Company"), at a price of $17.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 6, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), copies of which are enclosed herewith. The Offer is being made in connection with the Agreement and Plan of Merger, dated as of December 28, 1997, among Tyco, the Purchaser and the Company. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES REPRESENTING AT LEAST 51% OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF THE COMPANY ON A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER. HP PARTNERS L.P., WHICH OWNS 1,515,886 ISSUED AND OUTSTANDING SHARES, CONSTITUTING APPROXIMATELY 18% OF THE SHARES ON A FULLY DILUTED BASIS (APPROXIMATELY 26% OF THE SHARES ON A FULLY DILUTED BASIS INCLUDING 685,714 SHARES ISSUABLE TO IT UPON THE EXERCISE OF WARRANTS), HAS AGREED TO TENDER ITS SHARES IN THE OFFER. For your information and for forwarding to your clients, we are enclosing the following documents: 1. The Offer to Purchase. 2. The Letter of Transmittal to be used by stockholders of the Company in accepting the Offer. Facsimile copies of the Letter of Transmittal (with manual signatures) may be used to tender Shares. 3. A letter to stockholders of the Company from George V. Flagg, President and Chief Executive Officer of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company with the Securities and Exchange Commission and mailed to the stockholders of the Company. 4. A printed form of letter which may be sent to your clients for whose account you hold Shares in your name or in the name of your nominee with space provided for obtaining such clients' instructions with regard to the Offer. 5. The Notice of Guaranteed Delivery to be used to accept the Offer if certificates representing Shares are not immediately available or if time will not permit all required documents to reach the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) or if the procedures for book-entry transfer cannot be completed on a timely basis. 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 7. A return envelope addressed to ChaseMellon Shareholder Services, L.L.C., as Depositary. Your attention is directed to the following: 1. The tender price is $17.00 per Share, net to the seller in cash. 2. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Tuesday, February 3, 1998, unless the Offer is extended. 4. The Offer is being made for all of the outstanding Shares. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares representing at least 51% of the total number of outstanding Shares of the Company on a fully diluted basis as of the date the Shares are accepted for payment pursuant to the Offer. HP Partners L.P., which owns 1,515,886 issued and outstanding Shares, constituting approximately 18% of the Shares on a fully diluted basis (approximately 26% of the Shares on a fully diluted basis including 685,714 Shares issuable to it upon the exercise of warrants), has agreed to tender its Shares in the Offer. 5. Stockholders who tender Shares will not be obligated to pay brokerage fees, commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and pay for all Shares which are validly tendered on or prior to the Expiration Date and not theretofore withdrawn pursuant to the Offer to Purchase. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing such Shares (or a timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, pursuant to the procedures described in Section 2 of the Offer to Purchase), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message (as defined in Section 2 of the Offer to Purchase)), and (iii) all other documents required by the Letter of Transmittal. If holders of Shares wish to tender, but it is impracticable for them to forward their certificates or other required documents prior to the expiration of the Offer, a tender may be effected by following the guaranteed delivery procedures specified under Section 2, "Procedure for Tendering Shares," in the Offer to Purchase. 2 The Purchaser will not pay any fees or commissions to any broker or dealer or to any other person (other than the Information Agent) in connection with the solicitation of tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding the enclosed materials to your clients. The Purchaser will pay or cause to be paid any transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the enclosed Letter of Transmittal. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 3, 1998, UNLESS THE OFFER IS EXTENDED. Any inquiries you may have with respect to the Offer should be directed to, and additional copies of the enclosed materials may be obtained by contacting, the undersigned at (800) 566-9061 or (212) 754-8000 (call collect). Banks and brokerage firms please call (800) 662-5200. Very truly yours, [LOGO] NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF THE PURCHASER, TYCO, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN. 3 EX-99.(A)(4) 5 LETTER TO CLIENTS FOR USE BY BROKERS, ET AL. OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HOLMES PROTECTION GROUP, INC. AT $17.00 NET PER SHARE BY T9 ACQUISITION CORP., AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 3, 1998, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration is an Offer to Purchase, dated January 6, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer") relating to the offer by T9 Acquisition Corp., a Delaware corporation (the "Purchaser") and an indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company ("Tyco"), to purchase all of the outstanding shares of common stock, par value $.01 per share (the "Shares"), of Holmes Protection Group, Inc., a Delaware corporation (the "Company"), at a price of $17.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer. The Offer is being made in connection with the Agreement and Plan of Merger, dated as of December 28, 1997, among Tyco, the Purchaser and the Company. WE ARE THE HOLDER OF RECORD OF SHARES FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to have us tender on your behalf any or all of the Shares held by us for your account, pursuant to the terms and conditions set forth in the Offer. Your attention is directed to the following: 1. The tender price is $17.00 per Share, net to you in cash. 2. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Tuesday, February 3, 1998, unless the Offer is extended. 4. The Offer is being made for all of the outstanding Shares. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares representing at least 51% of the total number of outstanding Shares of the Company on a fully diluted basis as of the date the Shares are accepted for payment pursuant to the Offer. HP Partners L.P., which owns 1,515,886 issued and outstanding Shares, constituting approximately 18% of the Shares on a fully diluted basis (approximately 26% of the Shares on a fully diluted basis including 685,714 Shares issuable to it upon the exercise of warrants), has agreed to tender its Shares in the Offer. 5. Stockholders who tender Shares will not be obligated to pay brokerage fees, commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer. If you wish to have us tender any or all of your Shares, please complete, sign and return the instruction form set forth below. An envelope to return your instructions to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the instruction form set forth below. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and any supplements and amendments thereto. The Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a good faith effort to comply with any such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Purchaser cannot comply with any such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HOLMES PROTECTION GROUP, INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated January 6, 1998, and the related Letter of Transmittal (which together constitute the "Offer") relating to the offer by T9 Acquisition Corp. (the "Purchaser"), a Delaware corporation and an indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company, to purchase all of the outstanding shares of common stock, par value $.01 per share (the "Shares"), of Holmes Protection Group, Inc., a Delaware corporation, at a price of $17.00 per Share, net to the seller in cash. This will instruct you to tender to the Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Shares to be Tendered:* SIGN HERE Shares Signature(s) Account Number: Please print name(s) and address(es) here Dated: , 1998 Area Code and Telephone Number(s) Tax Identification or Social Security Number
- ------------------------ * Unless otherwise indicated, it will be assumed that all of your Shares held by us for your account are to be tendered. EX-99.(A)(5) 6 NOTICE OF GUARANTEED DELIVERY NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF HOLMES PROTECTION GROUP, INC. TO T9 ACQUISITION CORP., AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. (Not to be used for Signature Guarantees) This form, or one substantially equivalent hereto, must be used to accept the Offer (as defined below) if certificates representing shares of common stock, par value $.01 per share (the "Shares"), of Holmes Protection Group, Inc., a Delaware corporation, are not immediately available (or if the procedure for book-entry transfer cannot be completed on a timely basis), or if time will not permit all required documents to reach the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). Such form may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary. See Section 2 of the Offer to Purchase. THE DEPOSITARY FOR THE OFFER IS: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. BY HAND OR BY MAIL: BY OVERNIGHT COURIER: BY FACSIMILE: ChaseMellon ChaseMellon (201) 329-8936 Shareholder Services, L.L.C. Shareholder Services, L.L.C. (For Eligible Institutions Only) P.O. Box 3301 120 Broadway, 13th Floor South Hackensack, NJ 07606 New York, NY 10271 CONFIRM BY TELEPHONE: (201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal or an Agent's Message (as defined in Section 2 of the Offer to Purchase) and certificates representing the Shares to the Depositary within the time period specified herein. Failure to do so could result in a financial loss to the Eligible Institution. Ladies and Gentlemen: The undersigned hereby tenders to T9 Acquisition Corp., a Delaware corporation and an indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company, upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 6, 1998, (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged, the number of Shares specified below pursuant to the guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase. Number of Shares ------------------ Name(s) of Record Holder(s) Certificate No(s). (if available) - ------- ----------------------------------------------------- (Please Type or Print) Address(es) - ----------------------------------- ----------------------------------------------------- / / CHECK BOX IF SHARES WILL BE TENDERED BY BOOK-ENTRY TRANSFER. ----------------------------------------------------- (Zip Code) Name of Tendering Institution: Area Code and Tel. No(s). - ----------------------------------- ----------------------------------------------------- Account Number ------------------- Signature(s) Dated -----------, 1998 ----------------------------------------------------- -----------------------------------------------------
GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member in good standing of the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program (each, an "Eligible Institution"), (a) represents that the above named person(s) own(s) the Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (b) represents that such tender of Shares complies with Rule 14e-4 under the Exchange Act, and (c) guarantees delivery to the Depositary, at one of its addresses set forth above, of certificates representing the Shares tendered hereby in proper form for transfer, or confirmation of book-entry transfer of such Shares into the Depositary's accounts at The Depository Trust Company, in each case with delivery of a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees, or an Agent's Message in the case of a book-entry transfer, and any other required documents, within three Nasdaq National Market trading days after the date hereof. -------------------------------------------- -------------------------------------------- (Name of Firm) (Authorized Signature) -------------------------------------------- -------------------------------------------- (Address) (Title) -------------------------------------------- Name -------------------------------------- (Zip Code) (Please Type or Print) -------------------------------------------- Date ---------------------------------, 1998 (Area Code and Tel. No.)
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES REPRESENTING SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.(A)(6) 7 TEXT OF JOINT PRESS RELEASE EXHIBIT 99(a)(6) TYCO INTERNATIONAL TO ACQUIRE HOLMES PROTECTION; ACQUISITION TO EXPAND TYCO'S COMMERCIAL SECURITY PRESENCE HAMILTON, Bermuda, and NEW YORK, Dec. 29 /PRNewswire/ -- Tyco International Ltd. (NYSE: TYC; LSE: TYI) (Tyco), a diversified manufacturing and service company, and Holmes Protection Group, Inc. (Nasdaq: HLMS (Holmes), a provider of electronic security systems, announced today that they have entered into a definitive merger agreement pursuant to which Tyco will purchase, for cash, all of the outstanding common stock of Holmes for $17.00 per share. Holmes, headquartered in New York, NY, has revenues of $70 million and provides electronic security systems to over 65,000 commercial and residential customers throughout the United States with a strong presence in the Northeast. Over 50 percent of its revenues are from monitoring services, which provide a strong base of recurring revenue. Holmes will be integrated with Tyco's ADT Security Services. "Holmes is an excellent addition to our growing electronic security business. Their emphasis on industrial, commercial and institutional customers will enhance ADT's current position in this important market," said L. Dennis Kozlowski, Tyco's Chairman and Chief Executive Officer. "We will continue to grow our presence in the electronic security industry with a combination of internal growth coupled with acquisitions that are immediately accretive to our shareholders," he concluded. Under the agreement, a subsidiary of Tyco will commence a tender offer to purchase all of Holmes' approximately 6.3 million shares of common stock outstanding for cash of $17.00 per share. The tender offer will be followed by a merger in which each of the remaining shares of Holmes will be exchanged for $17.00 in cash. The offer will be made pursuant to definitive offering documents which will be filed with the Securities and Exchange Commission. The offer is conditioned on the tender of a majority of the outstanding shares of common stock on a fully diluted basis, as well as certain other conditions. Tyco International Ltd., a diversified manufacturing and service company, is the world's largest manufacturer and installer of fire protection systems, the largest provider of electronic security services in North America and the United Kingdom and has strong leadership positions in disposable medical products, packaging materials, flow control products, electrical and electronic components and underwater telecommunications systems. The Company operates in more than 50 countries around the world and will have annual revenues of in excess of $12 billion. FORWARD LOOKING INFORMATION Certain statements in this release are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All forward looking statements involve risks and uncertainties. In particular, any statements contained herein regarding the consummation and benefits of future acquisitions, as well as expectations with respect to future sales, operating efficiencies and product expansion, are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of the Company, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Factors that might affect such forward looking statements include, among other things, overall economic and business conditions, the demand for the Company's goods and services, competitive factors in the industries in which the Company competes, changes in government regulation and the timing, impact and other uncertainties of future acquisitions. CONTACT: David P. Brownell of Tyco International Ltd., 603-778-9700 or George V. Flagg of Holmes Protection Group, Inc., 212-629-1213 EX-99.(A)(7) 8 FORM OF ADVERTISEMENT EXHIBIT 99(a)(7) THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE, DATED JANUARY 6, 1998, AND THE RELATED LETTER OF TRANSMITTAL AND IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN ANY JURISDICTION THE SECURITIES LAWS OF WHICH REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED MADE ON BEHALF OF THE PURCHASER BY ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HOLMES PROTECTION GROUP, INC. AT $17.00 NET PER SHARE BY T9 ACQUISITION CORP. AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF TYCO INTERNATIONAL LTD. T9 Acquisition Corp., a Delaware corporation (the "Purchaser") and an indirect wholly-owned subsidiary of Tyco International Ltd., a Bermuda company ("Tyco"), is offering to purchase all outstanding shares of common stock, par value $.01 per share (the "Shares"), of Holmes Protection Group, Inc., a Delaware corporation (the "Company"), at $17.00 per Share, net to the seller in cash (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 6, 1998, and in the related Letter of Transmittal (which together constitute the "Offer"). THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 3, 1998, UNLESS EXTENDED. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer at least that number of Shares which would constitute 51% of the outstanding Shares on a fully diluted basis (the "Minimum Condition"). HP Partners L.P., which beneficially owns 1,515,886 issued and outstanding Shares, constituting approximately 18% of the Shares on a fully diluted basis (approximately 26% of the Shares on a fully diluted basis including 685,714 Shares issuable to it upon the exercise of warrants), has agreed to tender its Shares in the Offer. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of December 28, 1997 (the "Merger Agreement"), among Tyco, the Purchaser and the Company pursuant to which, following the consummation of the Offer and the satisfaction or waiver of certain conditions, the Purchaser will be merged with and into the Company (the "Merger"). At the effective time of the Merger, each outstanding Share (other than Shares held in the Company"s treasury or by any wholly-owned subsidiary of the Company, or owned by Tyco, the Purchaser or any other wholly-owned subsidiary of Tyco or held by stockholders, if any, who are entitled to and who properly exercise dissenters" rights under Delaware law) will be converted into the right to receive the Offer Price, without interest. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY"S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares properly tendered to the Purchaser and not withdrawn as, if and when the Purchaser gives oral or written notice to ChaseMellon Shareholder Services L.L.C. (the "Depositary") of the Purchaser"s acceptance for payment of such Shares. Upon the terms and subject to the Offer, payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting payment to tendering stockholders. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares or timely confirmation of book-entry transfer of such Shares into the Depositary"s account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to the procedures set forth in Section 2 of the Offer to Purchase, (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees and (iii) any other documents required by the Letter of Transmittal. Under no circumstances will interest be paid by the Purchaser on the purchase price of the Shares, regardless of any delay in making payment for the Shares. The term "Expiration Date" means 12:00 Midnight, New York City time, on Tuesday, February 3, 1998, unless and until the Purchaser, in its sole discretion (but subject to the terms of the Merger Agreement), shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. The Purchaser expressly reserves the right, in its sole discretion (but subject to the terms of the Merger Agreement), at any time or from time to time, and regardless of whether or not any of the events set forth in Section 15 of the Offer to Purchase shall have occurred or shall have been determined by the Purchaser to have occurred, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and the payment for, any Shares, by giving oral or written notice of such extension to the Depositary. The Purchaser shall not have any obligation to pay interest on the purchase price for tendered Shares in the event the Purchaser exercises its right to extend the period of time during which the Offer is open. There can be no assurance that the Purchaser will exercise its right to extend the Offer. Any such extension will be followed by a public announcement thereof no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder"s Shares. Except as otherwise provided below, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to 12:00 Midnight, New York City time, on Tuesday, February 3, 1998 (or, if the Purchaser shall have extended the period of time during which the Offer is open, the latest time and date at which the Offer, as so extended by the Purchaser, shall expire) and, unless theretofore accepted for payment and paid for by the Purchaser pursuant to the Offer, may also be withdrawn at any time on or after March 8, 1998. For a withdrawal to be effective, a written telegraphic or facsimile transmission notice of withdrawal must be timely received by the Deposita ry at one of its addresses set forth on the back cover of the Offer to Purchase and must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from the name of the person who tendered the Shares. If certifica tes for Shares have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered by an Eligible Institution (as defined in the Offer to Purchase), the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been delivered pursuant to the procedures for book-entry transfer as set forth in Section 2 of the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with the Book-Entry Transfer Facility"s procedures. Withdrawals of tenders of Shares may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 2 of the Offer to Purchase at any time prior to the Expiration Date. The Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and furnished to brokers, dealers, banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder lists or, if applicable, who are listed as participants in a clearing agency"s security position listing, for subsequent transmittal to beneficial owners of Shares. The information required to be disclosed by Rule 14d-6(e)(1)(vii) under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Requests for copies of the Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent as set forth below, and copies will be furnished promptly at the Purchaser"s expense. THE INFORMATION AGENT FOR THE OFFER IS: MORROW & CO., INC. 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 Toll Free (800) 566-9061 Banks and Brokerage Firms please call: (800) 662-5200 January 6, 1998 EX-99.(A)(8) 9 W-9, TAX GUIDELINES 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 The actual owner of individuals (joint the account or, if account) combined funds, the first individual on the account(1) 3. Custodian account of The minor(2) a minor (Uniform Gift to Minors Act) 4. a. The usual The grantor- revocable savings trustee(1) trust (grantor is also trustee) b. So-called trust The actual owner(1) account that is not a legal or valid trust under state law 5. Sole proprietorship The owner(3) 6. A valid trust, The legal entity(4) estate, or pension trust - ----------------------------------------------------- GIVE THE NAME AND EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - ----------------------------------------------------- 7. Corporate The corporation 8. Association, club, The organization religious, charitable, educational or other tax-exempt organization 9. Partnership The partnership 10. A broker or The broker or registered nominee nominee 11. Account with the The public entity Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments
