{"id":43070,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/agreement-and-plan-of-merger-holmes-protection-group-inc-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-merger-holmes-protection-group-inc-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-merger-holmes-protection-group-inc-and.html","title":{"rendered":"Agreement and Plan of Merger – Holmes Protection Group Inc. and Tyco International Ltd."},"content":{"rendered":"\n HOLMES PROTECTION GROUP, INC.,\n TYCO INTERNATIONAL LTD.\n and\n T9 ACQUISITION CORP.\n\n\n ___________________________________________\n ___________________________________________\n\n\n\n\n AGREEMENT AND PLAN OF MERGER\n ______________________________\n ______________________________\n\n\n\n ___________________________________________\n ___________________________________________\n\n\n\n\n\n Dated as of December 28, 1997\n\n\n _________________________________________________________\n _________________________________________________________\n\n\n\n\n TABLE OF CONTENTS\n\n PAGE\n\n ARTICLE I.\n\n TENDER OFFER AND MERGER\n\n1.1. The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2\n1.2. Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3\n1.3. Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5\n1.4. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6\n1.5. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6\n1.6. Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . .6\n1.7. Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . .7\n1.8. Surrender of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .8\n1.9. Options, Warrants and Convertible Securities . . . . . . . . . . . . . .9\n1.10. Certificate of Incorporation and Bylaws. . . . . . . . . . . . . . . . 11\n1.11. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . 12\n1.12. Other Effects of Merger. . . . . . . . . . . . . . . . . . . . . . . . 12\n1.13. Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12\n1.14. Additional Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 13\n1.15. Merger Without Meeting of Stockholders.. . . . . . . . . . . . . . . . 13\n1.16. Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . 13\n1.17. Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . 13\n\n ARTICLE II.\n\n REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n\n2.1. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . 14\n2.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14\n2.3. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15\n2.4. Authorization; Binding Agreement . . . . . . . . . . . . . . . . . . . 16\n2.5. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 16\n2.6. No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17\n2.7. Securities Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 17\n2.8. Company Financial Statements . . . . . . . . . . . . . . . . . . . . . 18\n2.9. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . 18\n2.10. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . 18\n2.11. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . 18\n2.12. Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19\n2.13. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19\n2.14. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19\n2.15. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 20\n2.16. Taxes and Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . 23\n2.17. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . 25\n2.18. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . 26\n2.19. Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27\n2.20. Limitation on Business Conduct . . . . . . . . . . . . . . . . . . . . 27\n2.21. Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 27\n2.22. Leased Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28\n2.23. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . 28\n2.24. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29\n2.25. Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29\n2.26. Interested Party Transactions. . . . . . . . . . . . . . . . . . . . . 29\n2.27. Alarm Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30\n2.28. Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . 30\n\n i\n\n\n\n2.29. Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . 30\n2.30. Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . 30\n2.31. Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30\n\n ARTICLE III.\n\n REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER\n\n3.1. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . 31\n3.2. Authorization; Binding Agreement . . . . . . . . . . . . . . . . . . . 31\n3.3. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 31\n3.4. No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31\n3.5. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . 32\n3.6. Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . 32\n3.7. Financing Arrangements.. . . . . . . . . . . . . . . . . . . . . . . . 32\n3.8. No Prior Activities. . . . . . . . . . . . . . . . . . . . . . . . . . 33\n\n ARTICLE IV.\n\n ADDITIONAL COVENANTS OF THE COMPANY\n\n4.1. Conduct of Business of the Company and the Company Subsidiaries . 33\n4.2. Notification of Certain Matters. . . . . . . . . . . . . . . . . . . . 36\n4.3. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . 36\n4.4. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . 36\n4.5. Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . 37\n4.6. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 37\n4.7. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37\n4.8. No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37\n4.9. SEC and Stockholder Filings. . . . . . . . . . . . . . . . . . . . . . 40\n4.10. Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . 40\n\n ARTICLE V.\n\n ADDITIONAL COVENANTS OF PURCHASER AND PARENT\n\n5.1. Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . 40\n5.2. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 40\n5.3. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41\n5.4. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 41\n5.5. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42\n5.6. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 42\n5.7. Guarantee of Parent. . . . . . . . . . . . . . . . . . . . . . . . . . 43\n\n ARTICLE VI.\n\n MERGER CONDITIONS\n\n6.1. Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43\n6.2. Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . 43\n6.3. No Injunction or Action. . . . . . . . . . . . . . . . . . . . . . . . 43\n6.4. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 43\n\n ARTICLE VII.\n\n TERMINATION AND ABANDONMENT\n\n7.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44\n7.2. Effect of Termination and Abandonment. . . . . . . . . . . . . . . . . 45\n\n ii\n\n\n ARTICLE VIII.\n\n MISCELLANEOUS\n\n8.1. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46\n8.2. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . 47\n8.3. Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . 47\n8.4. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47\n8.5. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47\n8.6. Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . 49\n8.7. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49\n8.8. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50\n8.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50\n8.10. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50\n8.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 51\n8.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51\n8.13. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . 51\n8.14. Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52\n8.15. Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . 52\n\n Annex I\n\nGlossary of Defined Terms\n\n iii\n\n\n AGREEMENT AND PLAN OF MERGER\n\n This Agreement and Plan of Merger (this \"AGREEMENT\") is made and\nentered into as of December 28, 1997, by and among HOLMES PROTECTION GROUP,\nINC., a Delaware corporation (the \"COMPANY\"), TYCO INTERNATIONAL LTD., a Bermuda\ncompany (\"PARENT\"), and T9 ACQUISITION CORP., a Delaware corporation and an\nindirect wholly owned subsidiary of Parent (\"PURCHASER\").\n\n W I T N E S S E T H:\n\n WHEREAS, the respective Boards of Directors of the Company, Purchaser\nand Parent have approved the acquisition by Purchaser of the Company; and\n\n WHEREAS, in furtherance thereof, it is proposed that Purchaser will\nmake a cash tender offer (the \"OFFER\") to acquire all of the issued and\noutstanding shares (\"SHARES\") of common stock, $.01 par value, of the Company\n(\"COMPANY STOCK\"), for $17.00 per Share, or such higher price as may be paid in\nthe Offer (the \"PER SHARE AMOUNT\"), in each case net to the seller in cash\nwithout interest; and\n\n WHEREAS, also in furtherance of such acquisition, the respective\nBoards of Directors of the Company, Purchaser and Parent have each approved the\nmerger (the \"MERGER\") of Purchaser with and into the Company following the Offer\nin accordance with the laws of the State of Delaware; and\n\n WHEREAS, the Board of Directors of the Company has approved and\nresolved to recommend acceptance of the Offer and the Merger to the holders of\nShares and has determined that the consideration to be paid for each Share in\nthe Offer and the Merger is fair to and in the best interest of the holders of\nsuch Shares and to recommend that the holders of such Shares accept the Offer\nand approve this Agreement and the transactions contemplated hereby; and\n\n WHEREAS, the Company, Purchaser and Parent desire to make certain\nrepresentations, warranties and agreements in connection with, and establish\nvarious conditions precedent to, the transactions contemplated hereby;\n\n NOW, THEREFORE, in consideration of the premises and the\nrepresentations, warranties, covenants and agreements hereinafter set forth, the\nparties hereto agree as follows:\n\n\n\n ARTICLE I\n\n TENDER OFFER AND MERGER\n\n 1.1. THE OFFER. (a) Provided that this Agreement shall not have \nbeen terminated in accordance with SECTION 7.1 hereof and that none of the \nevents set forth in ANNEX I hereto shall have occurred and be existing, \nPurchaser shall commence (within the meaning of Rule 14d-2 under the \nSecurities Exchange Act of 1934, as amended, and the rules and regulations \nthereunder (the \"SECURITIES EXCHANGE ACT\")) the Offer as promptly as \npracticable, but in no event later than five business days following the \nfirst public announcement of the Offer, and shall use reasonable best efforts \nto consummate the Offer. The obligation of Purchaser to accept for payment \nany Shares tendered shall be subject to the satisfaction of only those \nconditions set forth in ANNEX I hereto. The Per Share Amount shall be net to \neach seller in cash, subject to reduction only for any applicable federal \nback-up withholding or stock transfer taxes payable by such seller. The \nCompany agrees that no Shares held by the Company (or any of its direct or \nindirect subsidiaries) will be tendered pursuant to the Offer.\n\n Without the prior written consent of the Company, Purchaser shall\nnot (i) decrease the Per Share Amount or change the form of consideration\npayable in the Offer, (ii) decrease the number of Shares sought in the Offer,\n(iii) amend or waive satisfaction of the Minimum Condition (as defined in ANNEX\nI hereto) or (iv) impose additional conditions to the Offer or amend any other\nterm of the Offer in any manner adverse to the holders of the Shares. The Offer\nshall initially expire twenty (20) business days after the date of its\ncommencement, unless this Agreement is terminated in accordance with ARTICLE VII\nhereof, in which case the Offer (whether or not previously extended in\naccordance with the terms hereof) shall expire on such date of termination. \nPurchaser agrees that it shall not terminate or withdraw the Offer or extend the\nexpiration date of the Offer unless at the expiration date of the Offer the\nconditions to the Offer described in ANNEX I hereto shall not have been\nsatisfied or earlier waived. Notwithstanding the foregoing, Purchaser may,\nwithout the consent of the Company, extend the Offer at any time, and from time\nto time, (x) if at the then scheduled expiration date of the Offer any of the\nconditions to Purchaser's obligation to accept for payment and pay for Shares\nshall not have been satisfied or waived, until such time as such conditions are\nsatisfied or waived; (ii) for any period required by any rule, regulation,\ninterpretation or position of the Securities and Exchange Commission (the \"SEC\")\nor its staff applicable to the Offer; or (iii) if all conditions to Purchaser's\nobligation to accept for payment and pay for Shares are satisfied or waived but\nthe number of Shares tendered is less than 90% of the then outstanding number of\nShares, for an aggregate period of not more than ten (10) business days (for all\nsuch extensions) beyond the latest expiration date that would be permitted under\nclause (i) or (ii) of this sentence.\n\n -2-\n\n\n The Offer shall be made by means of an offer to purchase (the\n\"OFFER TO PURCHASE\") having only the conditions set forth in ANNEX I hereto. As\nsoon as practicable on the date the Offer is commenced, Purchaser shall file\nwith the SEC a Tender Offer Statement on Schedule 14D-1 (together with all\namendments and supplements thereto, the \"SCHEDULE 14D-1\") with respect to the\nOffer that will comply in all material respects with the provisions of, and\nsatisfy in all material respects the requirements of, such Schedule 14D-1 and\nall applicable federal securities laws and will contain (including as an\nexhibit) or incorporate by reference the Offer to Purchase and forms of the\nrelated letter of transmittal and summary advertisement (which documents,\ntogether with any supplements or amendments thereto, and any other SEC schedule\nor form which is filed in connection with the Offer and related transactions,\nare referred to collectively herein as the \"OFFER DOCUMENTS\"). Each of Parent,\nPurchaser and the Company agrees promptly to correct any information provided by\nit for use in the Schedule 14D-1 or the Offer Documents if and to the extent\nthat such information shall have become false or misleading in any material\nrespect and to supplement the information provided by it specifically for use in\nthe Schedule 14D-1 or the Offer Documents to include any information that shall\nbecome necessary in order to make the statements therein, in light of the\ncircumstances under which they were made, not misleading, and Purchaser further\nagrees to take all steps necessary to cause the Schedule 14D-1, as so corrected\nor supplemented, to be filed with the SEC and the Offer Documents, as so\ncorrected or supplemented, to be disseminated to holders of Shares, in each case\nas and to the extent required by applicable federal securities laws. The\nCompany and its counsel shall be given a reasonable opportunity to review and\ncomment on any Offer Documents before they are filed with the SEC.\n\n Upon the terms and subject to the conditions of the Offer,\nPurchaser shall accept for payment and pay for Shares as soon as permitted under\nthe terms of the Offer and applicable law.\n\n -3-\n\n\n 1.2. COMPANY ACTION. (a) The Company hereby approves and consents\nto the Offer and represents and warrants that the Board of Directors of the\nCompany, at a meeting duly called and held on December 26, 1997, at which a\nmajority of the Directors was present, duly approved and adopted this Agreement\nand the transactions contemplated hereby, including the Offer and the Merger,\nrecommended that stockholders of the Company accept the Offer, tender their\nShares pursuant to the Offer and approve this Agreement and the transactions\ncontemplated hereby, including the Merger, and determined that this Agreement\nand the transactions contemplated hereby, including the Offer and the Merger,\nare fair to and in the best interests of the stockholders of the Company. The\nCompany hereby consents to the inclusion in the Offer Documents of such\nrecommendation of the Board of Directors of the Company. The Company represents\nthat its Board of Directors has received the written opinion (the \"FAIRNESS\nOPINION\") of J.P. Morgan Securities Inc. (the \"FINANCIAL ADVISOR\") that the\nproposed consideration to be received by the holders of Shares pursuant to the\nOffer and the Merger is fair to such holders from a financial point of view. \nThe Company has been authorized by the Financial Advisor to permit, subject to\nthe prior review and consent by the Financial Advisor (such consent not to be\nunreasonably withheld), the inclusion of the Fairness Opinion (or a reference\nthereto) in the Offer Documents, the Schedule 14D-9 (as hereinafter defined) and\nthe Proxy Statement (as hereinafter defined).\n\n The Company shall file with the SEC, as promptly as practicable\nafter the filing by Parent of the Schedule 14D-1 with respect to the Offer, a\nTender Offer Solicitation\/ Recommendation Statement on Schedule 14D-9 (together\nwith any amendments or supplements thereto, the \"SCHEDULE 14D-9\") that will\ncomply in all material respects with the provisions of all applicable federal\nsecurities laws. The Company shall mail such Schedule 14D-9 to the stockholders\nof the Company as promptly as practicable after the commencement of the Offer. \nThe Schedule 14D-9 and the Offer Documents shall contain the recommendations of\nthe Board of Directors of the Company described in SECTION 1.2(A) hereof. The\nCompany agrees promptly to correct the Schedule 14D-9 if and to the extent that\nit shall become false or misleading in any material respect (and each of Parent\nand Purchaser, with respect to written information supplied by it specifically\nfor use in the Schedule 14D-9, shall promptly notify the Company of any required\ncorrections of such information and cooperate with the Company with respect to\ncorrecting such information) and to supplement the information contained in the\nSchedule 14D-9 to include any information that shall become necessary in order\nto make the statements therein, in light of the circumstances under which they\nwere made, not misleading, and the Company shall take all steps necessary to\ncause the Schedule 14D-9 as so corrected or supplemented to be filed with the\nSEC and disseminated to holders of Shares to the extent required by applicable\nfederal securities laws. Purchaser and its counsel shall be given a reasonable\nopportunity to review and comment on the Schedule 14D-9 before it is filed with\nthe SEC.\n\n -4-\n\n\n In connection with the Offer, the Company shall promptly upon\nexecution of this Agreement furnish Purchaser with mailing labels containing the\nnames and addresses of all record holders of Shares and security position\nlistings of Shares held in stock depositories, each as of a recent date, and\nshall promptly furnish Purchaser with such additional information reasonably\navailable to the Company, including updated lists of stockholders, mailing\nlabels and security position listings, and such other information and assistance\nas Purchaser or its agents may reasonably request for the purpose of\ncommunicating the Offer to the record and beneficial holders of Shares.