- --------------------------------------------- - --------------------------------------------- (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 a political subdivision, agency or instrumentality thereof. - An international organization or any agency or instrumentality thereof. - A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An exempt charitable remainder trust, or a non-exempt trust described in section 4947. - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the United States and which have at least one nonresident alien partner. - Payments of patronage dividends not paid in money. - Payments made by certain foreign organizations. - Payments made to a middleman known in the investment community as a nominee or who is listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Payments made to a middleman known in the investment community as a nominee or who is listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-99.(C)(1) 10 CONF. AGMT BTW TYCO AND CO. [JP MORGAN LETTERHEAD] October 14, 1997 Mr. Jeffrey D. Mattfolk Director Mergers & Acquisitions Tyco International (US) Inc. One Tyco Park Exeter, NH 03833 Dear Mr. Mattfolk: Holmes Protection Group, Inc. (the "Company") has engaged J.P. Morgan Securities Inc. ("J.P. Morgan") to advise the Company with respect to one or more possible transactions with you concerning your possible purchase from the Company of all or a portion of the stock, assets, or business of the Company, or any related transactions as may be mutually agreed between you and the Company (each, a "Transaction"). In connection with your consideration of a Transaction with the Company, the Company is prepared to furnish you with certain confidential and proprietary information concerning the business and properties of the Company. All such information is herein collectively referred to as the "Evaluation Material". To maintain the confidentiality of the Evaluation Material, you and each individual or entity with access to the Evaluation Material agree: (a) not to use any Evaluation Material or notes, summaries, or other material derived therefrom (such notes, summaries or other material collectively referred to herein as the "Notes") except to determine whether you wish to propose to enter into a Transaction with the Company and the terms thereof; (b) not to disclose any Evaluation Material or Notes other than to those of your and your affiliated companies officers, directors, employees, advisors and representatives (collectively, "Representatives") with a need to know the information contained therein; PROVIDED, that such Representatives shall have agreed to be bound by the terms of this Agreement; PROVIDED, FURTHER, that you agree to be responsible for any breach of this Agreement by any of your Representatives; and (c) not to disclose that the Evaluation Material has been made available, that you or your Representatives have inspected any Evaluation Material, or that you and the Company may be considering a Transaction or have had, are having or propose to have any discussions with respect thereto. The Company (directly or through J.P. Morgan) may elect at any time to terminate further access by you to Evaluation Material. You agree that upon any such termination, you will promptly (and in any case within 7 days of the Company's or J.P. Morgan's request) return to J.P. Morgan or the Company all Evaluation Material except Notes, cause all Notes to be destroyed, and confirm in writing to the Company that all such material has been returned or destroyed in compliance with this Agreement. No such termination will affect your obligations hereunder or those of your Representatives, all of which obligations shall continue in effect for the term of this Agreement. -2- This Agreement shall be inoperative as to particular portions of the Evaluation Material if such information (i) becomes generally available to the public other than as a result of a disclosure by you or your Representatives in violation of this Agreement, (ii) was available to you on a non-confidential basis prior to its disclosure to you by the Company or its representatives and you so notify the Company thereof in writing within 30 days of receipt of the information from the Company, or (iii) becomes available to you on a non-confidential basis from a source other than the Company or its representatives when such source is entitled, to the best of your knowledge, to make such disclosure. You agree to keep the Evaluation Material confidential even after this Agreement is terminated so long as such information does not fall within categories (i), (ii) or (iii) above. If you or your Representatives are requested or required (by oral questions, interrogatories, requests for information, subpoena, civil investigative demand, or similar process) to disclose any Evaluation Material or Notes, it is agreed that you will provide the Company with prompt written notice of such request(s) so that the Company may seek an appropriate protective order and/or waive your compliance with the provisions of this Agreement. If, failing the entry of a protective order or the receipt of a waiver hereunder, you or your Representatives are, in the opinion of your or your Representatives' counsel, as the case may be, compelled to disclose Evaluation Material or Notes under pain of liability for contempt or other censure or penalty, you may disclose only that portion of such information as is legally required without liability hereunder; PROVIDED, that you agree to exercise your best efforts to obtain assurance that confidential treatment will be accorded such information. You acknowledge that, in your examination of the Evaluation Material, you will have access to material non-public information concerning the Company. You agree that, for a period of two years following the date hereof, you will not (and you will ensure that your affiliates (and any person acting on behalf of or in concert with you or any affiliate) will not), without the prior written approval of the Board of Directors of the Company, purchase or otherwise acquire (or enter into any agreement or make any proposal to purchase or otherwise acquire) any securities of the Company, any warrant or option to purchase such securities, any security convertible into any such securities, or any other right to acquire such securities. Notwithstanding the foregoing, if an unaffiliated third party seeks to acquire or assists, advises or encourages any other persons in seeking to acquire, directly or indirectly, a majority interest in the Company during the two-year period from the date hereof, then you will be permitted hereunder to take any such actions. For a period of two years following the date hereof, you agree not to initiate or maintain contact (except for those contacts made in the ordinary course of business) with any officer, director, employee, agent or other representative of the Company regarding the business, operations or prospects of the Company, except with the express written consent of J.P. Morgan. It is understood that J.P. Morgan will arrange for appropriate contacts for due diligence purposes. Unless otherwise agreed to by J.P. Morgan, all (i) communications regarding any possible Transaction, (ii) requests for additional information, (iii) requests for facility tours or management meetings, and (iv) discussions or questions regarding procedures -3- in connection with any possible Transaction, will be submitted or directed exclusively to J.P. Morgan. For a period of two years following the date hereof, you will not, directly or indirectly, solicit for employment or hire any officer, director, or employee of the Company or any of its subsidiaries or divisions with whom you have had contact or who became known to you in connection with your consideration of the Transaction, except that you shall not be precluded from hiring any such employee who (i) initiates discussions regarding such employment without any direct or indirect solicitation by you, (ii) responds to any public advertisement placed by you, or (iii) has been terminated by the Company or its subsidiaries prior to commencement of employment discussions between you and such officer, director, or employee. You understand and agree that none of the Company, J.P. Morgan, or their respective affiliates or representatives make any representations or warranties, express or implied, with respect to any of the Evaluation Material. You also agree that none of the Company, J.P. Morgan, or their respective affiliates or representatives shall assume any responsibility or have any liability to you or your Representatives resulting from the selection or use of the Evaluation Material by you or your Representatives. You agree that no contract or agreement providing for any Transaction shall be deemed to exist between you and the Company unless and until you and the Company execute and deliver a final definitive agreement relating thereto (a "Transaction Agreement"), and you hereby waive, in advance, any claims (including, without limitation, breach of contract) in connection with any Transaction unless and until you and the Company shall have executed and delivered a Transaction Agreement. You also agree that unless and until you and the Company shall have executed and delivered a Transaction Agreement, neither you nor the Company will be under any legal obligation of any kind whatsoever with respect to a Transaction by virtue of this Agreement except for the matters specifically agreed to herein. You further acknowledge and agree that the Company reserves the right, in its sole discretion, to reject any and all proposals made by you or your Representatives with regard to a Transaction, and to terminate discussions and negotiations with you at any time. You further understand that the Company shall be free to establish and change any process or procedure with respect to a Transaction as the Company in its sole discretion shall determine (including, without limitation, negotiating with any other interested party and entering into a final definitive agreement relating to a Transaction with any other party without prior notice to you or any other person). It is further understood and agreed that money damages would not be a sufficient remedy for any breach of this Agreement and that the Company shall be entitled to specific performance and injunctive or other equitable relief as a remedy for any such breach, and you further agree to waive any requirement for the security or posting of any bond in connection with such remedy. Such remedy shall not be deemed to be the exclusive remedy for breach of this Agreement but shall be in addition to all other remedies available at law or equity to the Company. -4- This Agreement shall terminate three years from the date hereof and be governed by New York law. Very truly yours, J.P. MORGAN SECURITIES INC., as agent for HOLMES PROTECTION GROUP, INC. By: /s/ Donna Hitscherich ---------------------------- Name: Donna Hitscherich Title: Vice President Accepted as of the date first above written: TYCO INTERNATIONAL (US) INC. By: /s/ Jeffrey D. Mattfolk --------------------------- Name: Jeffrey D. Mattfolk Title: Director of Mergers & Acquisitions EX-99.(C)(2) 11 AGMT AND PLAN OF MERGER HOLMES PROTECTION GROUP, INC., TYCO INTERNATIONAL LTD. and T9 ACQUISITION CORP. ___________________________________________ ___________________________________________ AGREEMENT AND PLAN OF MERGER ______________________________ ______________________________ ___________________________________________ ___________________________________________ Dated as of December 28, 1997 _________________________________________________________ _________________________________________________________ TABLE OF CONTENTS PAGE ARTICLE I. TENDER OFFER AND MERGER 1.1. The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 1.2. Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 1.3. Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 1.4. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 1.5. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 1.6. Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . .6 1.7. Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . .7 1.8. Surrender of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .8 1.9. Options, Warrants and Convertible Securities . . . . . . . . . . . . . .9 1.10. Certificate of Incorporation and Bylaws. . . . . . . . . . . . . . . . 11 1.11. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . 12 1.12. Other Effects of Merger. . . . . . . . . . . . . . . . . . . . . . . . 12 1.13. Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.14. Additional Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1.15. Merger Without Meeting of Stockholders.. . . . . . . . . . . . . . . . 13 1.16. Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . 13 1.17. Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2.1. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . 14 2.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.3. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.4. Authorization; Binding Agreement . . . . . . . . . . . . . . . . . . . 16 2.5. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 16 2.6. No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2.7. Securities Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2.8. Company Financial Statements . . . . . . . . . . . . . . . . . . . . . 18 2.9. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . 18 2.10. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . 18 2.11. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . 18 2.12. Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.13. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.14. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.15. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 20 2.16. Taxes and Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . 23 2.17. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . 25 2.18. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . 26 2.19. Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.20. Limitation on Business Conduct . . . . . . . . . . . . . . . . . . . . 27 2.21. Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.22. Leased Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2.23. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . 28 2.24. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2.25. Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2.26. Interested Party Transactions. . . . . . . . . . . . . . . . . . . . . 29 2.27. Alarm Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.28. Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . 30 i 2.29. Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.30. Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.31. Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER 3.1. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . 31 3.2. Authorization; Binding Agreement . . . . . . . . . . . . . . . . . . . 31 3.3. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 31 3.4. No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.5. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . 32 3.6. Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . 32 3.7. Financing Arrangements.. . . . . . . . . . . . . . . . . . . . . . . . 32 3.8. No Prior Activities. . . . . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE IV. ADDITIONAL COVENANTS OF THE COMPANY 4.1. Conduct of Business of the Company and the Company Subsidiaries . 33 4.2. Notification of Certain Matters. . . . . . . . . . . . . . . . . . . . 36 4.3. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . 36 4.4. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . 36 4.5. Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . 37 4.6. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 37 4.7. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 4.8. No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 4.9. SEC and Stockholder Filings. . . . . . . . . . . . . . . . . . . . . . 40 4.10. Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . 40 ARTICLE V. ADDITIONAL COVENANTS OF PURCHASER AND PARENT 5.1. Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . 40 5.2. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 40 5.3. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 5.4. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 41 5.5. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 5.6. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 5.7. Guarantee of Parent. . . . . . . . . . . . . . . . . . . . . . . . . . 43 ARTICLE VI. MERGER CONDITIONS 6.1. Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 6.2. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . 43 6.3. No Injunction or Action. . . . . . . . . . . . . . . . . . . . . . . . 43 6.4. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 43 ARTICLE VII. TERMINATION AND ABANDONMENT 7.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.2. Effect of Termination and Abandonment. . . . . . . . . . . . . . . . . 45 ii ARTICLE VIII. MISCELLANEOUS 8.1. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 8.2. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . 47 8.3. Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . 47 8.4. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 8.5. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 8.6. Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . 49 8.7. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 8.8. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 8.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 8.10. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 8.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 8.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 8.13. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . 51 8.14. Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 8.15. Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Annex I Glossary of Defined Terms iii AGREEMENT AND PLAN OF MERGER This Agreement and Plan of Merger (this "AGREEMENT") is made and entered into as of December 28, 1997, by and among HOLMES PROTECTION GROUP, INC., a Delaware corporation (the "COMPANY"), TYCO INTERNATIONAL LTD., a Bermuda company ("PARENT"), and T9 ACQUISITION CORP., a Delaware corporation and an indirect wholly owned subsidiary of Parent ("PURCHASER"). W I T N E S S E T H: WHEREAS, the respective Boards of Directors of the Company, Purchaser and Parent have approved the acquisition by Purchaser of the Company; and WHEREAS, in furtherance thereof, it is proposed that Purchaser will make a cash tender offer (the "OFFER") to acquire all of the issued and outstanding shares ("SHARES") of common stock, $.01 par value, of the Company ("COMPANY STOCK"), for $17.00 per Share, or such higher price as may be paid in the Offer (the "PER SHARE AMOUNT"), in each case net to the seller in cash without interest; and WHEREAS, also in furtherance of such acquisition, the respective Boards of Directors of the Company, Purchaser and Parent have each approved the merger (the "MERGER") of Purchaser with and into the Company following the Offer in accordance with the laws of the State of Delaware; and WHEREAS, the Board of Directors of the Company has approved and resolved to recommend acceptance of the Offer and the Merger to the holders of Shares and has determined that the consideration to be paid for each Share in the Offer and the Merger is fair to and in the best interest of the holders of such Shares and to recommend that the holders of such Shares accept the Offer and approve this Agreement and the transactions contemplated hereby; and WHEREAS, the Company, Purchaser and Parent desire to make certain representations, warranties and agreements in connection with, and establish various conditions precedent to, the transactions contemplated hereby; NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements hereinafter set forth, the parties hereto agree as follows: ARTICLE I TENDER OFFER AND MERGER 1.1. THE OFFER. (a) Provided that this Agreement shall not have been terminated in accordance with SECTION 7.1 hereof and that none of the events set forth in ANNEX I hereto shall have occurred and be existing, Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "SECURITIES EXCHANGE ACT")) the Offer as promptly as practicable, but in no event later than five business days following the first public announcement of the Offer, and shall use reasonable best efforts to consummate the Offer. The obligation of Purchaser to accept for payment any Shares tendered shall be subject to the satisfaction of only those conditions set forth in ANNEX I hereto. The Per Share Amount shall be net to each seller in cash, subject to reduction only for any applicable federal back-up withholding or stock transfer taxes payable by such seller. The Company agrees that no Shares held by the Company (or any of its direct or indirect subsidiaries) will be tendered pursuant to the Offer. Without the prior written consent of the Company, Purchaser shall not (i) decrease the Per Share Amount or change the form of consideration payable in the Offer, (ii) decrease the number of Shares sought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition (as defined in ANNEX I hereto) or (iv) impose additional conditions to the Offer or amend any other term of the Offer in any manner adverse to the holders of the Shares. The Offer shall initially expire twenty (20) business days after the date of its commencement, unless this Agreement is terminated in accordance with ARTICLE VII hereof, in which case the Offer (whether or not previously extended in accordance with the terms hereof) shall expire on such date of termination. Purchaser agrees that it shall not terminate or withdraw the Offer or extend the expiration date of the Offer unless at the expiration date of the Offer the conditions to the Offer described in ANNEX I hereto shall not have been satisfied or earlier waived. Notwithstanding the foregoing, Purchaser may, without the consent of the Company, extend the Offer at any time, and from time to time, (x) if at the then scheduled expiration date of the Offer any of the conditions to Purchaser's obligation to accept for payment and pay for Shares shall not have been satisfied or waived, until such time as such conditions are satisfied or waived; (ii) for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "SEC") or its staff applicable to the Offer; or (iii) if all conditions to Purchaser's obligation to accept for payment and pay for Shares are satisfied or waived but the number of Shares tendered is less than 90% of the then outstanding number of Shares, for an aggregate period of not more than ten (10) business days (for all such extensions) beyond the latest expiration date that would be permitted under clause (i) or (ii) of this sentence. -2- The Offer shall be made by means of an offer to purchase (the "OFFER TO PURCHASE") having only the conditions set forth in ANNEX I hereto. As soon as practicable on the date the Offer is commenced, Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together with all amendments and supplements thereto, the "SCHEDULE 14D-1") with respect to the Offer that will comply in all material respects with the provisions of, and satisfy in all material respects the requirements of, such Schedule 14D-1 and all applicable federal securities laws and will contain (including as an exhibit) or incorporate by reference the Offer to Purchase and forms of the related letter of transmittal and summary advertisement (which documents, together with any supplements or amendments thereto, and any other SEC schedule or form which is filed in connection with the Offer and related transactions, are referred to collectively herein as the "OFFER DOCUMENTS"). Each of Parent, Purchaser and the Company agrees promptly to correct any information provided by it for use in the Schedule 14D-1 or the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect and to supplement the information provided by it specifically for use in the Schedule 14D-1 or the Offer Documents to include any information that shall become necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and Purchaser further agrees to take all steps necessary to cause the Schedule 14D-1, as so corrected or supplemented, to be filed with the SEC and the Offer Documents, as so corrected or supplemented, to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment on any Offer Documents before they are filed with the SEC. Upon the terms and subject to the conditions of the Offer, Purchaser shall accept for payment and pay for Shares as soon as permitted under the terms of the Offer and applicable law. -3- 1.2. COMPANY ACTION. (a) The Company hereby approves and consents to the Offer and represents and warrants that the Board of Directors of the Company, at a meeting duly called and held on December 26, 1997, at which a majority of the Directors was present, duly approved and adopted this Agreement and the transactions contemplated hereby, including the Offer and the Merger, recommended that stockholders of the Company accept the Offer, tender their Shares pursuant to the Offer and approve this Agreement and the transactions contemplated hereby, including the Merger, and determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best interests of the stockholders of the Company. The Company hereby consents to the inclusion in the Offer Documents of such recommendation of the Board of Directors of the Company. The Company represents that its Board of Directors has received the written opinion (the "FAIRNESS OPINION") of J.P. Morgan Securities Inc. (the "FINANCIAL ADVISOR") that the proposed consideration to be received by the holders of Shares pursuant to the Offer and the Merger is fair to such holders from a financial point of view. The Company has been authorized by the Financial Advisor to permit, subject to the prior review and consent by the Financial Advisor (such consent not to be unreasonably withheld), the inclusion of the Fairness Opinion (or a reference thereto) in the Offer Documents, the Schedule 14D-9 (as hereinafter defined) and the Proxy Statement (as hereinafter defined). The Company shall file with the SEC, as promptly as practicable after the filing by Parent of the Schedule 14D-1 with respect to the Offer, a Tender Offer Solicitation/ Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the "SCHEDULE 14D-9") that will comply in all material respects with the provisions of all applicable federal securities laws. The Company shall mail such Schedule 14D-9 to the stockholders of the Company as promptly as practicable after the commencement of the Offer. The Schedule 14D-9 and the Offer Documents shall contain the recommendations of the Board of Directors of the Company described in SECTION 1.2(A) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and to the extent that it shall become false or misleading in any material respect (and each of Parent and Purchaser, with respect to written information supplied by it specifically for use in the Schedule 14D-9, shall promptly notify the Company of any required corrections of such information and cooperate with the Company with respect to correcting such information) and to supplement the information contained in the Schedule 14D-9 to include any information that shall become necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Company shall take all steps necessary to cause the Schedule 14D-9 as so corrected or supplemented to be filed with the SEC and disseminated to holders of Shares to the extent required by applicable federal securities laws. Purchaser and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 before it is filed with the SEC. -4- In connection with the Offer, the Company shall promptly upon execution of this Agreement furnish Purchaser with mailing labels containing the names and addresses of all record holders of Shares and security position listings of Shares held in stock depositories, each as of a recent date, and shall promptly furnish Purchaser with such additional information reasonably available to the Company, including updated lists of stockholders, mailing labels and security position listings, and such other information and assistance as Purchaser or its agents may reasonably request for the purpose of communicating the Offer to the record and beneficial holders of Shares. 