\n\n 1.3. DIRECTORS. Promptly upon the purchase by Parent of Shares\npursuant to the Offer (and provided that the Minimum Condition has been\nsatisfied), Parent shall be entitled to designate such number of directors,\nrounded up to the next whole number, on the Board of Directors of the Company as\nwill give Parent, subject to compliance with Section 14(f) of the Securities\nExchange Act, representation on the Board of Directors of the Company equal to\nat least that number of directors which equals the product of the total number\nof directors on the Board of Directors of the Company (giving effect to the\ndirectors appointed or elected pursuant to this sentence and including current\ndirectors serving as officers of the Company) multiplied by the percentage that\nthe aggregate number of Shares beneficially owned by Parent or any affiliate of\nParent (including for purposes of this SECTION 1.3 such Shares as are accepted\nfor payment pursuant to the Offer, but excluding Shares held by the Company)\nbears to the number of Shares outstanding. At such time, if requested by\nParent, the Company will also cause each committee of the Board of Directors of\nthe Company to include persons designated by Parent constituting the same\npercentage of each such committee as Parent's designees are of the Board of\nDirectors of the Company. The Company shall, upon request by Parent, promptly\nincrease the size of the Board of Directors of the Company or exercise\nreasonable best efforts to secure the resignations of such number of directors\nas is necessary to enable Parent's designees to be elected to the Board of\nDirectors of the Company in accordance with the terms of this SECTION 1.3 and to\ncause Parent's designees so to be elected; PROVIDED, HOWEVER, that, in the event\nthat Parent's designees are appointed or elected to the Board of Directors of\nthe Company, until the Effective Time (as hereinafter defined) the Board of\nDirectors of the Company shall have at least two directors who are directors on\nthe date hereof and each of whom is neither an officer of the Company nor a\ndesignee, shareholder, affiliate or associate (within the meaning of the federal\nsecurities laws) of Parent (such directors, the \"INDEPENDENT DIRECTORS\");\nPROVIDED FURTHER, that if no Independent Directors remain, the other directors\nshall designate one person to fill one of the vacancies who shall be neither an\nofficer of the Company nor a designee, shareholder, affiliate or associate of\nParent, and such person shall be deemed to be an Independent Director for\npurposes of this Agreement. Subject to applicable law, the Company shall\npromptly take all action necessary pursuant to Section 14(f) of the Securities\nExchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its\nobligations under this SECTION 1.3 and \n\n -5-\n\n\nshall include in the Schedule 14D-9 mailed to stockholders promptly after the\ncommencement of the Offer (or in an amendment thereof or an information\nstatement pursuant to Rule 14f-1 if Parent has not theretofore designated\ndirectors) such information with respect to the Company and its officers and\ndirectors as is required under Section 14(f) and Rule 14f-1 in order to fulfill\nits obligations under this SECTION 1.3. Parent will supply the Company and be\nsolely responsible for any information with respect to itself and its nominees,\nofficers, directors and affiliates required by such Section 14(f) and Rule 14f-\n1. Notwithstanding anything in this Agreement to the contrary, prior to the\nEffective Time, the affirmative vote of a majority of the Independent Directors\nshall be required to (i) amend or terminate this Agreement on behalf of the\nCompany, (ii) exercise or waive any of the Company's rights or remedies\nhereunder, (iii) extend the time for performance of Parent's obligations\nhereunder, (iv) take any other action by the Company in connection with this\nAgreement required to be taken by the Board of Directors of the Company or (v)\namend the Company's Certificate of Incorporation or the Company's Bylaws, each\nas in effect on the date of this Agreement.\n\n 1.4. THE MERGER. Upon the terms and subject to the conditions of\nthis Agreement, the Merger shall be consummated in accordance with the Delaware\nGeneral Corporation Law (the \"DELAWARE CODE\"). At the Effective Time (as\ndefined in SECTION 1.5 hereof), upon the terms and subject to the conditions of\nthis Agreement, Purchaser shall be merged with and into the Company in\naccordance with the Delaware Code and the separate existence of Purchaser shall\nthereupon cease, and the Company, as the surviving corporation in the Merger\n(the \"SURVIVING CORPORATION\"), shall continue its corporate existence under the\nlaws of the State of Delaware as an indirect subsidiary of Parent. The parties\nshall prepare and execute a certificate of merger (the \"CERTIFICATE OF MERGER\")\nin order to comply in all respects with the requirements of the Delaware Code\nand with the provisions of this Agreement.\n\n 1.5. EFFECTIVE TIME. The Merger shall become effective at the time\nof the filing of the Certificate of Merger with the Secretary of State of\nDelaware in accordance with the applicable provisions of the Delaware Code or at\nsuch later time as may be specified in the Certificate of Merger. As soon as\npracticable after all of the conditions set forth in ARTICLE VI of this\nAgreement have been satisfied or waived by the party or parties entitled to the\nbenefit of the same, the parties hereto shall cause the Merger to become\neffective. Parent and the Company shall mutually determine the time of such\nfiling and the place where the closing of the Merger (the \"CLOSING\") shall\noccur. The time when the Merger shall become effective is herein referred to as\nthe \"EFFECTIVE TIME\", and the date on which the Effective Time occurs is herein\nreferred to as the \"CLOSING DATE.\"\n\n 1.6. CONVERSION OF SHARES. At the Effective Time, by virtue of the\nMerger and without any action on the part of Purchaser, the Company or the\nholder of any of the securities \n\n -6-\n\n\nspecified below:\n\n Each Share issued and outstanding immediately before the Effective\nTime (other than any Dissenting Shares (as hereinafter defined) and Shares to be\ncanceled pursuant to SECTION 1.6(B)) shall be canceled and extinguished and be\nconverted into the right to receive the Per Share Amount in cash payable to the\nholder thereof, without interest, upon surrender of the certificate representing\nsuch Share in accordance with SECTION 1.8 hereof. From and after the Effective\nTime, the holders of certificates evidencing ownership of Shares outstanding\nimmediately prior to the Effective Time shall cease to have any rights with\nrespect to such Shares except as otherwise provided for herein or by applicable\nLaw.\n\n Each Share held in the treasury of the Company and each Share owned\nby Parent or any direct or indirect wholly owned subsidiary of Parent\nimmediately before the Effective Time shall be canceled and extinguished, and no\npayment or other consideration shall be made with respect thereto.\n\n The shares of Purchaser common stock outstanding immediately prior\nto the Merger shall be converted into 1,000 shares of the common stock of the\nSurviving Corporation (the \"SURVIVING CORPORATION COMMON STOCK\"), which shares\nof the Surviving Corporation Common Stock shall constitute all of the issued and\noutstanding capital stock of the Surviving Corporation and shall be owned by an\nindirect subsidiary of Parent.\n\n 1.7. DISSENTING SHARES. (a) Notwithstanding any provision of this\nAgreement to the contrary, any Shares issued and outstanding immediately prior\nto the Effective Time and held by a holder who has demanded and perfected his\ndemand for appraisal of his Shares in accordance with the Delaware Code\n(including but not limited to Section 262 thereof), and as of the Effective Time\nhas neither effectively withdrawn nor lost his right to such appraisal\n(\"DISSENTING SHARES\"), shall not be converted into or represent a right to\nreceive cash pursuant to SECTION 1.6 hereof, but the holder thereof shall be\nentitled to only such rights as are granted by the Delaware Code.\n\n Notwithstanding the provisions of SECTION 1.7(A) hereof, if any\nholder of Shares who demands appraisal of his Shares under the Delaware Code\nshall effectively withdraw or lose (through failure to perfect or otherwise) his\nright to appraisal, then as of the Effective Time or the occurrence of such\nevent, whichever occurs later, such holder's Shares shall automatically be\nconverted into and represent only the right to receive cash as provided in\nSECTION 1.6 hereof, without interest thereon, upon surrender of the certificate\nor certificates representing such Shares.\n\n The Company shall give Purchaser (i) prompt notice of any written\ndemands for appraisal or payment of the fair value of any Shares, withdrawals of\nsuch demands and any other instruments served pursuant to the Delaware Code\nreceived \n\n -7-\n\n\nby the Company after the date hereof and (ii) the opportunity to direct all\nnegotiations and proceedings with respect to demands for appraisal under the\nDelaware Code. The Company shall not voluntarily make any payment with respect\nto any demands for appraisal and shall not, except with the prior written\nconsent of Parent, settle or offer to settle any such demands.\n\n\n 1.8. SURRENDER OF SHARES. (a) Prior to the Effective Time, \nPurchaser shall appoint Chase Mellon Shareholder Services or such other \ncommercial bank or trust company designated by Purchaser and reasonably \nacceptable to the Company to act as exchange agent hereunder (the \"Exchange \nAgent\") for the payment of the Per Share Amount upon surrender of \ncertificates representing the Shares. All of the fees and expenses of the \nExchange Agent shall be borne by Purchaser.\n\n (b) Parent shall cause the Surviving Corporation to provide the\nExchange Agent with cash in amounts necessary to pay for all of the Shares\npursuant to SECTION 1.8(C) hereof when and as such amounts are needed by the\nExchange Agent.\n\n (c) On the Closing Date, Purchaser shall instruct the Exchange Agent\nto mail to each holder of record of a certificate representing any Shares\ncanceled upon the Merger pursuant to SECTION 1.6(A) hereof, within five business\ndays of receiving from the Company a list of such holders of record, (i) a\nletter of transmittal (which shall specify that delivery shall be effected, and\nrisk of loss and title to the certificates shall pass, only upon delivery of the\ncertificates to the Exchange Agent and shall be in such form and have such other\nprovisions as Parent may reasonably specify) and (ii) instructions for use in\neffecting the surrender of the certificates. Each holder of a certificate or\ncertificates representing any Shares canceled upon the Merger pursuant to\nSECTION 1.6(A) hereof may thereafter surrender such certificate or certificates\nto the Exchange Agent, as agent for such holder, to effect the surrender of such\ncertificate or certificates on such holder's behalf for a period ending one year\nafter the Effective Time. Upon the surrender of certificates representing the\nShares, Parent shall cause the Exchange Agent to pay the holder of such\ncertificates in exchange therefor cash in an amount equal to the Per Share\nAmount multiplied by the number of Shares represented by such certificate. \nUntil so surrendered, each such certificate (other than certificates\nrepresenting Dissenting Shares) shall represent solely the right to receive the\naggregate Per Share Amount relating thereto.\n\n (d) If payment of cash in respect of canceled Shares is to be made to\na person other than the person in whose name a surrendered certificate or\ninstrument is registered, it shall be a condition to such payment that the\ncertificate or instrument so surrendered shall be properly endorsed or shall be\notherwise in proper form for transfer and that the person requesting such\npayment shall have paid any transfer and other taxes required by reason of such\npayment in a name other than that of the registered holder of the certificate or\ninstrument surrendered or shall have established to the satisfaction of Parent\nor the \n\n -8-\n\n\nExchange Agent that such tax either has been paid or is not payable.\n\n (e) At the Effective Time, the stock transfer books of the Company\nshall be closed, and no transfer of Shares shall be made thereafter, other than\ntransfers of Shares that have occurred prior to the Effective Time. In the\nevent that, after the Effective Time, certificates are presented to the\nSurviving Corporation, they shall be canceled and exchanged for cash as provided\nin SECTION 1.6(A).\n\n (f) The Per Share Amount paid in the Merger shall be net to the\nholder of Shares in cash, and without interest thereon subject to reduction only\nfor any applicable federal back-up withholding or stock transfer taxes payable\nby such holder.\n\n (g) Promptly following the date which is one year after the Effective\nTime, the Exchange Agent shall deliver to Parent all cash, certificates and\nother documents in its possession relating to the transactions contemplated\nhereby, and the Exchange Agent's duties shall terminate. Thereafter, each\nholder of a certificate representing Shares (other than certificates\nrepresenting Dissenting Shares and certificates representing Shares held by\nParent or in the treasury of the Company) may surrender such certificate to the\nSurviving Corporation and (subject to any applicable abandoned property, escheat\nor similar law) receive in consideration therefor the aggregate Per Share Amount\nrelating thereto, without any interest thereon.\n\n (h) None of the Company, Parent, the Surviving Corporation or the\nExchange Agent shall be liable to any holder of Shares for any cash delivered to\na public official pursuant to any abandoned property, escheat or similar law,\nrule, regulation, statute, order, judgment or decree.\n\n 1.9. OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES. (a) Each of the\nCompany and Parent shall take all reasonable actions necessary to provide that\nall then outstanding options to purchase Shares, whether or not then exercisable\nor vested (I) under the Company's 1996 Stock Incentive Plan and (II) if and to\nthe extent required by the terms of the Company Option Plans (as hereinafter\ndefined) other than the Company's 1996 Stock Incentive Plan, under such other\nCompany Option Plans, shall become fully exercisable and vested upon the\nconsummation of the Offer. Holders of options under the Company Option Plans\n(\"COMPANY OPTIONS\") that become fully exercisable and vested upon the\nconsummation of the Offer in accordance with the provisions of the preceding\nsentence will have a period of sixty days following the consummation of the\nOffer to surrender their options to the Company in exchange for cash equal to\nthe excess of (i) the aggregate value of the Shares underlying the options,\nbased on the Per Share Amount, over (ii) the aggregate exercise price for the\nShares underlying the options. Each of the Company and Parent shall take all\nreasonable actions necessary to provide that, upon consummation of the Merger,\nall then outstanding \n\n -9-\n\n\nCompany Options, whether or not then exercisable or vested if and to the extent\nso provided in the applicable Company Option Plan, shall be converted into the\nright to receive, at the election of the holder, either (1) in cash, the\naggregate value of the Shares underlying the options, based on the Per Share\nAmount, less the aggregate exercise price for the Shares underlying the options,\nor (2) options, exercisable on the same terms and conditions as the surrendered\noptions (except that the option received in exchange shall be immediately\nexercisable) to acquire that number of common shares, par value $.20, of Parent\n(\"PARENT SHARES\") determined by multiplying, in the case of each option, (A) the\nnumber of Shares for which the surrendered option was exercisable immediately\nprior to the Effective Time by (B) a fraction, the numerator of which is the Per\nShare Amount and the denominator of which is the closing price per Parent Share\non the New York Stock Exchange on the trading day immediately preceding the\nClosing Date. The exercise price per Parent Share for each new option issued\npursuant to the foregoing clause (2) shall be an amount equal to the aggregate\nexercise price for the Shares underlying the surrendered option divided by the\nnumber of Parent Shares for which such new option is exercisable. \"COMPANY\nOPTION PLANS\" shall mean the Company's Amended and Restated Senior Executives'\nOption Plan, the Company's 1992 Directors' Option Plan and the Company's 1996\nStock Incentive Plan.\n\n (b) Each of the Company and Parent shall take all reasonable actions\nnecessary so that the Warrants expiring August 30, 2002 (except as otherwise\nprovided therein) to purchase 166,666 shares of Company Stock at a price of\n$9.75 per share, subject to adjustment (the \"BANK WARRANTS\"), shall be\nexercisable, from and after the Effective Time, for an amount of cash equal in\nthe aggregate to the Per Share Amount multiplied by the number of Shares for\nwhich such warrants were exercisable immediately prior to the Effective Time. \nEach of the Company and Parent shall take all reasonable actions necessary so\nthat the Warrants expiring August 13, 2002 to purchase 203,033 shares of Company\nStock at a price of $10.17 per share, subject to adjustment, and the Warrants\nexpiring August 1 2004 to purchase 685,714 shares of Company Stock at a price of\n$4.58 per share, subject to adjustment (collectively, the \"OTHER WARRANTS\" and,\nwith the Bank Warrants, the \"COMPANY WARRANTS\"), shall be exercisable, from and\nafter the Effective, at the election of the holder as provided in the applicable\nOther Warrant, for either (i) an amount of cash equal in the aggregate to the\nPer Share Amount multiplied by the number of Shares for which such warrants were\nexercisable immediately prior to the Effective Time or (ii) a number of Parent\nShares equal to the product of (I) the number of Shares for which such warrants\nwere exercisable immediately prior to the Effective Time and (II) a fraction,\nthe numerator of which is the Per Share Amount and the denominator of which is\nthe Current Market Price (as defined in the applicable Other Warrant) of the\nParent Shares on the trading day immediately preceding the Closing Date. The\nexercise price per Parent Share under each Other Warrant, as adjusted pursuant\nto the foregoing clause (ii), shall be an amount equal to the aggregate exercise\nprice for the Shares for which such warrant was exercisable prior to such\nadjustment divided by the number of Parent Shares for which such \n\n -10-\n\n\nwarrant is exercisable as a result of such adjustment. In addition, the Company\nshall deliver to the holders of the applicable Other Warrants notice of the\nMerger, and the Parent shall deliver to the holders of the applicable Other\nWarrants the instruments of assumption and legal opinions required to be\ndelivered, pursuant to the terms of the applicable Other Warrants, in connection\nwith the Merger. Notwithstanding the forgoing provisions of this SECTION 1.9(B),\nany holder exercising a Company Warrant for cash in accordance with the\nprovisions of this Section 1.9(b) shall not be required to pay the exercise\nprice thereof and instead may receive in the aggregate upon exercise the\ndifference between (A) the Per Share Amount multiplied by the number of Shares\nfor which such warrants were exercisable immediately prior to the Effective Time\nand (B) the aggregate exercise price for the Shares underlying such warrants.\n\n (c) Each of the Company and Parent shall take all reasonable actions\nnecessary so that the Company's Subordinated Convertible Debentures convertible\ninto 24,810 shares of Company Stock, subject to adjustment (the \"COMPANY\nDEBENTURES\"), shall be convertible, from and after the Effective Time, into an\namount of cash equal to the product of the number of Shares into which such\nCompany Debentures were convertible immediately prior to the Effective Time\nmultiplied by the Per Share Amount. The Company shall deliver to the holders of\nthe Company Debentures notice of the Merger.