1.3. DIRECTORS. Promptly upon the purchase by Parent of Shares pursuant to the Offer (and provided that the Minimum Condition has been satisfied), Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as will give Parent, subject to compliance with Section 14(f) of the Securities Exchange Act, representation on the Board of Directors of the Company equal to at least that number of directors which equals the product of the total number of directors on the Board of Directors of the Company (giving effect to the directors appointed or elected pursuant to this sentence and including current directors serving as officers of the Company) multiplied by the percentage that the aggregate number of Shares beneficially owned by Parent or any affiliate of Parent (including for purposes of this SECTION 1.3 such Shares as are accepted for payment pursuant to the Offer, but excluding Shares held by the Company) bears to the number of Shares outstanding. At such time, if requested by Parent, the Company will also cause each committee of the Board of Directors of the Company to include persons designated by Parent constituting the same percentage of each such committee as Parent's designees are of the Board of Directors of the Company. The Company shall, upon request by Parent, promptly increase the size of the Board of Directors of the Company or exercise reasonable best efforts to secure the resignations of such number of directors as is necessary to enable Parent's designees to be elected to the Board of Directors of the Company in accordance with the terms of this SECTION 1.3 and to cause Parent's designees so to be elected; PROVIDED, HOWEVER, that, in the event that Parent's designees are appointed or elected to the Board of Directors of the Company, until the Effective Time (as hereinafter defined) the Board of Directors of the Company shall have at least two directors who are directors on the date hereof and each of whom is neither an officer of the Company nor a designee, shareholder, affiliate or associate (within the meaning of the federal securities laws) of Parent (such directors, the "INDEPENDENT DIRECTORS"); PROVIDED FURTHER, that if no Independent Directors remain, the other directors shall designate one person to fill one of the vacancies who shall be neither an officer of the Company nor a designee, shareholder, affiliate or associate of Parent, and such person shall be deemed to be an Independent Director for purposes of this Agreement. Subject to applicable law, the Company shall promptly take all action necessary pursuant to Section 14(f) of the Securities Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under this SECTION 1.3 and -5- shall include in the Schedule 14D-9 mailed to stockholders promptly after the commencement of the Offer (or in an amendment thereof or an information statement pursuant to Rule 14f-1 if Parent has not theretofore designated directors) such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this SECTION 1.3. Parent will supply the Company and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by such Section 14(f) and Rule 14f- 1. Notwithstanding anything in this Agreement to the contrary, prior to the Effective Time, the affirmative vote of a majority of the Independent Directors shall be required to (i) amend or terminate this Agreement on behalf of the Company, (ii) exercise or waive any of the Company's rights or remedies hereunder, (iii) extend the time for performance of Parent's obligations hereunder, (iv) take any other action by the Company in connection with this Agreement required to be taken by the Board of Directors of the Company or (v) amend the Company's Certificate of Incorporation or the Company's Bylaws, each as in effect on the date of this Agreement. 1.4. THE MERGER. Upon the terms and subject to the conditions of this Agreement, the Merger shall be consummated in accordance with the Delaware General Corporation Law (the "DELAWARE CODE"). At the Effective Time (as defined in SECTION 1.5 hereof), upon the terms and subject to the conditions of this Agreement, Purchaser shall be merged with and into the Company in accordance with the Delaware Code and the separate existence of Purchaser shall thereupon cease, and the Company, as the surviving corporation in the Merger (the "SURVIVING CORPORATION"), shall continue its corporate existence under the laws of the State of Delaware as an indirect subsidiary of Parent. The parties shall prepare and execute a certificate of merger (the "CERTIFICATE OF MERGER") in order to comply in all respects with the requirements of the Delaware Code and with the provisions of this Agreement. 1.5. EFFECTIVE TIME. The Merger shall become effective at the time of the filing of the Certificate of Merger with the Secretary of State of Delaware in accordance with the applicable provisions of the Delaware Code or at such later time as may be specified in the Certificate of Merger. As soon as practicable after all of the conditions set forth in ARTICLE VI of this Agreement have been satisfied or waived by the party or parties entitled to the benefit of the same, the parties hereto shall cause the Merger to become effective. Parent and the Company shall mutually determine the time of such filing and the place where the closing of the Merger (the "CLOSING") shall occur. The time when the Merger shall become effective is herein referred to as the "EFFECTIVE TIME", and the date on which the Effective Time occurs is herein referred to as the "CLOSING DATE." 1.6. CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger and without any action on the part of Purchaser, the Company or the holder of any of the securities -6- specified below: Each Share issued and outstanding immediately before the Effective Time (other than any Dissenting Shares (as hereinafter defined) and Shares to be canceled pursuant to SECTION 1.6(B)) shall be canceled and extinguished and be converted into the right to receive the Per Share Amount in cash payable to the holder thereof, without interest, upon surrender of the certificate representing such Share in accordance with SECTION 1.8 hereof. From and after the Effective Time, the holders of certificates evidencing ownership of Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided for herein or by applicable Law. Each Share held in the treasury of the Company and each Share owned by Parent or any direct or indirect wholly owned subsidiary of Parent immediately before the Effective Time shall be canceled and extinguished, and no payment or other consideration shall be made with respect thereto. The shares of Purchaser common stock outstanding immediately prior to the Merger shall be converted into 1,000 shares of the common stock of the Surviving Corporation (the "SURVIVING CORPORATION COMMON STOCK"), which shares of the Surviving Corporation Common Stock shall constitute all of the issued and outstanding capital stock of the Surviving Corporation and shall be owned by an indirect subsidiary of Parent. 1.7. DISSENTING SHARES. (a) Notwithstanding any provision of this Agreement to the contrary, any Shares issued and outstanding immediately prior to the Effective Time and held by a holder who has demanded and perfected his demand for appraisal of his Shares in accordance with the Delaware Code (including but not limited to Section 262 thereof), and as of the Effective Time has neither effectively withdrawn nor lost his right to such appraisal ("DISSENTING SHARES"), shall not be converted into or represent a right to receive cash pursuant to SECTION 1.6 hereof, but the holder thereof shall be entitled to only such rights as are granted by the Delaware Code. Notwithstanding the provisions of SECTION 1.7(A) hereof, if any holder of Shares who demands appraisal of his Shares under the Delaware Code shall effectively withdraw or lose (through failure to perfect or otherwise) his right to appraisal, then as of the Effective Time or the occurrence of such event, whichever occurs later, such holder's Shares shall automatically be converted into and represent only the right to receive cash as provided in SECTION 1.6 hereof, without interest thereon, upon surrender of the certificate or certificates representing such Shares. The Company shall give Purchaser (i) prompt notice of any written demands for appraisal or payment of the fair value of any Shares, withdrawals of such demands and any other instruments served pursuant to the Delaware Code received -7- by the Company after the date hereof and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the Delaware Code. The Company shall not voluntarily make any payment with respect to any demands for appraisal and shall not, except with the prior written consent of Parent, settle or offer to settle any such demands. 1.8. SURRENDER OF SHARES. (a) Prior to the Effective Time, Purchaser shall appoint Chase Mellon Shareholder Services or such other commercial bank or trust company designated by Purchaser and reasonably acceptable to the Company to act as exchange agent hereunder (the "Exchange Agent") for the payment of the Per Share Amount upon surrender of certificates representing the Shares. All of the fees and expenses of the Exchange Agent shall be borne by Purchaser. (b) Parent shall cause the Surviving Corporation to provide the Exchange Agent with cash in amounts necessary to pay for all of the Shares pursuant to SECTION 1.8(C) hereof when and as such amounts are needed by the Exchange Agent. (c) On the Closing Date, Purchaser shall instruct the Exchange Agent to mail to each holder of record of a certificate representing any Shares canceled upon the Merger pursuant to SECTION 1.6(A) hereof, within five business days of receiving from the Company a list of such holders of record, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the certificates shall pass, only upon delivery of the certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the certificates. Each holder of a certificate or certificates representing any Shares canceled upon the Merger pursuant to SECTION 1.6(A) hereof may thereafter surrender such certificate or certificates to the Exchange Agent, as agent for such holder, to effect the surrender of such certificate or certificates on such holder's behalf for a period ending one year after the Effective Time. Upon the surrender of certificates representing the Shares, Parent shall cause the Exchange Agent to pay the holder of such certificates in exchange therefor cash in an amount equal to the Per Share Amount multiplied by the number of Shares represented by such certificate. Until so surrendered, each such certificate (other than certificates representing Dissenting Shares) shall represent solely the right to receive the aggregate Per Share Amount relating thereto. (d) If payment of cash in respect of canceled Shares is to be made to a person other than the person in whose name a surrendered certificate or instrument is registered, it shall be a condition to such payment that the certificate or instrument so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid any transfer and other taxes required by reason of such payment in a name other than that of the registered holder of the certificate or instrument surrendered or shall have established to the satisfaction of Parent or the -8- Exchange Agent that such tax either has been paid or is not payable. (e) At the Effective Time, the stock transfer books of the Company shall be closed, and no transfer of Shares shall be made thereafter, other than transfers of Shares that have occurred prior to the Effective Time. In the event that, after the Effective Time, certificates are presented to the Surviving Corporation, they shall be canceled and exchanged for cash as provided in SECTION 1.6(A). (f) The Per Share Amount paid in the Merger shall be net to the holder of Shares in cash, and without interest thereon subject to reduction only for any applicable federal back-up withholding or stock transfer taxes payable by such holder. (g) Promptly following the date which is one year after the Effective Time, the Exchange Agent shall deliver to Parent all cash, certificates and other documents in its possession relating to the transactions contemplated hereby, and the Exchange Agent's duties shall terminate. Thereafter, each holder of a certificate representing Shares (other than certificates representing Dissenting Shares and certificates representing Shares held by Parent or in the treasury of the Company) may surrender such certificate to the Surviving Corporation and (subject to any applicable abandoned property, escheat or similar law) receive in consideration therefor the aggregate Per Share Amount relating thereto, without any interest thereon. (h) None of the Company, Parent, the Surviving Corporation or the Exchange Agent shall be liable to any holder of Shares for any cash delivered to a public official pursuant to any abandoned property, escheat or similar law, rule, regulation, statute, order, judgment or decree. 1.9. OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES. (a) Each of the Company and Parent shall take all reasonable actions necessary to provide that all then outstanding options to purchase Shares, whether or not then exercisable or vested (I) under the Company's 1996 Stock Incentive Plan and (II) if and to the extent required by the terms of the Company Option Plans (as hereinafter defined) other than the Company's 1996 Stock Incentive Plan, under such other Company Option Plans, shall become fully exercisable and vested upon the consummation of the Offer. Holders of options under the Company Option Plans ("COMPANY OPTIONS") that become fully exercisable and vested upon the consummation of the Offer in accordance with the provisions of the preceding sentence will have a period of sixty days following the consummation of the Offer to surrender their options to the Company in exchange for cash equal to the excess of (i) the aggregate value of the Shares underlying the options, based on the Per Share Amount, over (ii) the aggregate exercise price for the Shares underlying the options. Each of the Company and Parent shall take all reasonable actions necessary to provide that, upon consummation of the Merger, all then outstanding -9- Company Options, whether or not then exercisable or vested if and to the extent so provided in the applicable Company Option Plan, shall be converted into the right to receive, at the election of the holder, either (1) in cash, the aggregate value of the Shares underlying the options, based on the Per Share Amount, less the aggregate exercise price for the Shares underlying the options, or (2) options, exercisable on the same terms and conditions as the surrendered options (except that the option received in exchange shall be immediately exercisable) to acquire that number of common shares, par value $.20, of Parent ("PARENT SHARES") determined by multiplying, in the case of each option, (A) the number of Shares for which the surrendered option was exercisable immediately prior to the Effective Time by (B) a fraction, the numerator of which is the Per Share Amount and the denominator of which is the closing price per Parent Share on the New York Stock Exchange on the trading day immediately preceding the Closing Date. The exercise price per Parent Share for each new option issued pursuant to the foregoing clause (2) shall be an amount equal to the aggregate exercise price for the Shares underlying the surrendered option divided by the number of Parent Shares for which such new option is exercisable. "COMPANY OPTION PLANS" shall mean the Company's Amended and Restated Senior Executives' Option Plan, the Company's 1992 Directors' Option Plan and the Company's 1996 Stock Incentive Plan. (b) Each of the Company and Parent shall take all reasonable actions necessary so that the Warrants expiring August 30, 2002 (except as otherwise provided therein) to purchase 166,666 shares of Company Stock at a price of $9.75 per share, subject to adjustment (the "BANK WARRANTS"), shall be exercisable, from and after the Effective Time, for an amount of cash equal in the aggregate to the Per Share Amount multiplied by the number of Shares for which such warrants were exercisable immediately prior to the Effective Time. Each of the Company and Parent shall take all reasonable actions necessary so that the Warrants expiring August 13, 2002 to purchase 203,033 shares of Company Stock at a price of $10.17 per share, subject to adjustment, and the Warrants expiring August 1 2004 to purchase 685,714 shares of Company Stock at a price of $4.58 per share, subject to adjustment (collectively, the "OTHER WARRANTS" and, with the Bank Warrants, the "COMPANY WARRANTS"), shall be exercisable, from and after the Effective, at the election of the holder as provided in the applicable Other Warrant, for either (i) an amount of cash equal in the aggregate to the Per Share Amount multiplied by the number of Shares for which such warrants were exercisable immediately prior to the Effective Time or (ii) a number of Parent Shares equal to the product of (I) the number of Shares for which such warrants were exercisable immediately prior to the Effective Time and (II) a fraction, the numerator of which is the Per Share Amount and the denominator of which is the Current Market Price (as defined in the applicable Other Warrant) of the Parent Shares on the trading day immediately preceding the Closing Date. The exercise price per Parent Share under each Other Warrant, as adjusted pursuant to the foregoing clause (ii), shall be an amount equal to the aggregate exercise price for the Shares for which such warrant was exercisable prior to such adjustment divided by the number of Parent Shares for which such -10- warrant is exercisable as a result of such adjustment. In addition, the Company shall deliver to the holders of the applicable Other Warrants notice of the Merger, and the Parent shall deliver to the holders of the applicable Other Warrants the instruments of assumption and legal opinions required to be delivered, pursuant to the terms of the applicable Other Warrants, in connection with the Merger. Notwithstanding the forgoing provisions of this SECTION 1.9(B), any holder exercising a Company Warrant for cash in accordance with the provisions of this Section 1.9(b) shall not be required to pay the exercise price thereof and instead may receive in the aggregate upon exercise the difference between (A) the Per Share Amount multiplied by the number of Shares for which such warrants were exercisable immediately prior to the Effective Time and (B) the aggregate exercise price for the Shares underlying such warrants. (c) Each of the Company and Parent shall take all reasonable actions necessary so that the Company's Subordinated Convertible Debentures convertible into 24,810 shares of Company Stock, subject to adjustment (the "COMPANY DEBENTURES"), shall be convertible, from and after the Effective Time, into an amount of cash equal to the product of the number of Shares into which such Company Debentures were convertible immediately prior to the Effective Time multiplied by the Per Share Amount. The Company shall deliver to the holders of the Company Debentures notice of the Merger. 1.10. CERTIFICATE OF INCORPORATION AND BYLAWS. Subject to SECTION 5.5 hereof, unless otherwise determined by Parent prior to the Effective Time, at and after the Effective Time (a) the Restated Certificate of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended as provided by the Delaware Code and such Certificate of Incorporation; PROVIDED, HOWEVER, that (i) Article Fourth shall be amended and restated in its entirety to provide that the capital stock of the Surviving Corporation shall consist of 1,000 shares of Common Stock, par value $.01 per share; (ii) Article Fifth shall be amended and restated in its entirety to provide that the Surviving Corporation's Board shall consist of not less than three members, all of a single class, with the exact number to be fixed from time to time by resolution of the Board of Directors; (iii) Article Sixth shall be amended by deleting the second sentence thereof; (iv) Article Seventh shall be amended by deleting the second sentence thereof; and (v) Article Eighth shall be deleted; and (b) the Bylaws of the Surviving Corporation shall be the Bylaws of Purchaser in effect at the Effective Time (subject to any subsequent amendments). 1.11. DIRECTORS AND OFFICERS. At and after the Effective Time, the directors of Purchaser immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their successors are duly elected or appointed and qualified. -11- 1.12. OTHER EFFECTS OF MERGER. The Merger shall have all further effects as specified in the applicable provisions of the Delaware Code. 1.13. PROXY STATEMENT. (a) Following the consummation of the Offer and if required by the Securities Exchange Act because of action by the Company's stockholders necessary in order to consummate the Merger, the Company shall prepare and file with the SEC and, when cleared by the SEC, shall mail to stockholders, a proxy statement in connection with a meeting of the Company's stockholders to vote upon the adoption of this Agreement and the Merger and the transactions contemplated hereby and thereby (the "COMPANY PROPOSALS"), or an information statement, as appropriate, satisfying all requirements of the Securities Exchange Act (such proxy or information statement in the form mailed by the Company to its stockholders, together with any and all amendments or supplements thereto, is herein referred to as the "PROXY STATEMENT"). Parent will furnish the Company with such information concerning Parent and its subsidiaries as is necessary in order to cause the Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply with applicable Law. Parent agrees promptly to advise the Company if, at any time prior to the meeting of stockholders of the Company referenced herein, any Parent Information (as defined) in the Proxy Statement is or becomes incorrect or incomplete in any material respect and to provide the Company with the information needed to correct such inaccuracy or omission. Parent will furnish the Company with such supplemental information as may be necessary in order to cause the Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply with applicable Law after the mailing thereof to the stockholders of the Company. The Company and Parent agree to cooperate in making any preliminary filings of the Proxy Statement with the SEC, as promptly as practicable, pursuant to Rule 14a-6 under the Securities Exchange Act. The Company shall provide Parent for its review a copy of the Proxy Statement prior to each filing thereof, with reasonable time and opportunity for such review. Parent authorizes the Company to utilize in the Proxy Statement the information concerning Parent and its subsidiaries provided to the Company in connection with, or contained in, the Proxy Statement. 1.14. ADDITIONAL ACTIONS. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of Purchaser or the Company or otherwise to carry out this Agreement, the officers and directors of the Company and Purchaser shall be authorized to execute and deliver, in the name and on behalf of Purchaser or the Company, -12- all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of Purchaser or the Company, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement. 1.15. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the foregoing provisions of this ARTICLE I, in the event that Purchaser, or any other direct or indirect subsidiary of Parent, shall acquire at least 90 percent of the outstanding shares of Company Stock, the parties hereto agree to take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the expiration of the Offer without a meeting of stockholders of the Company, in accordance with Section 253 of the Delaware Code. 1.16. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any certificates representing shares of Company Stock shall have been lost, stolen or destroyed, the Exchange Agent shall make such payment in exchange for such lost, stolen or destroyed certificates upon the making of an affidavit of that fact by the holder thereof; PROVIDED, HOWEVER, that Parent may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Parent or the Exchange Agent with respect to the certificates alleged to have been lost, stolen or destroyed. 1.17. MATERIAL ADVERSE EFFECT. When used in connection with the Company or any of its subsidiaries or Parent or any of its subsidiaries, as the case may be, the term "Material Adverse Effect" means any change, effect or circumstance that, individually or when taken together with all other similar changes, effects or circumstances that have occurred during the period relevant to the determination of such Material Adverse Effect, is or is reasonably likely to be materially adverse to the business, assets (including intangible assets), financial condition or results of operations of the Company and its subsidiaries or Parent and its subsidiaries, as the case may be, in each case taken as a whole. Changes, effects and circumstances referred to in any of the provisions of SECTION 2.15 hereof shall be deemed similar for purposes of this SECTION 1.17. ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Parent and Purchaser that, except as set forth in the correspondingly numbered Sections of the letter, dated the date hereof, from the Company to Parent (the "COMPANY DISCLOSURE LETTER"): -13- 2.1. ORGANIZATION AND GOOD STANDING. The Company and each of the Company Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company and each of the Company Subsidiaries is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not reasonably be expected to have a Material Adverse Effect. The Company has heretofore made available to Parent accurate and complete copies of the Certificate of Incorporation and Bylaws, as currently in effect, of the Company. For purposes of this Agreement, the term "COMPANY SUBSIDIARY" shall mean any "Subsidiary" (as such term is defined in Rule 1-02 of Regulation S-X of the SEC) of the Company. 2.2. CAPITALIZATION. As of the date hereof, the authorized capital stock of the Company consists of (a) 12,000,000 shares of Company Stock, and (b) 1,000,000 shares of undesignated preferred stock, par value $1.00 per share. As of November 14, 1997, (a) 6,317,291 shares of Company Stock were issued and outstanding, (b) no shares of preferred stock were issued and outstanding and (c) 7,142 shares of Company Stock were issued and held in the treasury of the Company. As of November 14, 1997, (i) no shares of Company Stock or preferred stock were held by subsidiaries of the Company, (ii) 2,087,734 shares of Company Stock were reserved for future issuance pursuant to outstanding stock options granted under the Company Option Plans, (iii) 1,055,413 shares of Company Stock were reserved for future issuance upon exercise of Company Warrants and (iv) 24,810 shares of Company Stock were reserved for issuance upon conversion of the Company Debentures. No material change in the capitalization of the Company has occurred between November 14, 1997 and the date hereof. No other capital stock of the Company is authorized or issued. All issued and outstanding shares of the Company Stock are duly authorized, validly issued, fully paid and non-assessable. Except as set forth in the Company Securities Filings (as hereinafter defined) or as otherwise contemplated by this Agreement, as of the date hereof, there are no outstanding rights, subscriptions, warrants, puts, calls, unsatisfied preemptive rights, options or other agreements of any kind relating to any of the outstanding, authorized but unissued or treasury shares of the capital stock or any other security of the Company, and there is no authorized or outstanding security of any kind convertible into or exchangeable for any such capital stock or other security. Except as disclosed in the Company Securities Filings, there are no obligations, contingent or other, of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of Common Stock or the capital stock of any subsidiary or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any such subsidiary or any other entity, other than pursuant to intercompany agreements, the Credit Agreement (as -14- defined in the Company Disclosure Letter), and guarantees of bank obligations of subsidiaries entered into in the ordinary course of business. The Company has in effect no shareholder rights plan or any similar plan or arrangement pursuant to which the Company's stockholders have or may obtain the right to acquire capital stock of the Company at a price below the market price thereof. 2.3. SUBSIDIARIES. SECTION 2.3 of the Company Disclosure Letter sets forth the name and jurisdiction of incorporation of each Company Subsidiary, each of which is wholly owned by the Company except as otherwise indicated in said SECTION 2.3 of the Company Disclosure Letter. All of the capital stock and other interests of the Company Subsidiaries so held by the Company are owned by it or a Company Subsidiary as indicated in said SECTION 2.3 of the Company Disclosure Letter, free and clear of any claim, lien, encumbrance or security interest with respect thereto. All of the outstanding shares of capital stock of each of the Company Subsidiaries directly or indirectly held by the Company are duly authorized, validly issued, fully paid and non-assessable and were issued free of preemptive rights and in compliance with applicable Laws. No equity securities or other interests of any of the Company Subsidiaries are or may become required to be issued or purchased by reason of any options, warrants, rights to subscribe to, puts, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any capital stock of any Company Subsidiary, and there are no contracts, commitments, understandings or arrangements by which any Company Subsidiary is bound to issue additional shares of its capital stock, or options, warrants or rights to purchase or acquire any additional shares of its capital stock or securities convertible into or exchangeable for such shares. Except as set forth in the Company Securities Filings, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity, with respect to which interest the Company has invested or is required to invest $100,000 or more, excluding securities in any publicly traded company held for investment by the Company and comprising less than five percent of the outstanding stock of such company. 2.4. AUTHORIZATION; BINDING AGREEMENT. The Company has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including, but not limited to, the Merger, have been duly and validly authorized by the Company's Board of Directors, and no other corporate proceedings on the part of the Company or any Company Subsidiary are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby (other than the adoption of this Agreement by the stockholders holding a majority of the outstanding shares of Company Stock of the Company in accordance with the Delaware Code). This Agreement has been duly and -15- validly executed and delivered by the Company and constitutes the legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by principles of equity regarding the availability of remedies ("ENFORCEABILITY EXCEPTIONS"). 2.5. GOVERNMENTAL APPROVALS. No consent, approval, waiver or authorization of, notice to or declaration or filing with ("CONSENT") any nation or government, any state or other political subdivision thereof or any entity, authority or body exercising executive, legislative, judicial or regulatory functions of or pertaining to government, including, without limitation, any governmental or regulatory authority, agency, department, board, commission or instrumentality, any court, tribunal or arbitrator and any self-regulatory organization ("GOVERNMENTAL AUTHORITY"), on the part of the Company or any of the Company Subsidiaries is required in connection with the execution or delivery by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby other than (i) the filing of the Certificate of Merger with the Secretary of State of Delaware in accordance with the Delaware Code, (ii) filings with the SEC, (iii) filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR ACT"), (iv) consents or filings required under the Communications Act of 1934, as amended, relating to change in ownership or control of certain business radio and related licenses held by the Company or its subsidiaries and (v) those Consents that, if they were not obtained or made, would not reasonably be expected to have a Material Adverse Effect. 2.6. NO VIOLATIONS. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and compliance by the Company with any of the provisions hereof will not (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or Bylaws of the Company or any of the Company Subsidiaries, (ii) require any Consent under or result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of, any Company Material Contract (as hereinafter defined), (iii) result in the creation or imposition of any lien or encumbrance of any kind upon any of the assets of the Company or any Company Subsidiary or (iv) subject to obtaining the Consents from Governmental Authorities referred to in SECTION 2.5 hereof, violate any applicable provision of any statute, law, rule or regulation or any order, decision, injunction, judgment, award or decree ("LAW") to which the Company or any Company Subsidiary or its assets or properties are subject, except, in the case of each of clauses (ii), (iii) and (iv) above, for any deviations from the foregoing which would not reasonably be expected to have a Material Adverse Effect. -16- 2.7. SECURITIES FILINGS. The Company has made available to Parent true and complete copies of (i) its Annual Reports on Form 10-K, as amended, for the years ended December 31, 1994, 1995 and 1996, as filed with the SEC, (ii) its proxy statements relating to all of the meetings of stockholders (whether annual or special) of the Company since January 1, 1995, as filed with the SEC, and (iii) all other reports, statements and registration statements and amendments thereto (including, without limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by the Company with the SEC since January 1, 1997. The reports and statements set forth in clauses (i) through (iii) above, and those subsequently provided or required to be provided pursuant to this SECTION 2.7, are referred to collectively herein as the "COMPANY SECURITIES FILINGS." As of their respective dates, or as of the date of the last amendment thereof, if amended after filing, the Company Securities Filings (i) were prepared in all material respects in accordance with the requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT") and the rules and regulations promulgated thereunder, or the Exchange Act, as the case may be, and none of the Company Securities Filings contained or, as to the Company Securities Filings subsequent to the date hereof, will contain, any untrue statement of a material fact or omitted or, as to the Company Securities Filings subsequent to the date hereof, will omit, to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 2.8. COMPANY FINANCIAL STATEMENTS. The audited consolidated financial statements and unaudited interim financial statements of the Company included in the Company Securities Filings (the "COMPANY FINANCIAL STATEMENTS") have been prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as may be indicated therein or in the notes thereto) and present fairly, in all material respects, the financial position of the Company and its subsidiaries as at the dates thereof and the results of their operations and cash flows for the periods then ended subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments, any other adjustments described therein and the fact that certain information and notes have been condensed or omitted in accordance with the Securities Exchange Act. 2.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the Company Securities Filings, since December 31, 1996, through the date of this Agreement, there has not been: (i) any event that has had or would reasonably be expected to have a Material Adverse Effect, (ii) any declaration, payment or setting aside for payment of any dividend or other distribution or any redemption or other acquisition of any shares of capital stock or securities of the Company by the Company, (iii) any material damage or loss to any material asset or property, whether or not covered by insurance, (iv) any change by the Company in accounting principles or practices, (v) any material revaluation by the Company of any of its assets, including writing down the value of inventory or writing off -17- notes or accounts receivable other than in the ordinary course of business, (vi) any sale of a material amount of property of the Company, except in the ordinary course of business, or (vii) any other action or event, involving an amount exceeding $250,000, that would have required the consent of Parent pursuant to Section 4.1 hereof had such action or event occurred after the date of this Agreement. 2.10. NO UNDISCLOSED LIABILITIES. Except as set forth in the Company Securities Filings, neither the Company nor any of its subsidiaries has any liabilities (absolute, accrued, contingent or otherwise), except liabilities (a) in the aggregate adequately provided for in the Company's audited balance sheet (including any related notes thereto) for the fiscal year ended December 31, 1996 included in the Company's 1996 Annual Report on Form 10-K (the "1996 BALANCE SHEET"), (b) incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected on the 1996 Balance Sheet, (c) incurred since December 31, 1996 in the ordinary course of business consistent with past practice, (d) incurred in connection with this Agreement or (e) which would not reasonably be expected to have a Material Adverse Effect. 2.11. COMPLIANCE WITH LAWS. The business of the Company and each of the Company Subsidiaries has been operated in compliance with all Laws applicable thereto, except for any non-compliance which would not reasonably be expected to have a Material Adverse Effect. 2.12. PERMITS. (i) The Company and the Company Subsidiaries have all permits, certificates, licenses, approvals and other authorizations from Governmental Authorities required in connection with the operation of their respective businesses (collectively, "COMPANY PERMITS"), (ii) neither the Company nor any of its subsidiaries is in violation of any Company Permit and (iii) no proceedings are pending or, to the knowledge of the Company, threatened, to revoke or limit any Company Permit, except, in the case of each of clauses (i), (ii) and (iii) above, those the absence or violation of which would not reasonably be expected to have a Material Adverse Effect. 2.13. LITIGATION. Except as disclosed in the Company Securities Filings, there is no suit, action or proceeding ("LITIGATION") pending or, to the knowledge of the Company, threatened against the Company or any of the Company Subsidiaries which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect, nor is there any judgment, decree, injunction, rule or order of any Governmental Authority outstanding against the Company or any of its subsidiaries which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. Except as set forth in the Company Securities Filings, since December 31, 1996, and prior to or on the date hereof, there have been no actions, suits or proceedings made or pending against the Company or any of its subsidiaries alleging (x) any Environmental Claims (as hereinafter defined) or (y) any claim against the Company in connection with its rendering of any security services, except -18- for (i) such claims (not resulting as of the date hereof in an action, suit or proceeding) not exceeding in any individual case $500,000 or (ii) such actions, suits or proceedings which, in the case of either clause (x) or (y) above, would not reasonably be expected to result in liability to the Company or any of its subsidiaries, not covered by insurance, of $100,000 or more in any individual case or (without regard to whether or not any thereof is covered by insurance) $500,000 in the aggregate. The Company has not established any reserves in the Company Financial Statements with respect to claims referred to in clauses (x) and (y) of the preceding sentence. SECTION 2.14 of the Company Disclosure Letter lists all letters received by the Company from insurance carriers asserting a reservation of rights with respect to any action, suit or proceeding. 2.14. CONTRACTS. SECTION 2.14 of the Company Disclosure Letter includes a list of all loan agreements and financing agreements and of all equipment lease financing agreements involving obligations of the Company or any subsidiary in excess of $250,000. Neither the Company nor any of the Company Subsidiaries is a party or is subject to any note, bond, mortgage, indenture, contract, lease, license, agreement or instrument that is required to be described in or filed as an exhibit to any Company Securities Filing (collectively with those agreements listed in Section 2.14 of the Company Disclosure letter, the "COMPANY MATERIAL CONTRACTS") that is not so described in or filed as required by the Securities Act or the Securities Exchange Act, as the case may be. The Company is not a party to any agreements to acquire in the future the stock or substantially all the assets of another person. Except as disclosed in the Company Securities Filings, all such Company Material Contracts are valid and binding and are in full force and effect and enforceable against the Company or such subsidiary in accordance with their respective terms, subject to the Enforceability Exceptions. Neither the Company nor any of its subsidiaries is in violation or breach of or default under any such Company Material Contract where such violation or breach would reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, no party (other than the Company or its subsidiaries) is in default, violation or breach of any Company Material Contract where such violation or breach would reasonably be expected to have a Material Adverse Effect. 2.15. EMPLOYEE BENEFIT PLANS. (a) Section 2.15(a) of the Company Disclosure Letter lists all employee pension benefit plans (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), all employee welfare benefit plans (as defined in Section 3(1) of ERISA) and all other bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other similar fringe or employee benefit plans, programs or arrangements, and any employment, executive compensation or severance agreements, written or otherwise, as amended, modified or supplemented, for the benefit of, or relating to, any former or current employee, officer or consultant (or any of their beneficiaries) of the Company or any other entity (whether or not incorporated) which is a member of a -19- controlled group including the Company or which is under common control with the Company (an "ERISA AFFILIATE") within the meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the "CODE") or Section 4001(a)(14) or (b) of ERISA, or any subsidiary of the Company with respect to which the Company has or could have any current (actual or contingent) liability, as well as each plan with respect to which the Company or an ERISA Affiliate could incur liability under Title IV of ERISA or Section 412 of the Code (together for purposes of this SECTION 2.15, the "EMPLOYEE PLANS"). Prior to the date of this Agreement, the Company has provided or made available to Parent copies of (i) each such written Employee Plan (or a written description of any Employee Plan which is not written) and all related trust agreements, insurance and other contracts (including policies), summary plan descriptions, summaries of material modifications and any material communications to plan participants, (ii) the three most recent annual reports on Form 5500 series, with accompanying schedules and attachments, filed with respect to each Employee Plan required to make such a filing, (iii) the most recent actuarial valuation for each Employee Plan subject to Title IV of ERISA, (iv) the latest reports which have been filed with the Department of Labor with respect to each Employee Plan required to make such filing and (v) the most recent favorable determination letters issued for each Employee Plan and related trust which is subject to Parts 1, 2 and 4 of Subtitle B of Title I of ERISA (and, if an application for such determination is pending, a copy of the application for such determination). (b) (i) None of the Employee Plans promises or provides retiree medical or other retiree welfare benefits to any person, and none of the Employee Plans is a "multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii) to the knowledge of the Company, no party in interest or disqualified person (as defined in Section 3(14) of ERISA and Section 4975 of the Code) has at any time engaged in a transaction with respect to any Employee Plan which could subject the Company or any ERISA Affiliate, directly or indirectly, to a tax, penalty or other liability for prohibited transactions under ERISA or Section 4975 of the Code, except for any such tax, penalty or liability that would not reasonably be expected to result in a Material Adverse Effect; (iii) to the knowledge of the Company, no fiduciary of any Employee Plan has breached any of the responsibilities or obligations imposed upon fiduciaries under Title I of ERISA, except where such breach would not reasonably be expected to result in a Material Adverse Effect; (iv) all Employee Plans have been established and maintained substantially in accordance with their terms and have operated in compliance with the requirements prescribed by any and all statutes (including ERISA and the Code), orders, or governmental rules and regulations currently in effect with respect thereto (including all applicable requirements for notification to participants or the Department of Labor, the Internal Revenue Service (the "IRS") or the Secretary of the Treasury) except where failure to do so would not reasonably be expected to result in a Material Adverse Effect, and may by their terms be amended and/or terminated at -20- any time subject to applicable law and any applicable collective bargaining agreement; and the Company and each of its subsidiaries have performed all obligations required to be performed by them