\n\n 1.10. CERTIFICATE OF INCORPORATION AND BYLAWS. Subject to SECTION\n5.5 hereof, unless otherwise determined by Parent prior to the Effective Time,\nat and after the Effective Time (a) the Restated Certificate of Incorporation of\nthe Company, as in effect immediately prior to the Effective Time, shall be the\nCertificate of Incorporation of the Surviving Corporation until thereafter\namended as provided by the Delaware Code and such Certificate of Incorporation;\nPROVIDED, HOWEVER, that (i) Article Fourth shall be amended and restated in its\nentirety to provide that the capital stock of the Surviving Corporation shall\nconsist of 1,000 shares of Common Stock, par value $.01 per share; (ii) Article\nFifth shall be amended and restated in its entirety to provide that the\nSurviving Corporation's Board shall consist of not less than three members, all\nof a single class, with the exact number to be fixed from time to time by\nresolution of the Board of Directors; (iii) Article Sixth shall be amended by\ndeleting the second sentence thereof; (iv) Article Seventh shall be amended by\ndeleting the second sentence thereof; and (v) Article Eighth shall be deleted;\nand (b) the Bylaws of the Surviving Corporation shall be the Bylaws of Purchaser\nin effect at the Effective Time (subject to any subsequent amendments).\n\n 1.11. DIRECTORS AND OFFICERS. At and after the Effective Time, the\ndirectors of Purchaser immediately prior to the Effective Time shall be the\ninitial directors of the Surviving Corporation, and the officers of the Company\nimmediately prior to the Effective Time shall be the initial officers of the\nSurviving Corporation, in each case until their successors are duly elected or\nappointed and qualified.\n\n -11-\n\n\n 1.12. OTHER EFFECTS OF MERGER. The Merger shall have all further\neffects as specified in the applicable provisions of the Delaware Code.\n\n 1.13. PROXY STATEMENT. (a) Following the consummation of the Offer\nand if required by the Securities Exchange Act because of action by the\nCompany's stockholders necessary in order to consummate the Merger, the Company\nshall prepare and file with the SEC and, when cleared by the SEC, shall mail to\nstockholders, a proxy statement in connection with a meeting of the Company's\nstockholders to vote upon the adoption of this Agreement and the Merger and the\ntransactions contemplated hereby and thereby (the \"COMPANY PROPOSALS\"), or an\ninformation statement, as appropriate, satisfying all requirements of the\nSecurities Exchange Act (such proxy or information statement in the form mailed\nby the Company to its stockholders, together with any and all amendments or\nsupplements thereto, is herein referred to as the \"PROXY STATEMENT\").\n\n Parent will furnish the Company with such information concerning\nParent and its subsidiaries as is necessary in order to cause the Proxy\nStatement, insofar as it relates to Parent and its subsidiaries, to comply with\napplicable Law. Parent agrees promptly to advise the Company if, at any time\nprior to the meeting of stockholders of the Company referenced herein, any\nParent Information (as defined) in the Proxy Statement is or becomes incorrect\nor incomplete in any material respect and to provide the Company with the\ninformation needed to correct such inaccuracy or omission. Parent will furnish\nthe Company with such supplemental information as may be necessary in order to\ncause the Proxy Statement, insofar as it relates to Parent and its subsidiaries,\nto comply with applicable Law after the mailing thereof to the stockholders of\nthe Company.\n\n The Company and Parent agree to cooperate in making any\npreliminary filings of the Proxy Statement with the SEC, as promptly as\npracticable, pursuant to Rule 14a-6 under the Securities Exchange Act.\n\n The Company shall provide Parent for its review a copy of the\nProxy Statement prior to each filing thereof, with reasonable time and\nopportunity for such review. Parent authorizes the Company to utilize in the\nProxy Statement the information concerning Parent and its subsidiaries provided\nto the Company in connection with, or contained in, the Proxy Statement.\n\n 1.14. ADDITIONAL ACTIONS. If, at any time after the Effective Time,\nthe Surviving Corporation shall consider or be advised that any deeds, bills of\nsale, assignments, assurances or any other actions or things are necessary or\ndesirable to vest, perfect or confirm of record or otherwise in the Surviving\nCorporation its right, title or interest in, to or under any of the rights,\nproperties or assets of Purchaser or the Company or otherwise to carry out this\nAgreement, the officers and directors of the Company and Purchaser shall be\nauthorized to execute and deliver, in the name and on behalf of Purchaser or the\nCompany, \n\n -12-\n\n\nall such deeds, bills of sale, assignments and assurances and to take and do, in\nthe name and on behalf of Purchaser or the Company, all such other actions and\nthings as may be necessary or desirable to vest, perfect or confirm any and all\nright, title and interest in, to and under such rights, properties or assets in\nthe Surviving Corporation or otherwise to carry out this Agreement.\n\n 1.15. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the\nforegoing provisions of this ARTICLE I, in the event that Purchaser, or any\nother direct or indirect subsidiary of Parent, shall acquire at least 90 percent\nof the outstanding shares of Company Stock, the parties hereto agree to take all\nnecessary and appropriate action to cause the Merger to become effective as soon\nas practicable after the expiration of the Offer without a meeting of\nstockholders of the Company, in accordance with Section 253 of the Delaware\nCode.\n \n 1.16. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any\ncertificates representing shares of Company Stock shall have been lost, stolen\nor destroyed, the Exchange Agent shall make such payment in exchange for such\nlost, stolen or destroyed certificates upon the making of an affidavit of that\nfact by the holder thereof; PROVIDED, HOWEVER, that Parent may, in its\ndiscretion and as a condition precedent to the issuance thereof, require the\nowner of such lost, stolen or destroyed certificates to deliver a bond in such\nsum as it may reasonably direct as indemnity against any claim that may be made\nagainst Parent or the Exchange Agent with respect to the certificates alleged to\nhave been lost, stolen or destroyed.\n\n 1.17. MATERIAL ADVERSE EFFECT. When used in connection with the \nCompany or any of its subsidiaries or Parent or any of its subsidiaries, as \nthe case may be, the term \"Material Adverse Effect\" means any change, effect \nor circumstance that, individually or when taken together with all other \nsimilar changes, effects or circumstances that have occurred during the \nperiod relevant to the determination of such Material Adverse Effect, is or \nis reasonably likely to be materially adverse to the business, assets \n(including intangible assets), financial condition or results of operations \nof the Company and its subsidiaries or Parent and its subsidiaries, as the \ncase may be, in each case taken as a whole. Changes, effects and \ncircumstances referred to in any of the provisions of SECTION 2.15 hereof \nshall be deemed similar for purposes of this SECTION 1.17.\n\n ARTICLE II\n\n REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n\n The Company represents and warrants to Parent and Purchaser that,\nexcept as set forth in the correspondingly numbered Sections of the letter,\ndated the date hereof, from the Company to Parent (the \"COMPANY DISCLOSURE\nLETTER\"):\n\n -13-\n\n\n 2.1. ORGANIZATION AND GOOD STANDING. The Company and each of the\nCompany Subsidiaries is a corporation duly organized, validly existing and in\ngood standing under the laws of the jurisdiction of its incorporation and has\nall requisite corporate power and authority to own, lease and operate its\nproperties and to carry on its business as now being conducted. The Company and\neach of the Company Subsidiaries is duly qualified or licensed and in good\nstanding to do business in each jurisdiction in which the character of the\nproperty owned, leased or operated by it or the nature of the business conducted\nby it makes such qualification or licensing necessary, except where the failure\nto be so duly qualified or licensed and in good standing would not reasonably be\nexpected to have a Material Adverse Effect. The Company has heretofore made\navailable to Parent accurate and complete copies of the Certificate of\nIncorporation and Bylaws, as currently in effect, of the Company. For purposes\nof this Agreement, the term \"COMPANY SUBSIDIARY\" shall mean any \"Subsidiary\" (as\nsuch term is defined in Rule 1-02 of Regulation S-X of the SEC) of the Company.