under, are not in default under or violation of except where failure to do so would not reasonably be expected to result in a Material Adverse Effect, and have no knowledge of any default or violation by any other party to, any of the Employee Plans; (v) each Employee Plan which is subject to Parts 1, 2 and 4 of Subtitle B of ERISA is the subject of a favorable determination letter from the IRS, and to the knowledge of the Company nothing has occurred which may reasonably be expected to impair such determination; (vi) all contributions required to be made with respect to any Employee Plan pursuant to Section 412 of the Code, or the terms of the Employee Plan or any collective bargaining agreement, have been made on or before their due dates; (vii) with respect to each Employee Plan, no "reportable event" within the meaning of Section 4043 of ERISA (excluding any such event for which the 30-day notice requirement has been waived under the regulations to Section 4043 of ERISA) or any event described in Section 4062, 4063 or 4041 of ERISA has occurred for which there is any outstanding liability to the Company or any ERISA Affiliate, except where such liability would not reasonably be expected to result in a Material Adverse Effect, nor would the consummation of the transaction contemplated hereby (including the execution of this Agreement) constitute a reportable event for which the 30-day requirement has not been waived; and (viii) neither the Company nor any ERISA Affiliate has incurred or reasonably expects to incur any liability under Title IV of ERISA (other than liability for premium payments to the Pension Benefit Guaranty Corporation (the "PBGC") arising in the ordinary course), except where such liability would not reasonably be expected to result in a Material Adverse Effect. (c) Section 2.15(c) of the Company Disclosure Letter sets forth a true and complete list of each current or former employee, officer or director of the Company or any of its subsidiaries who holds (i) any option to purchase Company Stock as of the date hereof, together with the number of shares of Company Stock subject to such option, the option price of such option (to the extent determined as of the date hereof), whether such option is intended to qualify as an incentive stock option within the meaning of Section 422(b) of the Code (an "ISO"), and the expiration date of such option; (ii) any shares of Company Stock that are restricted as a result of an agreement with or stock plan of the Company; and (iii) any other right, directly or indirectly, to receive Company Stock, except as otherwise disclosed in Section 2.15 of the Company Disclosure Letter, together with the number of shares of Company Stock subject to such right, except as otherwise disclosed in Section 2.15 of the Company Disclosure Letter. Section 2.15(c) of the Company Disclosure Letter also sets forth the total number of any such ISOs and any such nonqualified options and other such rights. (d) Unless otherwise disclosed in Section 2.15(a) of the Company Disclosure Letter, Section 2.15(d) of the Company Disclosure Letter sets forth a true and complete list of (i) all -21- employment agreements with officers of the Company or any of its subsidiaries; (ii) all agreements with consultants who are individuals obligating the Company or any of its subsidiaries to make annual cash payments in an amount exceeding $100,000; (iii) all agreements with respect to the services of independent contractors or leased employees whether or not they participate in any of the Employee Plans; (iv) all officers of the Company or any of its subsidiaries who have executed a non-competition agreement with the Company or any of its subsidiaries; (v) all severance agreements, programs and policies of the Company or any of its subsidiaries with or relating to its employees, in each case with outstanding commitments exceeding $100,000, excluding programs and policies required to be maintained by law; and (vi) all plans, programs, agreements and other arrangements of the Company which contain change in control provisions. (e) The PBGC has not instituted proceedings to terminate any Employee Benefit Plan that is subject to Title IV of ERISA (each, a "DEFINED BENEFIT PLAN"). The Defined Benefit Plans have no accumulated or waived funding deficiencies within the meaning of Section 412 of the Code nor have any extensions of any amortization period within the meaning of Section 412 of the Code or 302 of ERISA been applied for with respect thereto. The most recent actuarial valuation with respect to any of the Company's Defined Benefit Plans made available to Parent is true and correct in all material respects and there has been no change since the date of such valuation that would reasonably be expected to result in a Material Adverse Effect. All applicable premiums required to be paid to the PBGC with respect to the Defined Benefit Plans have been paid. No facts or circumstances exist with respect to any Defined Benefit Plan which would give rise to a Lien on the assets of the Company under Section 4068 of ERISA or otherwise. All the assets of the Defined Benefit Plans are readily marketable securities or insurance contracts. (f) (i) The Company does not currently maintain an employee stock ownership plan (within the meaning of Section 4975(e)(7) of the Code) or any other Employee Plan that invests in Company Stock; and (ii) the consummation of the transactions contemplated by this Agreement will not result in an increase in the amount of compensation or benefits or accelerate the vesting or timing of payment of any benefits or compensation payable in respect of any employee except as otherwise disclosed in SECTION 1.9 hereof or except where such increase or acceleration would not reasonably be expected to result in a Material Adverse Effect. The Company will take all actions within its control to ensure that all actions required to be taken by a fiduciary of any Employee Plan in order to effectuate the transaction contemplated by this Agreement shall comply with the terms of such Plan, ERISA and other applicable laws. The Company will take all actions within its control to ensure that all actions required to be taken by a trustee of any Employee Plan that owns Company Stock shall have been duly authorized by the appropriate fiduciaries of such Plan and shall comply with the terms of such Plan, ERISA and other applicable laws. (g) The Company maintains no Employee Plan covering -22- non-U.S. employees. (h) The Company has fiduciary liability insurance of at least $500,000 in effect covering the fiduciaries of the Employee Plans (including the Company) with respect to whom the Company may have liability. 2.16. TAXES AND RETURNS. (a) The Company and each of the Company Subsidiaries has timely filed, or caused to be timely filed, all material Tax Returns (as hereinafter defined) required to be filed by it, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material amounts of Taxes (as hereinafter defined) required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Company Financial Statements have been established or which are being contested in good faith. There are no material claims or assessments pending against the Company or any of its subsidiaries for any alleged deficiency in any Tax, and the Company has not been notified in writing of any proposed Tax claims or assessments against the Company or any of its subsidiaries (other than in each case, claims or assessments for which adequate reserves in the Company Financial Statements have been established or which are being contested in good faith or are immaterial in amount). Neither the Company nor any of its subsidiaries has executed any waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by the Company or any of its subsidiaries for any extension of time within which to file any material Tax Return or within which to pay any material amounts of Taxes shown to be due on any Tax Return. To the best knowledge of the Company, there are no liens for material amounts of Taxes on the assets of the Company or any of its subsidiaries except for statutory liens for current Taxes not yet due and payable. (b) For purposes of this Agreement, the term "TAX" shall mean any federal, state, local, foreign or provincial income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, alternative or add-on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty imposed by any Governmental Authority. The term "TAX RETURN" shall mean a report, return or other information (including any attached schedules or any amendments to such report, return or other information) required to be supplied to or filed with a governmental entity with respect to any Tax, including an information return, claim for refund, amended return or declaration or estimated Tax. (c) (i) Neither the Company nor any of its subsidiaries has ever been a member of an affiliated group within the meaning of Section 1504 of the Code or filed or been included in a combined, consolidated or unitary Tax Return, other than of the Company and its subsidiaries; (ii) other than with respect to the Company and its subsidiaries, neither the Company nor any of its subsidiaries is liable for Taxes of any other Person, or is -23- currently under any contractual obligation to indemnify any person with respect to Taxes (except for customary agreements to indemnify lenders or securityholders in respect of taxes other than income taxes), or is a party to any tax sharing agreement or any other agreement providing for payments by the Company or any of its subsidiaries with respect to Taxes; (iii) neither the Company nor any of its subsidiaries is a party to any joint venture, partnership or other arrangement or contract which could be treated as a partnership for federal income tax purposes; (iv) neither the Company nor any of its subsidiaries has entered into any sale leaseback or any leveraged lease transaction that fails to satisfy the requirements of Revenue Procedure 75-21 (or similar provisions of foreign law); (v) neither the Company nor any of its subsidiaries has agreed or is required, as a result of a change in method of accounting or otherwise, to include any adjustment under Section 481 of the Code (or any corresponding provision of state, local or foreign law) in taxable income; (vi) neither the Company nor any of its subsidiaries is a party to any agreement, contract, arrangement or plan that would result (taking into account the transactions contemplated by this Agreement), separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code; (vii) the prices for any property or services (or for the use of property) provided by the Company or any of its subsidiaries to any other subsidiary or to the Company have been arm's length prices, determined using a method permitted by the Treasury Regulations under Section 482 of the Code; (viii) neither the Company nor any of its subsidiaries is liable with respect to any indebtedness the interest of which is not deductible for applicable federal, foreign, state or local income tax purposes; (ix) neither the Company nor any of its subsidiaries is a "consenting corporation" under Section 341(F) of the Code or any corresponding provision of state, local or foreign law; and (x) none of the assets owned by the Company or any of its subsidiaries is property that is required to be treated as owned by any other person pursuant to Section 168(g)(8) of the Internal Revenue Code of 1954, as amended, as in effect immediately prior to the enactment of the Tax Reform Act of 1986, or is "tax-exempt use property" within the meaning of Section 168(h) of the Code; PROVIDED that each of the statements made in clauses (i) through (x) above shall be deemed true and correct for purposes of this Agreement unless in any such case any failure of such statement to be true or correct would reasonably be expected to result in a Material Adverse Effect. (d) The amount of net operating losses (as defined in Section 172 of the Code) of the Company and its subsidiaries as of the end of the fiscal year ended December 31, 1996, and any limitation on the use of such losses as a result of an ownership change within the meaning of Section 382(g) of the Code occurring on or prior to December 31, 1996, is as set forth in the Company's financial statements for such year. 2.17. INTELLECTUAL PROPERTY. The Company or its subsidiaries own, or are licensed or otherwise possess legal enforceable rights to use, all patents, trademarks, trade names, service marks, copyrights and any applications therefor, -24- technology, know-how, trade secrets, computer software programs or applications, domain names and tangible or intangible proprietary information or materials that are used in the respective businesses of the Company and its subsidiaries as currently conducted, except for any such failures to own, be licensed or possess that would not reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Company, there are no valid grounds for any bona fide claims (i) to the effect that the business of the Company or any of its subsidiaries infringes on any copyright, patent, trademark, service mark or trade secret; (ii) against the use by the Company or any of its subsidiaries of any trademarks, trade names, trade secrets, copyrights, patents, technology, know-how or computer software programs and applications used in the business of the Company or any of its subsidiaries as currently conducted or as proposed to be conducted; (iii) challenging the ownership, validity or effectiveness of any of the patents, registered and material unregistered trademarks and service marks, registered copyrights, trade names and any applications therefor owned by the Company or any of its subsidiaries (the "COMPANY INTELLECTUAL PROPERTY RIGHTS") or other trade secret material to the Company; or (iv) challenging the license or legally enforceable right to use of any third-party patents, trademarks, service marks and copyrights by the Company or any of its subsidiaries, except, in the case of each of clauses (i), (ii), (iii) and (iv) above, for matters that, if determined adversely to the Company, would not reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Company, all material patents, registered trademarks, service marks and copyrights held by the Company are valid and subsisting. Except as set forth in the Company Securities Filings, to the Company's knowledge, there is no material unauthorized use, infringement or misappropriation of any of the Company Intellectual Property by any third party, including any employee or former employee of the Company or any of its subsidiaries. 2.18. DISCLOSURE DOCUMENTS. The Proxy Statement will comply in all material respects with the applicable requirements of the Securities Exchange Act except that no representation or warranty is being made by the Company with respect to the Parent Information included in the Proxy Statement. The Proxy Statement will not, at the time the Proxy Statement is filed with the SEC or first sent to stockholders, at the time of the Company's stockholders' meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading except that no representation or warranty is being made by the Company with respect to the Parent Information included in the Proxy Statement. The Schedule 14D-9 will comply in all material respects with the Securities Exchange Act except that no representation or warranty is being made by the Company with respect to the Parent Information included in the Schedule 14D-9. Neither the Schedule 14D-9 nor any of the information relating to the Company or its affiliates provided by or on behalf of the Company specifically for inclusion in the Schedule 14D-1 or the -25- Offer Documents will, at the respective times the Schedule 14D-9, the Schedule 14D-1 and the Offer Documents are filed with the SEC and are first published, sent or given to stockholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 2.19. LABOR MATTERS. Except as set forth in the Company Securities Filings, (i) there are no controversies pending or, to the knowledge of the Company or any of its subsidiaries, threatened, between the Company or any of its subsidiaries and any of their respective employees, which controversies would reasonably be expected to have a Material Adverse Effect; (ii) neither the Company nor any of its subsidiaries is a party to any material collective bargaining agreement or other labor union contract applicable to persons employed by the Company or its subsidiaries, nor, as of the date of this Agreement, does the Company or any of its subsidiaries know of any activities or proceedings of any labor union to organize any such employees; and (iii) neither the Company nor any of its subsidiaries has any knowledge of any strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to any employees of the Company or any of its subsidiaries which would reasonably be expected to have a Material Adverse Effect. 2.20. LIMITATION ON BUSINESS CONDUCT. Except as set forth in the Company Securities Filings, neither the Company nor any of its subsidiaries is a party to, or has any obligation under, any contract or agreement, written or oral, which contains any covenants currently or prospectively limiting in any material respect the freedom of the Company or any of its subsidiaries to engage in any line of business or to compete with any entity. 2.21. TITLE TO PROPERTY. Except as set forth in the Company Securities Filings, each of the Company and each of its subsidiaries owns the properties and assets that it purports to own free and clear of all liens, charges, mortgages, security interests or encumbrances of any kind ("LIENS"), except for Liens which arise in the ordinary course of business and do not materially impair the Company's or its subsidiaries' ownership or use of such properties or assets, Liens for taxes not yet due and Liens securing obligations under the Credit Agreement. With respect to the property and assets it leases, the Company , its subsidiaries, and to the best of the Company's knowledge each of the other parties thereto, is in material compliance with such leases, and the Company or its subsidiaries, as the case may be, hold a valid leasehold interest free of any Liens, except those referred to above. The rights, properties and assets presently owned, leased or licensed by the Company and its subsidiaries include all rights, properties and assets necessary to permit the Company and its subsidiaries to conduct their business in all material respects in the same manner as their businesses have been conducted prior to the date hereof. -26- 2.22. LEASED PREMISES. Neither the Company nor any of its subsidiaries owns any real property. Each of the buildings, structures and premises leased by the Company or any of its subsidiaries is in reasonably good repair and operating condition, except as would not reasonably be expected to have a Material Adverse Effect. 2.23. ENVIRONMENTAL MATTERS. (a) Except as set forth in the Company Securities Filings, the Company and its subsidiaries are in material compliance with the Environmental Laws (as hereinafter defined), which compliance includes the possession by the Company and its subsidiaries of all material permits and governmental authorizations required under applicable Environmental Laws, and compliance in all material respects with the terms and conditions thereof, except in each case where such non-compliance would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its subsidiaries has received any communication (written or oral), whether from a governmental authority, citizens group, employee or otherwise, that alleges that the Company or any of its subsidiaries is not in such material compliance, and there are no circumstances that may prevent or interfere with such compliance in the future, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect. (b) There are no Environmental Claims (as hereinafter defined), including claims based on "arranger liability," pending or, to the best knowledge of the Company, threatened against the Company or any of its subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law, except for such Environmental Claims that would not reasonably be expected to have a Material Adverse Effect. (c) To the best knowledge of the Company, there are no past or present actions, inactions, activities, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Material of Environmental Concern (as hereinafter defined), that would form the basis of any Environmental Claim against the Company or any of its subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries have retained or assumed either contractually or by operation of law, except for such Environmental Claims that would not reasonably be expected to have a Material Adverse Effect. (d) The Company is in compliance in all material respects with Environment Laws as they relate to any on-site or off-site locations where the Company or any of its subsidiaries has stored, disposed or arranged for the disposal of Materials of Environmental Concern for itself (but not on behalf of others) or (ii) any underground storage tanks located on property owned or leased by the Company or any of its subsidiaries. There is no asbestos contained in or forming part of any building, building component, structure or office space owned or leased by the Company or any of its subsidiaries. No polychlorinated biphenyls -27- (PCB's) or PCB-containing items are used or stored at any property owned or leased by the Company or any of its subsidiaries. (e) For purposes of this Agreement: (i) "Environmental Claim" means any claim, action, cause of action, investigation or notice (written or oral) by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from (x) the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned or operated by the Company or any of its subsidiaries, or (y) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. (ii) "Environmental Laws" means all Federal, state, local and foreign laws or regulations relating to pollution or protection of human health and the environment (including ambient air, surface water, ground water, land surface or sub-surface strata), including laws and regulations relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern. (iii) "Materials of Environmental Concern" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, toxic substances, petroleum and petroleum products. 2.24. INSURANCE. The Company maintains insurance that provides adequate coverage for normal risks incident to the business of the Company and its subsidiaries and their respective properties and assets and in character and amount comparable to that carried by persons engaged in similar businesses. The insurance polices maintained by the Company are with reputable insurance carriers and have no premium delinquencies. 2.25. CUSTOMERS. No customer of the Company accounted for more than 4% of the revenues of the Company and its subsidiaries for the fiscal year ended December 31, 1996. 2.26. INTERESTED PARTY TRANSACTIONS. Except as set forth in the Company Securities Filings, since the date of the Company's proxy statement dated April 30, 1997, no event has occurred that would be required to be reported as a Certain Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC, except for contracts entered into in the ordinary course of business of the Company, on an arms-length basis, with terms no less favorable to the Company than would reasonably be expected in a similar transaction with an unaffiliated third party. -28- 2.27. ALARM CONTRACTS. The Chief Executive Officer and the Chief Financial Officer of the Company believe, following reasonable inquiry, that no more than 20% of accounts for alarm system monitoring and/or service owned by the Company or any Company Subsidiary are not evidenced by a written contract. 2.28. FINDERS AND INVESTMENT BANKERS. Neither the Company nor any of its officers or directors has employed any broker, finder or financial advisor or otherwise incurred any liability for any brokerage fees, commissions, or financial advisors' or finders' fees in connection with the transactions contemplated hereby, other than pursuant to an agreement with J.P. Morgan Securities Inc., the terms of which have been disclosed to Parent. 2.29. FAIRNESS OPINION. The Company's Board of Directors has received from its financial advisor, J.P. Morgan Securities Inc., a written opinion addressed to it for inclusion in the Schedule 14D-9 and the Proxy Statement to the effect that the consideration to be received by the stockholders of the Company pursuant to each of the Offer and the Merger is fair to the Company's stockholders from a financial point of view. 2.30. TAKEOVER STATUTES. Assuming Parent and its "associates" and "affiliates" (as defined in Section 203 of the Delaware Code) collectively beneficially own and have beneficially owned at all times during the three-year period prior to the date hereof less than fifteen percent (15%) of the Company Stock outstanding, Section 203 of the Delaware Code is, and shall be, inapplicable to the acquisition of Shares pursuant to the Offer and the Merger. 