\n\n 2.2. CAPITALIZATION. As of the date hereof, the authorized capital\nstock of the Company consists of (a) 12,000,000 shares of Company Stock, and (b)\n1,000,000 shares of undesignated preferred stock, par value $1.00 per share. As\nof November 14, 1997, (a) 6,317,291 shares of Company Stock were issued and\noutstanding, (b) no shares of preferred stock were issued and outstanding and\n(c) 7,142 shares of Company Stock were issued and held in the treasury of the\nCompany. As of November 14, 1997, (i) no shares of Company Stock or preferred\nstock were held by subsidiaries of the Company, (ii) 2,087,734 shares of Company\nStock were reserved for future issuance pursuant to outstanding stock options\ngranted under the Company Option Plans, (iii) 1,055,413 shares of Company Stock\nwere reserved for future issuance upon exercise of Company Warrants and (iv)\n24,810 shares of Company Stock were reserved for issuance upon conversion of the\nCompany Debentures. No material change in the capitalization of the Company has\noccurred between November 14, 1997 and the date hereof. No other capital stock\nof the Company is authorized or issued. All issued and outstanding shares of\nthe Company Stock are duly authorized, validly issued, fully paid and\nnon-assessable. Except as set forth in the Company Securities Filings (as\nhereinafter defined) or as otherwise contemplated by this Agreement, as of the\ndate hereof, there are no outstanding rights, subscriptions, warrants, puts,\ncalls, unsatisfied preemptive rights, options or other agreements of any kind\nrelating to any of the outstanding, authorized but unissued or treasury shares\nof the capital stock or any other security of the Company, and there is no\nauthorized or outstanding security of any kind convertible into or exchangeable\nfor any such capital stock or other security. Except as disclosed in the\nCompany Securities Filings, there are no obligations, contingent or other, of\nthe Company or any of its subsidiaries to repurchase, redeem or otherwise\nacquire any shares of Common Stock or the capital stock of any subsidiary or to\nprovide funds to or make any investment (in the form of a loan, capital\ncontribution or otherwise) in any such subsidiary or any other entity, other\nthan pursuant to intercompany agreements, the Credit Agreement (as \n\n -14-\n\n\ndefined in the Company Disclosure Letter), and guarantees of bank obligations of\nsubsidiaries entered into in the ordinary course of business. The Company has\nin effect no shareholder rights plan or any similar plan or arrangement pursuant\nto which the Company's stockholders have or may obtain the right to acquire\ncapital stock of the Company at a price below the market price thereof.\n\n 2.3. SUBSIDIARIES. SECTION 2.3 of the Company Disclosure Letter \nsets forth the name and jurisdiction of incorporation of each Company \nSubsidiary, each of which is wholly owned by the Company except as otherwise \nindicated in said SECTION 2.3 of the Company Disclosure Letter. All of the \ncapital stock and other interests of the Company Subsidiaries so held by the \nCompany are owned by it or a Company Subsidiary as indicated in said SECTION \n2.3 of the Company Disclosure Letter, free and clear of any claim, lien, \nencumbrance or security interest with respect thereto. All of the \noutstanding shares of capital stock of each of the Company Subsidiaries \ndirectly or indirectly held by the Company are duly authorized, validly \nissued, fully paid and non-assessable and were issued free of preemptive \nrights and in compliance with applicable Laws. No equity securities or other \ninterests of any of the Company Subsidiaries are or may become required to be \nissued or purchased by reason of any options, warrants, rights to subscribe \nto, puts, calls or commitments of any character whatsoever relating to, or \nsecurities or rights convertible into or exchangeable for, shares of any \ncapital stock of any Company Subsidiary, and there are no contracts, \ncommitments, understandings or arrangements by which any Company Subsidiary \nis bound to issue additional shares of its capital stock, or options, \nwarrants or rights to purchase or acquire any additional shares of its \ncapital stock or securities convertible into or exchangeable for such shares. \nExcept as set forth in the Company Securities Filings, the Company does not \ndirectly or indirectly own any equity or similar interest in, or any interest \nconvertible into or exchangeable or exercisable for any equity or similar \ninterest in, any corporation, partnership, joint venture or other business \nassociation or entity, with respect to which interest the Company has \ninvested or is required to invest $100,000 or more, excluding securities in \nany publicly traded company held for investment by the Company and comprising \nless than five percent of the outstanding stock of such company.\n\n 2.4. AUTHORIZATION; BINDING AGREEMENT. The Company has all \nrequisite corporate power and authority to execute and deliver this Agreement \nand to consummate the transactions contemplated hereby. The execution and \ndelivery of this Agreement and the consummation of the transactions \ncontemplated hereby, including, but not limited to, the Merger, have been \nduly and validly authorized by the Company's Board of Directors, and no other \ncorporate proceedings on the part of the Company or any Company Subsidiary \nare necessary to authorize the execution and delivery of this Agreement or to \nconsummate the transactions contemplated hereby (other than the adoption of \nthis Agreement by the stockholders holding a majority of the outstanding \nshares of Company Stock of the Company in accordance with the Delaware Code). \n This Agreement has been duly and \n\n\n -15-\n\n\nvalidly executed and delivered by the Company and constitutes the legal, valid\nand binding agreement of the Company, enforceable against the Company in\naccordance with its terms, except to the extent that enforceability thereof may\nbe limited by applicable bankruptcy, insolvency, reorganization or other similar\nlaws affecting the enforcement of creditors' rights generally and by principles\nof equity regarding the availability of remedies (\"ENFORCEABILITY EXCEPTIONS\").\n\n 2.5. GOVERNMENTAL APPROVALS. No consent, approval, waiver or\nauthorization of, notice to or declaration or filing with (\"CONSENT\") any nation\nor government, any state or other political subdivision thereof or any entity,\nauthority or body exercising executive, legislative, judicial or regulatory\nfunctions of or pertaining to government, including, without limitation, any\ngovernmental or regulatory authority, agency, department, board, commission or\ninstrumentality, any court, tribunal or arbitrator and any self-regulatory\norganization (\"GOVERNMENTAL AUTHORITY\"), on the part of the Company or any of\nthe Company Subsidiaries is required in connection with the execution or\ndelivery by the Company of this Agreement or the consummation by the Company of\nthe transactions contemplated hereby other than (i) the filing of the\nCertificate of Merger with the Secretary of State of Delaware in accordance with\nthe Delaware Code, (ii) filings with the SEC, (iii) filings under the\nHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules\nand regulations promulgated thereunder (the \"HSR ACT\"), (iv) consents or filings\nrequired under the Communications Act of 1934, as amended, relating to change in\nownership or control of certain business radio and related licenses held by the\nCompany or its subsidiaries and (v) those Consents that, if they were not\nobtained or made, would not reasonably be expected to have a Material Adverse\nEffect.\n\n 2.6. NO VIOLATIONS. The execution and delivery of this \nAgreement, the consummation of the transactions contemplated hereby and \ncompliance by the Company with any of the provisions hereof will not (i) \nconflict with or result in any breach of any provision of the Certificate of \nIncorporation or Bylaws of the Company or any of the Company Subsidiaries, \n(ii) require any Consent under or result in a violation or breach of, or \nconstitute (with or without notice or lapse of time or both) a default (or \ngive rise to any right of termination, cancellation or acceleration) under \nany of the terms, conditions or provisions of, any Company Material Contract \n(as hereinafter defined), (iii) result in the creation or imposition of any \nlien or encumbrance of any kind upon any of the assets of the Company or any \nCompany Subsidiary or (iv) subject to obtaining the Consents from \nGovernmental Authorities referred to in SECTION 2.5 hereof, violate any \napplicable provision of any statute, law, rule or regulation or any order, \ndecision, injunction, judgment, award or decree (\"LAW\") to which the Company \nor any Company Subsidiary or its assets or properties are subject, except, in \nthe case of each of clauses (ii), (iii) and (iv) above, for any deviations \nfrom the foregoing which would not reasonably be expected to have a Material \nAdverse Effect.\n\n\n -16-\n\n\n 2.7. SECURITIES FILINGS. The Company has made available to \nParent true and complete copies of (i) its Annual Reports on Form 10-K, as \namended, for the years ended December 31, 1994, 1995 and 1996, as filed with \nthe SEC, (ii) its proxy statements relating to all of the meetings of \nstockholders (whether annual or special) of the Company since January 1, \n1995, as filed with the SEC, and (iii) all other reports, statements and \nregistration statements and amendments thereto (including, without \nlimitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, \nas amended) filed by the Company with the SEC since January 1, 1997. The \nreports and statements set forth in clauses (i) through (iii) above, and \nthose subsequently provided or required to be provided pursuant to this \nSECTION 2.7, are referred to collectively herein as the \"COMPANY SECURITIES \nFILINGS.\" As of their respective dates, or as of the date of the last \namendment thereof, if amended after filing, the Company Securities Filings \n(i) were prepared in all material respects in accordance with the \nrequirements of the Securities Act of 1933, as amended (the \"SECURITIES ACT\") \nand the rules and regulations promulgated thereunder, or the Exchange Act, as \nthe case may be, and none of the Company Securities Filings contained or, as \nto the Company Securities Filings subsequent to the date hereof, will \ncontain, any untrue statement of a material fact or omitted or, as to the \nCompany Securities Filings subsequent to the date hereof, will omit, to state \na material fact required to be stated therein or necessary to make the \nstatements therein, in light of the circumstances under which they were made, \nnot misleading.\n\n 2.8. COMPANY FINANCIAL STATEMENTS. The audited consolidated \nfinancial statements and unaudited interim financial statements of the \nCompany included in the Company Securities Filings (the \"COMPANY FINANCIAL \nSTATEMENTS\") have been prepared in accordance with generally accepted \naccounting principles applied on a consistent basis (except as may be \nindicated therein or in the notes thereto) and present fairly, in all \nmaterial respects, the financial position of the Company and its subsidiaries \nas at the dates thereof and the results of their operations and cash flows \nfor the periods then ended subject, in the case of the unaudited interim \nfinancial statements, to normal year-end audit adjustments, any other \nadjustments described therein and the fact that certain information and notes \nhave been condensed or omitted in accordance with the Securities Exchange Act.