2.31. FULL DISCLOSURE. No statement contained in any certificate or schedule furnished or to be furnished by the Company or its subsidiaries to Parent or Purchaser in, or pursuant to the provisions of, this Agreement contains or shall contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in the light of the circumstances under which it was made, in order to make the statements herein or therein not misleading. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER Parent and Purchaser jointly and severally represent and warrant to the Company that: 3.1. ORGANIZATION AND GOOD STANDING. Each of Parent and Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. -29- 3.2. AUTHORIZATION; BINDING AGREEMENT. Parent and Purchaser have all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including, but not limited to, the Merger, have been duly and validly authorized by the respective Boards of Directors of Parent and Purchaser, as appropriate, and no other corporate proceedings on the part of Parent, Purchaser or any other subsidiary of Parent are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby (other than the requisite approval by the sole stockholder of Purchaser of this Agreement and the Merger). This Agreement has been duly and validly executed and delivered by each of Parent and Purchaser and constitutes the legal, valid and binding agreement of Parent and Purchaser, enforceable against each of Parent and Purchaser in accordance with its terms, subject to the Enforceability Exceptions. 3.3. GOVERNMENTAL APPROVALS. No Consent from or with any Governmental Authority on the part of Parent or Purchaser is required in connection with the execution or delivery by Parent and Purchaser of this Agreement or the consummation by Parent and Purchaser of the transactions contemplated hereby other than (i) filings with the SEC and (ii) filings under the HSR Act. 3.4. NO VIOLATIONS. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and compliance by Parent or Purchaser with any of the provisions hereof will not (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or Bylaws or other governing instruments of Parent or any subsidiary of Parent, (ii) require any Consent under or result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of, any material note, bond, mortgage, indenture, contract, lease, license, agreement or instrument to which Parent is a party or by which Parent or any of its assets or property is subject, (iii) result in the creation or imposition of any material lien or encumbrance of any kind upon any of the assets of Parent or any subsidiary of Parent or (iv) subject to obtaining the Consents from Governmental Authorities referred to in SECTION 3.3 hereof, violate any Law to which Parent or any subsidiary of Parent or its assets or properties are subject, except in any such case for any such conflicts, violations, breaches, defaults or other occurrences that would not prevent or delay consummation of the Offer or the Merger, or otherwise materially and adversely affect the ability of Parent or Purchaser to perform their respective obligations under this Agreement. 3.5. DISCLOSURE DOCUMENTS. None of the information supplied by Parent, its officers, directors, representatives, agents or employees (the "PARENT INFORMATION") -30- for inclusion in the Proxy Statement will, at the time the Proxy Statement is filed with the SEC or first mailed to the Company's stockholders, at the time of the Company's stockholders' meeting or at the Effective Time, contain any untrue statement of a material fact, or will omit to state any material fact necessary in order to make the statements therein, in light of the circumstances in which they were made not misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for such stockholders' meeting which has become false or misleading. Neither the Schedule 14D-1 or the Offer Documents or any amendments thereof or supplements thereto nor any of the Parent Information provided specifically for inclusion in the Schedule 14D-9 will, at the respective times the Schedule 14D-1, the Offer Documents or the Schedule 14D-9 are filed with the SEC or first published, sent or given to the Company's stockholders, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, neither Parent nor Purchaser makes any representation or warranty with respect to any information that has been supplied by the Company or its accountants, counsel or other authorized representatives for use in any of the foregoing documents. The Schedule 14D-1 and the Offer Documents will comply as to form in all material respects with the provisions of the Securities Exchange Act. 3.6. FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of its officers or directors has employed any broker, finder or financial advisor or otherwise incurred any liability for any brokerage fees, commissions or financial advisors' or finders' fees in connection with the transactions contemplated hereby. 3.7. FINANCING ARRANGEMENTS. Parent (including for this purpose one or more of its wholly-owned subsidiaries) has funds available to it sufficient to enable the Purchaser to purchase the Shares in accordance with the terms of this Agreement and to pay all amounts due (or which will, as a result of the transactions contemplated hereby, become due) in respect of any indebtedness of the Company for money borrowed. 3.8. NO PRIOR ACTIVITIES. Except for obligations or liabilities incurred in connection with its incorporation or organization or the negotiation and consummation of this Agreement and the transactions contemplated hereby (including any financing in connection therewith), Purchaser has not incurred any obligations or liabilities and has not engaged in any business or activities of any type or kind whatsoever or entered into any agreements or arrangements with any person or entity. ARTICLE IV ADDITIONAL COVENANTS OF THE COMPANY The Company covenants and agrees as follows: -31- 4.1. CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY SUBSIDIARIES. (a) Unless Parent shall otherwise agree in writing and except as expressly contemplated by this Agreement or in the Company Disclosure Letter, during the period from the date of this Agreement to the Effective Time, (i) the Company shall conduct, and it shall cause the Company Subsidiaries to conduct, its or their businesses in the ordinary course and consistent with past practice, and the Company shall, and it shall cause the Company Subsidiaries to, use its or their reasonable best efforts to preserve substantially intact its business organization, to keep available the services of its present officers and employees and to preserve the present commercial relationships of the Company and the Company Subsidiaries with persons with whom the Company or the Company Subsidiaries do significant business and (ii) without limiting the generality of the foregoing, neither the Company nor any of the Company Subsidiaries will: (A) amend or propose to amend its Certificate of Incorporation or Bylaws in any material respect; (B) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any shares of, or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any shares of, the capital stock or other securities of the Company or any of the Company Subsidiaries, including, but not limited to, any securities convertible into or exchangeable for shares of stock of any class of the Company or any of the Company Subsidiaries, except for (a) the issuance of shares pursuant to the exercise of Company Options outstanding on the date of this Agreement in accordance with their present terms, (b) the issuance of shares upon the exercise of Company Warrants, or conversion of the Company Debentures, outstanding on the date of this Agreement in accordance with their present terms and (c) the issuance of not more than an aggregate of 15,000 shares of Company Stock to the sellers under the agreements pursuant to which the Company acquired Certified Systems, Inc., Certified Systems Central Station, Inc. and Security Solutions, Inc. to the extent required pursuant to the terms of such agreements; (C) split, combine or reclassify any shares of its capital stock or declare, pay or set aside any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, other than dividends or distributions to the Company or a subsidiary of the Company, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any shares of its capital stock or other securities; (D) create, incur or assume any indebtedness for borrowed money or issue any debt securities, except pursuant to the Credit Agreement, or make any loans (except as provided in paragraph (E) (b) below); (E) other than in the ordinary course of business -32- consistent with past practice, (a) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for the obligations of any person (other than the Company or a Company Subsidiary); (b) make any capital expenditures (it being understood that the acquisition of the stock or substantially all the assets of any other person shall not be deemed a "capital expenditures" for these purposes) or make any advances or capital contributions to, or investments in, any other person (other than to a Company Subsidiary); (c) voluntarily incur any material liability or obligation (absolute, accrued, contingent or otherwise); or (d) sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any assets or properties, real, personal or mixed, material to the Company and the Company Subsidiaries taken as a whole other than to secure debt permitted under paragraph (D); (F) increase in any manner the compensation of any of its officers or employees (other than, except with respect to employees who are executive officers or directors, in the ordinary course of business consistent with past practice) or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any stockholder, officer, director, employee, consultant or affiliate other than, in any such case referred to above, as may be required by Law or as required pursuant to the terms of agreements in effect on the date of this Agreement and other than arrangements with new employees (other than employees who will be officers of the Company) hired in the ordinary course of business consistent with past practice and providing for compensation (other than equity-based compensation) and other benefits consistent with those provided for similarly situated employees of the Company as of the date hereof; (G) alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any subsidiary or the Company; (H) except as may be required as a result of a change in law or as required by the SEC, change any of the accounting principles or practices used by it; (I) make any material tax election or settle or compromise any material income tax liability; (J) pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than -33- the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in, or contemplated by, the financial statements (or the notes thereto) of the Company or incurred in the ordinary course of business consistent with past practice; (K) except to the extent necessary for the exercise of its fiduciary duties by the Board of Directors of the Company as set forth in, and consistent with the provisions of, SECTION 4.8 hereof, waive, amend or allow to lapse any term or condition of any confidentiality or "standstill" agreement to which the Company or any subsidiary is a party; or (L) take, or agree in writing or otherwise to take, any of the foregoing actions or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect in any material respect at or prior to the Effective Time. (b) The Company shall, and the Company shall cause each of the Company Subsidiaries to, comply with all Laws applicable to it or any of its properties, assets or business and maintain in full force and effect all the Company Permits necessary for such business, except in any such case for any failure so to comply or maintain that would not reasonably be expected to result in a Material Adverse Effect. 4.2. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice to Parent if any of the following occur after the date of this Agreement: (i) receipt of any notice or other communication in writing from any third party alleging that the Consent of such third party is or may be required in connection with the transactions contemplated by this Agreement, provided that such Consent would have otherwise been required to have been disclosed in this Agreement; (ii) receipt of any material notice or other communication from any Governmental Authority (including, but not limited to, the NASD or any securities exchange) in connection with the transactions contemplated by this Agreement; (iii) the occurrence of an event which would be reasonably likely to (A) have a Material Adverse Effect or (B) cause any condition set forth in ANNEX I hereto to be unsatisfied in any material respect at any time prior to the consummation of the Offer or (iv) the commencement or threat of any Litigation involving or affecting the Company or any of the Company Subsidiaries, or any of their respective properties or assets, or, to its knowledge, any employee, agent, director or officer, in his or her capacity as such, of the Company or any of the Company Subsidiaries which, if pending on the date hereof, would have been required to have been disclosed in this Agreement or which relates to the consummation of the Merger. 4.3. ACCESS AND INFORMATION. Between the date of this Agreement and the Effective Time, and without intending by this SECTION 4.3 to limit any of the other obligations of the parties under this Agreement, the Company will -34- give, and shall direct its accountants and legal counsel to give, Parent and its authorized representatives (including, without limitation, its financial advisors, accountants and legal counsel), at reasonable times and without undue disruption to or interference with the normal conduct of the business and affairs of the Company, access as reasonably required in connection with the transactions provided for in this Agreement to all offices and other facilities and to all contracts, agreements, commitments, books and records of or pertaining to the Company and its subsidiaries and will furnish Parent with (a) such financial and operating data and other information with respect to the business and properties of the Company and its subsidiaries as Parent may from time to time reasonably request in connection with such transactions and (b) a copy of each material report, schedule and other document filed or received by the Company or any of its subsidiaries pursuant to the requirements of applicable securities laws or the NASD. 4.4. STOCKHOLDER APPROVAL. As soon as practicable following the consummation of the Offer, the Company will take all steps necessary to duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of voting upon the Company Proposals and for such other purposes as may be necessary or desirable in connection with effectuating the transactions contemplated hereby, if such meeting is required. Except as otherwise contemplated by this Agreement, the Board of Directors of the Company will recommend to the stockholders of the Company that they approve the Company Proposals. 4.5. REASONABLE BEST EFFORTS. Subject to the terms and conditions herein provided, the Company agrees to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, including, but not limited to, (i) obtaining all Consents from Governmental Authorities and other third parties required for the consummation of the Offer and the Merger and the transactions contemplated thereby and (ii) timely making all necessary filings under the HSR Act. Upon the terms and subject to the conditions hereof, the Company agrees to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to satisfy the other conditions of the Closing set forth herein. 4.6. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the Company shall not, and shall use reasonable best efforts to cause its affiliates not to, issue or cause the publication of any press release or any other announcement with respect to the Offer or the Merger or the transactions contemplated hereby without the consent of Parent (such consent not to be unreasonably withheld or delayed), except where such release or announcement is required by applicable Law or pursuant to any applicable listing agreement with, or rules or regulations of, the NASD, in which case the Company, prior to making such announcement, will consult with Parent regarding the same. -35- 4.7. COMPLIANCE. In consummating the transactions contemplated hereby, the Company shall comply in all material respects with the provisions of the Securities Exchange Act and the Securities Act and shall comply, and cause the Company Subsidiaries to comply or to be in compliance, in all material respects, with all other applicable Laws. 4.8. NO SOLICITATION. (a) The Company shall, and shall cause its officers, directors, employees, representatives and agents to, immediately cease any discussions or negotiations with any parties that may be ongoing with respect to a Company Takeover Proposal (as hereinafter defined). The Company shall not, nor shall it permit any of its subsidiaries to, nor shall it authorize or permit any of its officers, directors or employees or any investment banker, financial advisor, attorney, accountant or other representative retained by it or any of its subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage (including by way of furnishing information), or take any other action designed or reasonably likely to facilitate, any inquiries or the making of any proposal which constitutes, or may reasonably be expected to lead to, any Company Takeover Proposal or (ii) participate in any discussions or negotiations regarding any Company Takeover Proposal; PROVIDED, HOWEVER, that if, at any time prior to the Effective Time, the Board of Directors of the Company determines in good faith, with the advice of outside counsel, that the failure to do so could reasonably be determined to be a breach of its fiduciary duties to the Company's stockholders under applicable law, the Company many (and may authorize or permit any of the other persons referred to above in this SECTION 4.8 to), in response to a Company Takeover Proposal, and subject to compliance with SECTION 4.8(C), (x) furnish information with respect to the Company or its subsidiaries to any person pursuant to a confidentiality agreement similar in form to that between an affiliate of Parent and the Company and (y) participate in discussions or negotiations regarding such Company Takeover Proposal. "COMPANY TAKEOVER PROPOSAL" means any inquiry, proposal or offer, in each case not solicited in violation of this Agreement, from any person or persons relating to any direct or indirect acquisition or purchase of a substantial amount of the assets of the Company and its subsidiaries or 10% or more of any class of equity securities of the Company or any Company Subsidiary, any tender offer or exchange offer that if consummated would result in any person or group of related persons beneficially owning 10% or more of any class of equity securities of the Company or any Company Subsidiary or any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or any Company Subsidiary, other than the transactions contemplated by this Agreement. Except as set forth in this SECTION 4.8, neither the Board of Directors of the Company nor any committee thereof shall (i) withdraw or modify, or indicate publicly its intention to withdraw or modify, in a manner adverse to Parent, the approval or recommendation by such Board of Directors or such committee of the Offer or the Company -36- Proposals, (ii) approve or recommend, or indicate publicly its intention to approve or recommend, any Company Takeover Proposal or (iii) cause the Company to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, a "COMPANY ACQUISITION AGREEMENT") related to any Company Takeover Proposal. Notwithstanding the foregoing, in the event that prior to the Effective Time the Board of Directors of the Company determines in good faith, with the advice of outside counsel, that the failure to do so could reasonably be determined to be a breach of its fiduciary duties to the Company's stockholders under applicable law, the Board of Directors of the Company may (subject to this and the following sentences) (x) withdraw or modify its approval or recommendation of the Offer or the Company Proposals or (y) approve or recommend a Company Superior Proposal (as hereinafter defined) or terminate this Agreement (and concurrently with or after such termination, if it so chooses, cause the Company to enter into any Company Acquisition Agreement with respect to any Company Superior Proposal), but in each of the cases set forth in this clause (y), only at a time that is after the third business day following Parent's receipt of written notice advising Parent that the Board of Directors of the Company has received a Company Superior Proposal and, in the case of any previously received Company Superior Proposal that has been materially modified or amended, such modification or amendment and specifying the material terms and conditions of such Company Superior Proposal, modification or amendment (PROVIDED that such material terms shall not be deemed to include the identity of the person or persons making such Company Superior Proposal). For purposes of this Agreement, a "COMPANY SUPERIOR PROPOSAL" means any bona fide proposal, not solicited in violation of this Agreement, made by a third party or third parties to acquire, directly or indirectly, for consideration consisting of cash and/or securities, more than 50% of the combined voting power of the Shares then outstanding or all or substantially all the assets of the Company and otherwise on terms which the Board of Directors of the Company determines in its good faith judgment (based on the advice of its advisors) to be more favorable to the Company's stockholders than the Offer and the Merger (taking into account all factors relating to such proposed transaction deemed relevant by the Board of Directors of the Company, including, without limitation, the financing thereof, the proposed timing thereof and all other conditions thereto). In addition to the obligations of the Company set forth in paragraphs (a) and (b) of this SECTION 4.8, the Company shall promptly advise Parent orally and in writing of any request for information, or for access to information, or of any Company Takeover Proposal and the material terms and conditions of such request or Company Takeover Proposal or any amendment or modification thereto (PROVIDED that such material terms shall not be deemed to include the identity of the person or persons making such request or Company Takeover Proposal). Nothing contained in this SECTION 4.8 shall prohibit the Company from taking and -37- disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated under the Securities Exchange Act or from making any disclosure to the Company's stockholders if, in the good faith judgment of the Board of Directors of the Company, with the advice of outside counsel, failure so to disclose could be determined to be a breach of its fiduciary duties to the Company's stockholders under applicable law; PROVIDED, HOWEVER, that neither the Company nor its Board of Directors nor any committee thereof shall, except as permitted by SECTION 4.8(B), withdraw or modify, or indicate publicly its intention to withdraw or modify, its position with respect to the Offer or the Company Proposals or approve or recommend, or indicate publicly its intention to approve or recommend, a Company Takeover Proposal. The Company shall advise its officers and directors and any investment banker or attorney retained by the Company in connection with the transactions contemplated by this Agreement of the restrictions set forth in this SECTION 4.8. 4.9. SEC AND STOCKHOLDER FILINGS. The Company shall send to Parent a copy of all material public reports and materials as and when it sends the same to its stockholders, the SEC or any state or foreign securities commission. 