\n\n 2.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth \nin the Company Securities Filings, since December 31, 1996, through the date \nof this Agreement, there has not been: (i) any event that has had or would \nreasonably be expected to have a Material Adverse Effect, (ii) any \ndeclaration, payment or setting aside for payment of any dividend or other \ndistribution or any redemption or other acquisition of any shares of capital \nstock or securities of the Company by the Company, (iii) any material damage \nor loss to any material asset or property, whether or not covered by \ninsurance, (iv) any change by the Company in accounting principles or \npractices, (v) any material revaluation by the Company of any of its assets, \nincluding writing down the value of inventory or writing off \n\n\n -17-\n\n\nnotes or accounts receivable other than in the ordinary course of business, (vi)\nany sale of a material amount of property of the Company, except in the ordinary\ncourse of business, or (vii) any other action or event, involving an amount\nexceeding $250,000, that would have required the consent of Parent pursuant to\nSection 4.1 hereof had such action or event occurred after the date of this\nAgreement.\n\n 2.10. NO UNDISCLOSED LIABILITIES. Except as set forth in the \nCompany Securities Filings, neither the Company nor any of its subsidiaries \nhas any liabilities (absolute, accrued, contingent or otherwise), except \nliabilities (a) in the aggregate adequately provided for in the Company's \naudited balance sheet (including any related notes thereto) for the fiscal \nyear ended December 31, 1996 included in the Company's 1996 Annual Report on \nForm 10-K (the \"1996 BALANCE SHEET\"), (b) incurred in the ordinary course of \nbusiness and not required under generally accepted accounting principles to \nbe reflected on the 1996 Balance Sheet, (c) incurred since December 31, 1996 \nin the ordinary course of business consistent with past practice, (d) \nincurred in connection with this Agreement or (e) which would not reasonably \nbe expected to have a Material Adverse Effect.\n\n 2.11. COMPLIANCE WITH LAWS. The business of the Company and each \nof the Company Subsidiaries has been operated in compliance with all Laws \napplicable thereto, except for any non-compliance which would not reasonably \nbe expected to have a Material Adverse Effect.\n\n 2.12. PERMITS. (i) The Company and the Company Subsidiaries have \nall permits, certificates, licenses, approvals and other authorizations from \nGovernmental Authorities required in connection with the operation of their \nrespective businesses (collectively, \"COMPANY PERMITS\"), (ii) neither the \nCompany nor any of its subsidiaries is in violation of any Company Permit and \n(iii) no proceedings are pending or, to the knowledge of the Company, \nthreatened, to revoke or limit any Company Permit, except, in the case of \neach of clauses (i), (ii) and (iii) above, those the absence or violation of \nwhich would not reasonably be expected to have a Material Adverse Effect.\n\n 2.13. LITIGATION. Except as disclosed in the Company Securities \nFilings, there is no suit, action or proceeding (\"LITIGATION\") pending or, to \nthe knowledge of the Company, threatened against the Company or any of the \nCompany Subsidiaries which, individually or in the aggregate, would \nreasonably be expected to have a Material Adverse Effect, nor is there any \njudgment, decree, injunction, rule or order of any Governmental Authority \noutstanding against the Company or any of its subsidiaries which, \nindividually or in the aggregate, would reasonably be expected to have a \nMaterial Adverse Effect. Except as set forth in the Company Securities \nFilings, since December 31, 1996, and prior to or on the date hereof, there \nhave been no actions, suits or proceedings made or pending against the \nCompany or any of its subsidiaries alleging (x) any Environmental Claims (as \nhereinafter defined) or (y) any claim against the Company in connection with \nits rendering of any security services, except \n\n\n -18-\n\n\nfor (i) such claims (not resulting as of the date hereof in an action, suit or\nproceeding) not exceeding in any individual case $500,000 or (ii) such actions,\nsuits or proceedings which, in the case of either clause (x) or (y) above, would\nnot reasonably be expected to result in liability to the Company or any of its\nsubsidiaries, not covered by insurance, of $100,000 or more in any individual\ncase or (without regard to whether or not any thereof is covered by insurance)\n$500,000 in the aggregate. The Company has not established any reserves in the\nCompany Financial Statements with respect to claims referred to in clauses (x)\nand (y) of the preceding sentence. SECTION 2.14 of the Company Disclosure\nLetter lists all letters received by the Company from insurance carriers\nasserting a reservation of rights with respect to any action, suit or\nproceeding.\n\n 2.14. CONTRACTS. SECTION 2.14 of the Company Disclosure Letter \nincludes a list of all loan agreements and financing agreements and of all \nequipment lease financing agreements involving obligations of the Company or \nany subsidiary in excess of $250,000. Neither the Company nor any of the \nCompany Subsidiaries is a party or is subject to any note, bond, mortgage, \nindenture, contract, lease, license, agreement or instrument that is required \nto be described in or filed as an exhibit to any Company Securities Filing \n(collectively with those agreements listed in Section 2.14 of the Company \nDisclosure letter, the \"COMPANY MATERIAL CONTRACTS\") that is not so described \nin or filed as required by the Securities Act or the Securities Exchange Act, \nas the case may be. The Company is not a party to any agreements to acquire \nin the future the stock or substantially all the assets of another person. \nExcept as disclosed in the Company Securities Filings, all such Company \nMaterial Contracts are valid and binding and are in full force and effect and \nenforceable against the Company or such subsidiary in accordance with their \nrespective terms, subject to the Enforceability Exceptions. Neither the \nCompany nor any of its subsidiaries is in violation or breach of or default \nunder any such Company Material Contract where such violation or breach would \nreasonably be expected to have a Material Adverse Effect. To the knowledge \nof the Company, no party (other than the Company or its subsidiaries) is in \ndefault, violation or breach of any Company Material Contract where such \nviolation or breach would reasonably be expected to have a Material Adverse \nEffect.\n\n 2.15. EMPLOYEE BENEFIT PLANS. (a) Section 2.15(a) of the Company \nDisclosure Letter lists all employee pension benefit plans (as defined in \nSection 3(2) of the Employee Retirement Income Security Act of 1974, as \namended (\"ERISA\")), all employee welfare benefit plans (as defined in Section \n3(1) of ERISA) and all other bonus, stock option, stock purchase, incentive, \ndeferred compensation, supplemental retirement, severance and other similar \nfringe or employee benefit plans, programs or arrangements, and any \nemployment, executive compensation or severance agreements, written or \notherwise, as amended, modified or supplemented, for the benefit of, or \nrelating to, any former or current employee, officer or consultant (or any of \ntheir beneficiaries) of the Company or any other entity (whether or not \nincorporated) which is a member of a \n\n\n -19-\n\n\ncontrolled group including the Company or which is under common control with the\nCompany (an \"ERISA AFFILIATE\") within the meaning of Section 414(b), (c), (m) or\n(o) of the Internal Revenue Code of 1986, as amended, and the regulations\nthereunder (the \"CODE\") or Section 4001(a)(14) or (b) of ERISA, or any\nsubsidiary of the Company with respect to which the Company has or could have\nany current (actual or contingent) liability, as well as each plan with respect\nto which the Company or an ERISA Affiliate could incur liability under Title IV\nof ERISA or Section 412 of the Code (together for purposes of this SECTION 2.15,\nthe \"EMPLOYEE PLANS\"). Prior to the date of this Agreement, the Company has\nprovided or made available to Parent copies of (i) each such written Employee\nPlan (or a written description of any Employee Plan which is not written) and\nall related trust agreements, insurance and other contracts (including\npolicies), summary plan descriptions, summaries of material modifications and\nany material communications to plan participants, (ii) the three most recent\nannual reports on Form 5500 series, with accompanying schedules and attachments,\nfiled with respect to each Employee Plan required to make such a filing, (iii)\nthe most recent actuarial valuation for each Employee Plan subject to Title IV\nof ERISA, (iv) the latest reports which have been filed with the Department of\nLabor with respect to each Employee Plan required to make such filing and (v)\nthe most recent favorable determination letters issued for each Employee Plan\nand related trust which is subject to Parts 1, 2 and 4 of Subtitle B of Title I\nof ERISA (and, if an application for such determination is pending, a copy of\nthe application for such determination).