4.10. TAKEOVER STATUTES. If any "fair price," "moratorium," "control share acquisition" or other similar anti-takeover statute or regulation enacted under state or federal laws in the United States (each a "TAKEOVER STATUTE"), including, without limitation, Section 203 of the Delaware Code, is or may become applicable to the Offer or the Merger, the Company will use reasonable best efforts to grant such approvals and take such actions as are necessary so that the transactions contemplated by this Agreement and the Company Proposals may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act so as to eliminate or minimize the effects of any Takeover Statute on any of the transactions contemplated hereby. -38- ARTICLE V ADDITIONAL COVENANTS OF PURCHASER AND PARENT Parent and Purchaser covenant and agree as follows: 5.1. REASONABLE BEST EFFORTS. Subject to the terms and conditions herein provided, Purchaser agrees to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, including, but not limited to, (i) obtaining all Consents from Governmental Authorities and other third parties required for the consummation of the Offer and the Merger and the transactions contemplated thereby and (ii) timely making all necessary filings under the HSR Act. Upon the terms and subject to the conditions hereof, Parent agrees to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to satisfy the other conditions of the closing set forth herein. 5.2. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, Parent and Purchaser shall not, and shall use reasonable best efforts to cause its affiliates not to, issue or cause the publication of any press release or any other announcement with respect to the Offer or the Merger or the transactions contemplated hereby without the consent of the Company (such consent not to be unreasonably withheld or delayed), except where such release or announcement is required by applicable Law or pursuant to any applicable listing agreement with, or rules or regulations of, any stock exchange on which shares of Parent's capital stock are listed or the NASD, or other applicable securities exchange, in which case Parent, prior to making such announcement, will consult with the Company regarding the same. 5.3. COMPLIANCE. In consummating the transactions contemplated hereby, Parent and Purchaser shall comply in all material respects with the provisions of the Securities Exchange Act and the Securities Act and shall comply, and cause its subsidiaries to comply or to be in compliance, in all material respects, with all other applicable Laws. EMPLOYEE BENEFIT PLANS. 5.4. BENEFIT PLANS. As of the Effective Time, Parent shall cause the Surviving Corporation to honor and satisfy all obligations and liabilities with respect to the Employee Plans. Notwithstanding the foregoing, the Surviving Corporation shall not be required to continue any particular Employee Plan after the Effective Time, and any Employee Plan may be amended or terminated in accordance with its terms and applicable Law. To the extent that any Employee Plan is terminated or amended after the Effective Time so as to reduce the benefits that are then being provided with respect to participants thereunder, Parent shall arrange for each individual -39- who is then a participant in such terminated or amended plan to participate in a comparable Parent Benefit Plan ("PARENT BENEFIT PLAN") in accordance with the eligibility criteria thereof, provided that (i) such participants shall receive full credit for years of service with the Company or any of its subsidiaries prior to the Effective Time for all purposes for which such service was recognized under the applicable Employee Plan, including, but not limited to, recognition of service for eligibility, vesting (including acceleration thereof pursuant to the terms of the applicable Employee Plan) and, to the extent not duplicative of benefits received under such Employee Plan, the amount of benefits, (ii) such participants shall participate in the Parent Benefit Plans on terms no less favorable than those offered by Parent to similarly situated employees of Parent and (iii) Parent shall cause any and all pre-existing condition limitations (to the extent such limitations did not apply to a pre-existing condition under the Employee Plans) and eligibility waiting periods under any group health plans to be waived with respect to such participants and their eligible dependents. CHANGE IN CONTROL PROVISIONS. Parent and the Company hereby acknowledge that the consummation of the Offer and the transactions contemplated under this Agreement will be treated as a "Change in Control" for purposes of each of the applicable Employee Plans, and each applicable employment, severance or similar agreement applicable to any employee of the Company or any of its subsidiaries, listed in SECTION 5.4(B) of the Company Disclosure Letter (such Plans and agreements collectively, "CHANGE IN CONTROL AGREEMENTS") and agree to abide by the provisions of any Change in Control Agreements which relate to a Change in Control, including, but not limited to, the accelerated vesting and/or payment of equity-based awards. (c) The provisions of this Section 5.4 are not intended to and do not create rights of third party beneficiaries. 5.5. INDEMNIFICATION. (a) From and after the Effective Time, the Surviving Corporation shall indemnify and hold harmless all past and present officers and directors (the "INDEMNIFIED PARTIES") of the Company and of its subsidiaries to the full extent such persons may be indemnified by the Company pursuant to Delaware law, the Company's Certificate of Incorporation and Bylaws, as each is in effect on the date of this Agreement, for acts and omissions (x) arising out of or pertaining to the transactions contemplated by this Agreement or arising out of the Offer Documents or (y) otherwise with respect to any acts or omissions occurring or arising at or prior to the Effective Time and shall advance reasonable litigation expenses incurred by such persons in connection with defending any action arising out of such acts or omissions, PROVIDED that such persons provide the requisite affirmations and undertaking, as set forth in Section 145(e) of the Delaware Code. In addition, Parent will provide, or cause the Surviving Corporation to provide, for a period of not less than six years after the Effective Time, the Company's -40- current directors and officers an insurance and indemnification policy that provides coverage for events occurring or arising at or prior to the Effecting Time (the "D&O INSURANCE") that is no less favorable than the existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage; PROVIDED, HOWEVER, that Parent and the Surviving Corporation shall not be required to pay an annual premium for the D&O Insurance in excess of 300% of the annual premium currently paid by the Company for such insurance, but in such case shall purchase as much such coverage as possible for such amount. This SECTION 5.5 is intended to benefit the Indemnified Parties and shall be binding on all successors and assigns of Parent, Purchaser, the Company and the Surviving Corporation. Parent hereby guarantees the performance by the Surviving Corporation of the indemnified obligations pursuant to this SECTION 5.5, which guaranty is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the bankruptcy or insolvency of the Surviving Corporation or any other person. The Indemnified Parties shall be intended third-party beneficiaries of this SECTION 5.5. 5.6. VOTING OF SHARES. At any meeting of the Company's stockholders held for the purpose of voting upon the Company Proposals, all of the Shares then owned by Parent, Purchaser or any other subsidiaries of Parent shall be voted in favor of the Company Proposals. 5.7. GUARANTEE OF PARENT. Parent hereby guarantees the payment by Purchaser of the Per Share Amount and any other amounts payable by Purchaser pursuant to this Agreement and will cause Purchaser to perform all of its other obligations under this Agreement in accordance with their terms. ARTICLE VI MERGER CONDITIONS The respective obligations of each party to effect the Merger shall be subject to the fulfillment or waiver at or prior to the Effective Time of the following conditions: 6.1. OFFER. The Offer shall have been consummated; provided that this condition shall be deemed to have been satisfied with respect to the obligation of Parent and Purchaser to effect the Merger if Parent fails to accept for payment or pay for Shares pursuant to the Offer in violation of the terms of the Offer or of this Agreement. 6.2. STOCKHOLDER APPROVAL. If required, the Company Proposals shall have been approved at or prior to the Effective Time by the requisite vote of the stockholders of the Company in accordance with the Delaware Code. 6.3. NO INJUNCTION OR ACTION. No order, statute, rule, regulation, executive order, stay, decree, -41- judgment or injunction shall have been enacted, entered, promulgated or enforced by any court or other Governmental Authority which prohibits or prevents the consummation of the Merger which has not been vacated, dismissed or withdrawn prior to the Effective Time. The Company and Parent shall use all reasonable best efforts to have any of the foregoing vacated, dismissed or withdrawn by the Effective Time. 6.4. GOVERNMENTAL APPROVALS. All Consents of any Governmental Authority required for the consummation of the Merger and the transactions contemplated by this Agreement shall have been obtained or those Consents the failure to obtain which will not have a material adverse effect on the business, assets, condition (financial or other), liabilities or results of operations of the Surviving Corporation and its subsidiaries taken as a whole. ARTICLE VII TERMINATION AND ABANDONMENT 7.1. TERMINATION. This Agreement may be terminated at any time prior to the Effective Time, whether before or after approval of the stockholders of the Company described herein: (a) by mutual written consent of Parent and the Company; (b) by either Parent or the Company if any Governmental Authority shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement and such order, decree or ruling or other action shall have become final and nonappealable; (c) by Parent if (i) the Company shall have breached or failed to perform in any material respect any of its covenants or other agreements contained in this Agreement, which breach or failure to perform is incapable of being cured or has not been cured within 5 days after the giving of written notice thereof to the Company (but not later than the expiration of the twenty (20) business day period provided for the Offer under SECTION 1.1(b) hereof); (ii) any representation or warranty of the Company shall not have been true and correct in all material respects when made; (iii) any representation or warranty of the Company shall cease to be true and correct in all material respects at any later date as if made on such date (other than representations and warranties made as of a specified date) other than as a result of a breach or failure to perform by -42- the Company of any of its covenants or agreements under this Agreement; PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this SECTION 7.1(C) shall not be available to Parent if Purchaser or any other affiliate of Parent shall acquire shares of Common Stock pursuant to the Offer; (d) by Parent if (i) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified in a manner adverse to Parent its approval or recommendation of the Offer or any of the Company Proposals or shall have approved or recommended any Company Takeover Proposal or (ii) the Board of Directors of the Company or any committee thereof shall have resolved to take any of the foregoing actions; (e) by either Parent or the Company if the Offer shall have expired or been terminated without any Shares being purchased thereunder by Purchaser as a result of the occurrence of any of the events set forth in ANNEX I hereto; (f) by either the Company or Parent if either (x) as the result of the failure of the Minimum Condition or any of the other conditions set forth in Annex I hereto, the Offer shall have terminated or expired in accordance with its terms without Purchaser having purchased any Shares pursuant to the Offer or (y) the Offer shall not have been consummated on or before March 31, 1998, PROVIDED that the right to terminate this Agreement pursuant to this SECTION 7.1(F) shall not be available to any party whose failure to perform any of its obligations under this Agreement results in the failure of the Offer to be consummated by such time; (g) by the Company if Parent or Purchaser shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform is incapable of being cured or has not been cured within 5 days after the giving of written notice thereof to Parent; or (h) by the Company in accordance with SECTION 4.8(B) hereof; PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this SECTION 7.1(H) shall not be available (x) if the Company has breached in any material respect its obligations under SECTION 4.8 hereof, or (y) if the Company shall fail to pay when due the fees and expenses contemplated by SECTION 8.7 hereof. The party desiring to terminate this Agreement pursuant to the preceding paragraphs shall give written notice of such termination to the other party in accordance with SECTION 8.5 hereof. 7.2. EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of this Agreement and the abandonment of the Offer or the Merger pursuant to this ARTICLE VII, this -43- Agreement (other than SECTIONS 7.2, 8.1, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.10, 8.11, 8.12, 8.13, 8.14 and 8.15 hereof) shall become void and of no effect with no liability on the part of any party hereto (or of any of its directors, officers, employees, agents, legal or financial advisors or other representatives); PROVIDED, HOWEVER, that no such termination shall relieve any party hereto from any liability for any breach of this Agreement prior to termination. If this Agreement is terminated as provided herein, each party shall use all reasonable best efforts to redeliver all documents, work papers and other material (including any copies thereof) of any other party relating to the transactions contemplated hereby, whether obtained before or after the execution hereof, to the party furnishing the same. ARTICLE VIII MISCELLANEOUS 8.1. CONFIDENTIALITY. (a) Unless (i) otherwise expressly provided in this Agreement, (ii) required by applicable Law or any listing agreement with, or the rules and regulations of, any applicable securities exchange or the NASD, (iii) necessary to secure any required Consents as to which the other party has been advised or (iv) consented to in writing by Parent and the Company, all information (whether oral or written) and documents furnished in connection herewith together with analyses, compilations, studies or other documents prepared by such party which contain or otherwise reflect such information shall be kept strictly confidential by the Company, Parent and their respective officers, directors, employees and agents. Prior to any disclosure pursuant to the preceding sentence, the party intending to make such disclosure shall consult with the other party regarding the nature and extent of the disclosure. Nothing contained herein shall preclude disclosures to the extent necessary to comply with accounting, SEC and other disclosure obligations imposed by applicable Law. In the event the transactions contemplated by this Agreement are not consummated, each party shall return to the other any documents furnished by the other and all copies thereof that any of them may have made and will hold in confidence any information obtained from the other party except to the extent (a) such party is required to disclose such information by Law or such disclosure is necessary or desirable in connection with the pursuit or defense of a claim, (b) such information was known by such party prior to such disclosure (and PROVIDED that, except with respect to information referred to in the following clause (c), such party shall have advised the other party of such knowledge upon or promptly after its receipt of such information) or was thereafter developed or obtained by such party independent of such disclosure or (c) such information is or becomes generally available to the public other than by breach of this SECTION 8.1 (or, to such party's knowledge, breach of a confidentiality agreement with the other party). Prior to any disclosure of information pursuant to the exception in clause (a) of the preceding sentence, the party intending to disclose the same shall so notify the party which provided the same in order that such party may seek a protective -44- order or other appropriate remedy should it choose to do so. (b) The Parent and the Company further acknowledge that certain of the business and activities of each of them is competitive with business and activities of the other party, and each of them therefore agrees that it will not use, or seek to obtain any competitive or other business advantage as a result of, the information or documents so received by it in connection herewith, such party acknowledging that such use would be unfair and materially detrimental to the other party, PROVIDED that the provisions of this SECTION 8.1(b) shall not apply to information referred to in clause (c) of SECTION 8.1(a) hereof. 8.2. AMENDMENT AND MODIFICATION. This Agreement may be amended, modified or supplemented only by a written agreement among the Company, Parent and Purchaser. 8.3. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company on the one hand, or Parent and Purchaser on the other hand, to comply with any obligation, covenant, agreement or condition herein may be waived by Parent on the one hand, or the Company on the other hand, only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this SECTION 8.3. 8.4. SURVIVAL. The respective representations, warranties, covenants and agreements of the Company and Parent contained herein or in any certificates or other documents delivered prior to or at the Closing shall survive the execution and delivery of this Agreement, notwithstanding any investigation made or information obtained by the other party, but shall terminate at the Effective Time, except for those contained in SECTIONS 1.7, 1.8, 1.9, 1.14, 5.4, 5.5, 5.7 and 8.8 hereof and this SECTION 8.4, which shall survive beyond the Effective Time. 8.5. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by facsimile, receipt confirmed, or on the next business day when sent by overnight courier or on the second succeeding business day when sent by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): -45- (i) if to the Company, to: Holmes Protection Group, Inc. 440 Ninth Avenue New York, New York 10001 Attention: George V. Flagg, President Telecopy: (212) 629-6763 with a copy to: Dennis M. Stern, Esq. Senior Vice President and General Counsel Holmes Protection Group, Inc. 440 Ninth Avenue New York, New York 10001 Telecopy: (212) 563-0129 and to Willkie Farr & Gallagher One Citicorp Center 153 East 53rd Street New York, New York 10022 Attention: Cornelius T. Finnegan, III, Esq. Telecopy: (212) 821-8111 and (ii) if to Parent or Purchaser, to: Tyco International Ltd. The Gibbons Building 10 Queen Street, Suite 301 Hamilton HM11 Bermuda Attention: Secretary Telecopy: (441) 295-9647 with a copy to: Tyco International (US) Inc. One Tyco Park Exeter, New Hampshire 03833 Attention: Mark H. Swartz Telecopy: (603) 778-7700 and to Kramer, Levin, Naftalis & Frankel 919 Third Avenue New York, New York 10022 Attention: Abbe L. Dienstag, Esq. Telecopy: (212) 715-8000 8.6. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this -46- Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto prior to the Effective Time without the prior written consent of the Company, in the case of a proposed assignment by Parent or Purchaser, or by Parent, in the case of a proposed assignment by the Company, except that Purchaser may assign its rights, interest and obligations hereunder to any other wholly-owned direct or indirect subsidiary of Parent, provided that the provisions of SECTION 5.7 hereof shall apply to such other subsidiary. 8.7. EXPENSES. (a) Except as provided in SECTION 8.7(b) or 8.7(c) hereof, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs or expenses. (b) The Company agrees that if this Agreement is terminated pursuant to (i) Section 7.1(d); (ii) Section 7.1(h); or (iii) SECTION 7.1(F) and, with respect to this clause (iii), at the time of such termination any person, entity or group (as defined in Section 13(d)(3) of the Exchange Act) (other than Parent or any of its affiliates or any person identified in the Company's Proxy Statement dated April 30, 1997 and who has executed a Stockholder Agreement of even date herewith with Parent and Purchaser, provided that such person has not breached the terms of such Stockholder Agreement) shall have become the beneficial owner of more than 20% of the outstanding shares of Company Stock and such person, entity or group (or any affiliate of such person, entity or group) thereafter (x) shall make a Company Takeover Proposal and, in the case of a consensual transaction with the Company, shall substantially have negotiated the terms thereof, at any time on or prior to the date which is six months after such termination of this Agreement, and (y) shall consummate such Company Takeover Proposal at any time on or prior to the date which is one year after termination of this Agreement, in the case of a consensual transaction, or six months after termination of this Agreement, in the case of a non-consensual transaction, in each case with a value per share of Company Stock of at least $17.00 (with appropriate adjustments for reclassifications of capital stock, stock dividends, stock splits, reverse stock splits and similar events); then the Company shall pay to Parent the sum of (a) $3.5 million. Any payment required by this SECTION 8.7(b) shall be made as promptly as practicable but in no event later than two business days following termination of this Agreement pursuant to SECTION 7.1(d) OR 7.1(h) hereof, or, in the case of clause (iii) of this SECTION 8.7(b), upon consummation of such Company Takeover Proposal, and shall be made by wire transfer of immediately -47- available funds to an account designated by Parent. (c) The Company further agrees that if this Agreement is terminated pursuant to SECTION 7.1(C)(I) hereof, (i) the Company will pay to Parent, as promptly as practicable but in no event later than two business days following termination of this Agreement, the amount of all documented and reasonable costs and expenses incurred by Parent, Purchaser and their affiliates (including but not limited to fees and expenses of counsel and accountants and out-of-pocket expenses (but not fees) of financial advisors) in an aggregate amount not to exceed $350,000 in connection with this Agreement or the transactions contemplated hereby ("PARENT EXPENSES"); and (ii) in the event that the Company consummates a Company Takeover Proposal (whether or not solicited in violation of this Agreement) within one year from the date of termination of this Agreement, the sum of $3.5 million, less the amount of any payment made pursuant to clause (i) of this Section 8.7(c), which payment shall be made not later than two business days following consummation of such Company Takeover Proposal. (d) The Company further agrees that if this Agreement is terminated pursuant to SECTION 7.1(C)(II) hereof, the Company will pay to Parent, as promptly as practicable but in no event later than two business days following termination of this Agreement, the Parent Expenses. 8.8. GOVERNING LAW. This Agreement shall be deemed to be made in, and in all respects shall be interpreted, construed and governed by and in accordance with the laws of, the State of New York. 8.9. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 8.10. INTERPRETATION. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. As used in this Agreement, (i) the term "PERSON" shall mean and include an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an association, an unincorporated organization, a Governmental Authority and any other entity, (ii) unless otherwise specified herein, the term "AFFILIATE," with respect to any person, shall mean and include any person controlling, controlled by or under common control with such person and (iii) the term "SUBSIDIARY" of any specified person shall mean any corporation 50 percent or more of the outstanding voting power of which, or any -48- partnership, joint venture, limited liability company or other entity 50 percent or more of the total equity interest of which, is directly or indirectly owned by such specified person. 8.11. ENTIRE AGREEMENT. This Agreement and the documents or instruments referred to herein including, but not limited to, the Annex(es) attached hereto and the Disclosure Letter referred to herein, which Annex(es) and Disclosure Letter are incorporated herein by reference, embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants, or undertakings other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter. Notwithstanding the foregoing provisions of this SECTION 8.11, the provisions of the letter agreement dated October 14, 1997 between Tyco International (US) Inc. and J.P. Morgan Securities Inc., as agent for the Company, shall remain in effect in accordance with their terms. 8.12. SEVERABILITY. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. 8.13. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties further agree that each party shall be entitled to an injunction or restraining order to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity. 8.14. THIRD PARTIES. Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person that is not a party hereto or thereto or a successor or permitted assign of such a party; PROVIDED HOWEVER, that the parties hereto specifically acknowledge that the provisions of SECTION 5.5 hereof are intended to be for the benefit of, and shall be enforceable by, the Indemnified Parties. 8.15. DISCLOSURE LETTER. Parent acknowledges that the Company Disclosure Letter (i) relates to certain matters concerning the disclosures required and transactions contemplated -49- by this Agreement, (ii) is qualified in its entirety by reference to specific provisions of this Agreement, (iii) is not intended to constitute and shall not be construed as indicating that such matter is required to be disclosed, nor shall such disclosure be construed as an admission that such information is material with respect to the Company, except to the extent required by this Agreement. -50- IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement to be signed and delivered by their respective duly authorized officers as of the date first above written. TYCO INTERNATIONAL LTD. By:/s/ Mark H. Swartz ------------------ Name: Mark H. Swartz Title: Vice President and Chief Financial Officer T9 ACQUISITION CORP. By:/s/ Mark H. Swartz ------------------ Name: Mark H. Swartz Title: Vice President HOLMES PROTECTION GROUP, INC. By:/s/ George V. Flagg ------------------- Name: George V. Flagg Title: President -51- ANNEX I CONDITIONS TO THE OFFER. Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the Securities Exchange Act (relating to Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and (subject to any such rules or regulations) may delay the acceptance for payment of any tendered Shares and (except as provided in this Agreement) amend or terminate the Offer as to any Shares not then paid for if (i) the condition that there shall be validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares which represents at least 51% of the total number of Shares on a fully-diluted basis shall not have been satisfied (the "MINIMUM CONDITION") or (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer or (iii) at any time after the date of this Agreement and before the time of payment for any such Shares (whether or not any Shares have theretofore been accepted for payment or paid for pursuant to the Offer), any of the following conditions exists: (a) there shall be in effect an injunction or other order, decree, judgment or ruling by a Governmental Authority of competent jurisdiction or a Law shall have been promulgated, or enacted by a Governmental Authority of competent jurisdiction which in any such case (i) restrains or prohibits the making or consummation of the Offer or the consummation of the Merger, (ii) prohibits or restricts the ownership or operation by Parent (or any of its affiliates or subsidiaries) of any portion of the Company's business or assets, or Parent's business or assets relating to the security services business, which is material to the security services business of all such entities taken as a whole, or compels Parent (or any of its affiliates or subsidiaries) to dispose of or hold separate any portion of the Company's business or assets, or Parent's business or assets relating to the security services business, which is material to the security services business of all such entities taken as a whole, (iii) imposes material limitations on the ability of Purchaser effectively to acquire or to hold or to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by Purchaser on all matters properly presented to the stockholders of the Company, or (iv) imposes any material limitations on the ability of Parent or any of its affiliates or subsidiaries effectively to control in any material respect the business and operations of the Company, or (v) seeks to restrict any future business activity by Parent (or any of its affiliates) relating to the security services business, including, without limitation, by requiring the prior consent of any person or entity (including any Governmental Authority) to future transactions by Parent (or any of its affiliates); or (b) there shall have been instituted, pending or threatened an action by a Governmental Authority seeking to restrain or prohibit the making or consummation of the Offer or the consummation of the Merger or to impose any other restriction, prohibition or limitation referred to in the foregoing paragraph (a); or (c) this Agreement shall have been terminated by the Company or Parent in accordance with its terms; or (d) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in the Shares on the NASDAQ National Market System, (ii) any decline, measured from the date of this Agreement, in the Dow Jones Industrial Average or Standard & Poor's 500 Index by an amount in excess of 15%, (iii) a declaration of a banking moratorium or any general suspension of payments in respect of banks in the United States or (iv) in the case of any of the foregoing existing at the time of the execution of this Agreement, a material acceleration or worsening thereof; or (e) Parent and the Company shall have agreed that Purchaser shall amend the Offer to terminate the Offer or postpone the payment for Shares pursuant thereto; or (f) any of the representations and warranties made by the Company in the Merger Agreement shall not have been true and correct in all material respects when made, or shall thereafter have ceased to be true and correct in all material respects as if made as of such later date (other than representations and warranties made as of a specified date), or the Company shall not in all material respects have performed each obligation and agreement and complied with each covenant to be performed and complied with by it under this Agreement, PROVIDED, however, that such breach or future to perform is incapable of being cured or has not been cured within 5 days after the giving of written notice thereof to the Company, PROVIDED, however, that no such 5-day cure period shall require extension of the Offer beyond the twenty (20) business days provided under Section 1.1(b) of the Agreement; or (g) the Company's Board of Directors shall have modified or amended its recommendation of the Offer in any manner adverse to Parent or shall have withdrawn its recommendation of the Offer, or shall have recommended acceptance of any Company Takeover Proposal or shall have resolved to do any of the foregoing; or (h) any corporation, entity or "group" (as defined in Section 13(d)(3) of the Exchange Act) ("PERSON"), other than Parent and Purchaser and any person identified in the Company's Proxy Statement dated April 30, 1997 and who has executed a Stockholder Agreement of even date herewith with Parent and Purchaser, provided that such person has not breached the terms of such Stockholder Agreement, shall have acquired beneficial ownership of more than 20% of the outstanding Shares, or shall have been granted any options or rights, conditional or A-2 otherwise, to acquire a total of more than 20% of the outstanding Shares; (ii) any new group shall have been formed which beneficially owns more than 20% of the outstanding Shares; or (iii) any person (other than Parent or one or more of its affiliates) shall have entered into an agreement in principle or definitive agreement with the Company with respect to a tender or exchange offer for any Shares or a merger, consolidation or other business combination with or involving the Company; or (i) any change, development, effect or circumstance shall have occurred or be threatened that would reasonably be expected to have a Material Adverse Effect with respect to the Company; or (j) the Company shall commence a case under any chapter of Title XI of the United States Code or any similar law or regulation; or a petition under any chapter of Title XI of the United States Code or any similar law or regulation is filed against the Company which is not dismissed within 2 business days. The foregoing conditions are for the sole benefit of Parent and Purchaser and may be asserted by Parent or Purchaser regardless of the circumstances giving rise to any such condition and may be waived by Parent or Purchaser, in whole or in part, at any time and from time to time, in the sole discretion of Parent. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any right, the waiver of such right with respect to any particular facts or circumstances shall not be deemed a waiver with respect to any other facts or circumstances, and each right shall be deemed an ongoing right which may be asserted at any time and from time to time. Should the Offer be terminated pursuant to the foregoing provisions, all tendered Shares not theretofore accepted for payment shall forthwith be returned by the Exchange Agent to the tendering stockholders. A-3 GLOSSARY OF DEFINED TERMS 1996 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Bank Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Certificate of Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Change in Control Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Company Acquisition Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Company Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Company Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Company Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Company Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . 26 Company Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Company Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Company Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Company Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Company Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Company Securities Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Company Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Company Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Company Superior Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Company Takeover Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Company Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 D&O Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Defined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Delaware Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Enforceability Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Environmental Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ERISA Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Financial Advisor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Independent Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 ISO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Materials of Environmental Concern . . . . . . . . . . . . . . . . . . . . . . . . 29 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Minimum Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Offer Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Offer to Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Other Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Parent Benefit Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Parent Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Parent Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Parent Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Per Share Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Schedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Securities Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Surviving Corporation Common Stock . . . . . . . . . . . . . . . . . . . . . . . . .7 Takeover Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
EX-99.(C)(3) 12 STOCKHOLDER AGMT STOCKHOLDER AGREEMENT THIS STOCKHOLDER AGREEMENT is made and entered into as of this 28th day of December 1997, among TYCO INTERNATIONAL LTD., a Bermuda company ("PARENT"), T9 ACQUISITION CORP., a Delaware corporation and an indirect, wholly owned subsidiary of Parent ("PURCHASER"), and the other parties signatory hereto (each, a "STOCKHOLDER"). WHEREAS each Stockholder desires that HOLMES PROTECTION GROUP, INC., a Delaware corporation (the "COMPANY"), Parent and Purchaser enter into an Agreement and Plan of Merger dated as of the date hereof (as the same may be amended or supplemented, the "MERGER AGREEMENT") with respect to the merger of Purchaser with and into the Company (the "MERGER"); and WHEREAS each Stockholder is executing this Agreement as an inducement to Parent to enter into and execute, and to cause Purchaser to enter into and execute, the Merger Agreement. NOW, THEREFORE, in consideration of the execution and delivery by Parent and Purchaser of the Merger Agreement and the mutual covenants, conditions and agreements contained herein and therein, the parties agree as follows: SECTION 1. REPRESENTATIONS AND WARRANTIES. Each Stockholder severally, and not jointly, represents and warrants to Parent and Purchaser as follows: (a) Such Stockholder (individually or together with such other Stockholders as indicated on SCHEDULE A hereto) has voting and dispositive power over the number of shares of Common Stock, par value $.01 per share, of the Company (the "COMPANY COMMON STOCK"), set forth opposite such Stockholder's name in SCHEDULE A hereto (as may be adjusted from time to time pursuant to Section 5, such Stockholder's "SHARES"). Except for such Stockholder's Shares and any other shares of Company Common Stock subject hereto, such Stockholder does not have dispositive or voting power over any other shares of Company Common Stock. (b) Such Stockholder's Shares and the certificates representing such Shares are now and at all times during the term hereof will be held by such Stockholder, or by a nominee or custodian for the benefit of such Stockholder, free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever, except for any such encumbrances or proxies arising hereunder. (c) Such Stockholder understands and acknowledges that Parent is entering into, and causing Purchaser to enter into, the Merger Agreement in reliance upon such Stockholder's execution and delivery of this Agreement. Such Stockholder acknowledges that the irrevocable proxy set forth in Section 4 is granted in consideration for the execution and delivery of the Merger Agreement by Parent and Purchaser. SECTION 2. AGREEMENT TO TENDER. Each Stockholder hereby severally agrees that it shall tender its Shares into the Offer (as defined in the Merger Agreement) and that it shall not withdraw any Shares so tendered unless the Offer (i) is withdrawn in accordance with the terms of the Merger Agreement or (ii) expires and the conditions set forth in Annex I to the Merger Agreement shall not have been satisfied or waived by Parent or Purchaser. SECTION 3. COVENANTS. Each Stockholder severally, and not jointly, agrees with, and covenants to, Parent and Purchaser as follows: (a) Such Stockholder shall not, except as contemplated by the terms of this Agreement, (i) transfer (the term "TRANSFER" shall include, without limitation, for the purposes of this Agreement, any sale, gift, pledge or other disposition), or consent to any transfer of, any or all of such Stockholder's Shares or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of such Shares or any interest therein, (iii) grant any proxy, power-of- attorney or other authorization or consent in or with respect to such Shares, (iv) deposit such Shares into a voting trust or enter into a voting agreement or arrangement with respect to such Shares or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby. (b) Such Stockholder shall not, nor shall it permit any investment banker, attorney or other adviser or representative of such Stockholder acting on its behalf to, directly or indirectly, (i) solicit, initiate or encourage the submission of, any Company Takeover Proposal (as defined in the Merger Agreement) or (ii) participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Company Takeover Proposal, provided that the foregoing restrictions shall not be applicable in any case to the extent that, pursuant to the Merger Agreement, such restrictions would not be applicable to the Company. SECTION 4. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY. (a) Each Stockholder hereby irrevocably (except in accordance with the provisions of Section 8) grants to, and appoints, Parent and Jeff Mattfolk, Brian Moroze and any other individual who shall hereafter be designated by Parent, such Stockholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of such Stockholder, to vote such Stockholder's Shares, or grant a consent or approval in respect of such Shares, at any meeting of stockholders of the Company or at any adjournment thereof or in any other circumstances upon which their vote, consent or other approval is sought, against (i) any merger agreement or merger (other than the Merger Agreement and the Merger), consolidation, combination, sale of substantial assets, reorganization, joint venture, recapitalization, dissolution, liquidation or winding up of or by the Company and (ii) any amendment of the Company's Articles of Incorporation or By-laws or other proposal or transaction (including any consent solicitation to remove or elect any directors of the Company) involving the Company or any of its subsidiaries which amendment or other proposal or transaction would in any manner impede, frustrate, prevent or nullify, or result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under or with respect to, the Offer, the Merger, the Merger Agreement or any of the other transactions contemplated by the Merger Agreement (each of the foregoing in clause (ii) or (iii) above, a "COMPETING TRANSACTION"). (b) Such Stockholder represents that any proxies heretofore given in respect of such Stockholder's Shares are not irrevocable, and that any such proxies are hereby revoked. (c) Such Stockholder hereby affirms that the irrevocable proxy set forth in this Section 4 is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Stockholder under this Agreement. Such Stockholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked (except in accordance with the provisions of Section 8). Such Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212 of the Delaware General Corporation Law (the "DGCL"). 2 SECTION 5. CERTAIN EVENTS. Each Stockholder agrees that this Agreement and the obligations hereunder shall attach to such Stockholder's Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Shares shall pass, whether by operation of law or otherwise, including without limitation such Stockholder's heirs, guardians, administrators or successors. In the event of any stock split, stock dividend, merger, reorganization, recapitalization or other change in the capital structure of the Company affecting the Company Common Stock, or the acquisition of additional shares of Company Common Stock or other securities or rights of the Company by any Stockholder, the number of Shares listed on Schedule A beside the name of such Stockholder shall be adjusted appropriately and this Agreement and the obligations hereunder shall attach to any additional shares of Company Common Stock or other securities or rights of the Company issued to or acquired by such Stockholder. SECTION 6. STOP TRANSFER. The Company agrees with, and covenants to, Parent that the Company shall not register the transfer of any certificate representing any Stockholder's Shares, unless such transfer is made to Parent or Purchaser or otherwise in compliance with this Agreement. Each Stockholder acknowledges that its Shares will be placed by the Company on the "stop-transfer list" maintained by the Company's transfer agent until this Agreement is terminated pursuant to its terms. SECTION 7. FURTHER ASSURANCES. Each Stockholder shall, upon request of Parent or Purchaser execute and deliver any additional documents and take such further actions as may reasonably be deemed by Parent or Purchaser to be necessary or desirable to carry out the provisions hereof and to vest the power to vote such Stockholder's Shares as contemplated by Section 4 in Parent and the other irrevocable proxies described therein. SECTION 8. TERMINATION. This Agreement, and all rights and obligations of the parties hereunder and the proxy provided in Section 4, shall terminate upon the earlier of (a) the date upon which the Merger Agreement is terminated in accordance with its terms or (b) the date that Parent or Purchaser shall have purchased and paid for the Shares of each Stockholder pursuant to Section 2. SECTION 9. MISCELLANEOUS. (a) Capitalized terms used and not otherwise defined in this Agreement shall have the respective meanings assigned to such terms in the Merger Agreement. (b) All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Parent or Purchaser, to the address set forth in Section 8.5 of the Merger Agreement; and (ii) if to a Stockholder, to the address set forth on Schedule A hereto, or such other address as may be specified in writing by such Stockholder. (c) The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. (d) This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement, and shall become effective (even without the signature of any other Stockholder) as to any Stockholder when one or more counterparts have been signed by each of Parent, Purchaser and such Stockholder and delivered to Parent, Purchaser and such Stockholder. 3 (e) This Agreement (including the documents and instruments referred to herein) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. (f) This Agreement shall be governed by, and construed in accordance with, the laws of the state of New York and, to the extent expressly provided herein, the DGCL, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. (g) Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise, by any of the parties without the prior written consent of the other parties, except by laws of descent. Any assignment in violation of the foregoing shall be void. (h) If any term, provision, covenant or restriction herein, or the application thereof to any circumstance, shall, to any event, be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions herein and the application thereof to any other circumstances, shall remain in full force and effect, shall not in any way be affected, impaired or invalidated, and shall be enforced to the fullest extent permitted by law. (i) Each Stockholder agrees that irreparable damage would occur and that Parent and Purchaser would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that Parent and Purchaser shall be entitled to an injunction or injunctions to prevent breaches by any Stockholder of this Agreement and to enforce specifically the terms and provisions of this Agreement. Each of the parties hereto (i) consents to submit such party to the personal jurisdiction of any Federal court located in the State of New York in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, (ii) agrees that such party will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that such party will not bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than a Federal court located in the State of New York. The prevailing party in any judicial action shall be entitled to receive from the other party reimbursement for the prevailing party's reasonable attorneys' fees and disbursements, and court costs. (j) No amendment, modification or waiver in respect of this Agreement shall be effective against any party unless it shall be in writing and signed by such party. 4 IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused this Agreement to be duly executed and delivered as of the date first written above. TYCO INTERNATIONAL LTD. By:/s/ Mark H. Swartz -------------------------------- Name: Mark H. Swartz Title: Executive Vice President and Chief Financial Officer T9 ACQUISITION CORP. By:/s/ Mark H. Swartz -------------------------------- Name: Mark H. Swartz Title: Vice President ACKNOWLEDGED AND AGREED TO AS TO SECTION 6: HOLMES PROTECTION GROUP, INC. By:/s/ George V. Flagg --------------------------- Name: George V. Flagg Title: President 5 SCHEDULE A NUMBER OF SHARES OF NAME, ADDRESS AND SIGNATURE OF STOCKHOLDER COMMON STOCK OWNED - ------------------------------------------ ------------------ HP Partners L.P. 2,201,600 c/o HP Management, Inc. 444 Madison Avenue 38th Floor New York, NY 10022 6 -----END PRIVACY-ENHANCED MESSAGE-----