\n\n (b) (i) None of the Employee Plans promises or provides retiree\nmedical or other retiree welfare benefits to any person, and none of the\nEmployee Plans is a \"multiemployer plan\" as such term is defined in Section\n3(37) of ERISA; (ii) to the knowledge of the Company, no party in interest or\ndisqualified person (as defined in Section 3(14) of ERISA and Section 4975 of\nthe Code) has at any time engaged in a transaction with respect to any Employee\nPlan which could subject the Company or any ERISA Affiliate, directly or\nindirectly, to a tax, penalty or other liability for prohibited transactions\nunder ERISA or Section 4975 of the Code, except for any such tax, penalty or\nliability that would not reasonably be expected to result in a Material Adverse\nEffect; (iii) to the knowledge of the Company, no fiduciary of any Employee Plan\nhas breached any of the responsibilities or obligations imposed upon fiduciaries\nunder Title I of ERISA, except where such breach would not reasonably be\nexpected to result in a Material Adverse Effect; (iv) all Employee Plans have\nbeen established and maintained substantially in accordance with their terms and\nhave operated in compliance with the requirements prescribed by any and all\nstatutes (including ERISA and the Code), orders, or governmental rules and\nregulations currently in effect with respect thereto (including all applicable\nrequirements for notification to participants or the Department of Labor, the\nInternal Revenue Service (the \"IRS\") or the Secretary of the Treasury) except\nwhere failure to do so would not reasonably be expected to result in a Material\nAdverse Effect, and may by their terms be amended and\/or terminated at \n\n -20-\n\n\nany time subject to applicable law and any applicable collective bargaining\nagreement; and the Company and each of its subsidiaries have performed all\nobligations required to be performed by them under, are not in default under or\nviolation of except where failure to do so would not reasonably be expected to\nresult in a Material Adverse Effect, and have no knowledge of any default or\nviolation by any other party to, any of the Employee Plans; (v) each Employee\nPlan which is subject to Parts 1, 2 and 4 of Subtitle B of ERISA is the subject\nof a favorable determination letter from the IRS, and to the knowledge of the\nCompany nothing has occurred which may reasonably be expected to impair such\ndetermination; (vi) all contributions required to be made with respect to any\nEmployee Plan pursuant to Section 412 of the Code, or the terms of the Employee\nPlan or any collective bargaining agreement, have been made on or before their\ndue dates; (vii) with respect to each Employee Plan, no \"reportable event\"\nwithin the meaning of Section 4043 of ERISA (excluding any such event for which\nthe 30-day notice requirement has been waived under the regulations to Section\n4043 of ERISA) or any event described in Section 4062, 4063 or 4041 of ERISA has\noccurred for which there is any outstanding liability to the Company or any\nERISA Affiliate, except where such liability would not reasonably be expected to\nresult in a Material Adverse Effect, nor would the consummation of the\ntransaction contemplated hereby (including the execution of this Agreement)\nconstitute a reportable event for which the 30-day requirement has not been\nwaived; and (viii) neither the Company nor any ERISA Affiliate has incurred or\nreasonably expects to incur any liability under Title IV of ERISA (other than\nliability for premium payments to the Pension Benefit Guaranty Corporation (the\n\"PBGC\") arising in the ordinary course), except where such liability would not\nreasonably be expected to result in a Material Adverse Effect.\n\n (c) Section 2.15(c) of the Company Disclosure Letter sets forth a\ntrue and complete list of each current or former employee, officer or director\nof the Company or any of its subsidiaries who holds (i) any option to purchase\nCompany Stock as of the date hereof, together with the number of shares of\nCompany Stock subject to such option, the option price of such option (to the\nextent determined as of the date hereof), whether such option is intended to\nqualify as an incentive stock option within the meaning of Section 422(b) of the\nCode (an \"ISO\"), and the expiration date of such option; (ii) any shares of\nCompany Stock that are restricted as a result of an agreement with or stock plan\nof the Company; and (iii) any other right, directly or indirectly, to receive\nCompany Stock, except as otherwise disclosed in Section 2.15 of the Company\nDisclosure Letter, together with the number of shares of Company Stock subject\nto such right, except as otherwise disclosed in Section 2.15 of the Company\nDisclosure Letter. Section 2.15(c) of the Company Disclosure Letter also sets\nforth the total number of any such ISOs and any such nonqualified options and\nother such rights.\n\n (d) Unless otherwise disclosed in Section 2.15(a) of the Company\nDisclosure Letter, Section 2.15(d) of the Company Disclosure Letter sets forth a\ntrue and complete list of (i) all \n\n -21-\n\n\nemployment agreements with officers of the Company or any of its subsidiaries;\n(ii) all agreements with consultants who are individuals obligating the Company\nor any of its subsidiaries to make annual cash payments in an amount exceeding\n$100,000; (iii) all agreements with respect to the services of independent\ncontractors or leased employees whether or not they participate in any of the\nEmployee Plans; (iv) all officers of the Company or any of its subsidiaries who\nhave executed a non-competition agreement with the Company or any of its\nsubsidiaries; (v) all severance agreements, programs and policies of the Company\nor any of its subsidiaries with or relating to its employees, in each case with\noutstanding commitments exceeding $100,000, excluding programs and policies\nrequired to be maintained by law; and (vi) all plans, programs, agreements and\nother arrangements of the Company which contain change in control provisions.\n\n (e) The PBGC has not instituted proceedings to terminate any Employee\nBenefit Plan that is subject to Title IV of ERISA (each, a \"DEFINED BENEFIT\nPLAN\"). The Defined Benefit Plans have no accumulated or waived funding\ndeficiencies within the meaning of Section 412 of the Code nor have any\nextensions of any amortization period within the meaning of Section 412 of the\nCode or 302 of ERISA been applied for with respect thereto. The most recent\nactuarial valuation with respect to any of the Company's Defined Benefit Plans\nmade available to Parent is true and correct in all material respects and there\nhas been no change since the date of such valuation that would reasonably be\nexpected to result in a Material Adverse Effect. All applicable premiums\nrequired to be paid to the PBGC with respect to the Defined Benefit Plans have\nbeen paid. No facts or circumstances exist with respect to any Defined Benefit\nPlan which would give rise to a Lien on the assets of the Company under Section\n4068 of ERISA or otherwise. All the assets of the Defined Benefit Plans are\nreadily marketable securities or insurance contracts.\n\n (f) (i) The Company does not currently maintain an employee stock\nownership plan (within the meaning of Section 4975(e)(7) of the Code) or any\nother Employee Plan that invests in Company Stock; and (ii) the consummation of\nthe transactions contemplated by this Agreement will not result in an increase\nin the amount of compensation or benefits or accelerate the vesting or timing of\npayment of any benefits or compensation payable in respect of any employee\nexcept as otherwise disclosed in SECTION 1.9 hereof or except where such\nincrease or acceleration would not reasonably be expected to result in a\nMaterial Adverse Effect. The Company will take all actions within its control\nto ensure that all actions required to be taken by a fiduciary of any Employee\nPlan in order to effectuate the transaction contemplated by this Agreement shall\ncomply with the terms of such Plan, ERISA and other applicable laws. The\nCompany will take all actions within its control to ensure that all actions\nrequired to be taken by a trustee of any Employee Plan that owns Company Stock\nshall have been duly authorized by the appropriate fiduciaries of such Plan and\nshall comply with the terms of such Plan, ERISA and other applicable laws.\n\n (g) The Company maintains no Employee Plan covering \n\n -22-\n\n\nnon-U.S. employees.\n\n (h) The Company has fiduciary liability insurance of at least\n$500,000 in effect covering the fiduciaries of the Employee Plans (including the\nCompany) with respect to whom the Company may have liability.\n\n 2.16. TAXES AND RETURNS. (a) The Company and each of the Company\nSubsidiaries has timely filed, or caused to be timely filed, all material Tax\nReturns (as hereinafter defined) required to be filed by it, and has paid,\ncollected or withheld, or caused to be paid, collected or withheld, all material\namounts of Taxes (as hereinafter defined) required to be paid, collected or\nwithheld, other than such Taxes for which adequate reserves in the Company\nFinancial Statements have been established or which are being contested in good\nfaith. There are no material claims or assessments pending against the Company\nor any of its subsidiaries for any alleged deficiency in any Tax, and the\nCompany has not been notified in writing of any proposed Tax claims or\nassessments against the Company or any of its subsidiaries (other than in each\ncase, claims or assessments for which adequate reserves in the Company Financial\nStatements have been established or which are being contested in good faith or\nare immaterial in amount). Neither the Company nor any of its subsidiaries has\nexecuted any waivers or extensions of any applicable statute of limitations to\nassess any material amount of Taxes. There are no outstanding requests by the\nCompany or any of its subsidiaries for any extension of time within which to\nfile any material Tax Return or within which to pay any material amounts of\nTaxes shown to be due on any Tax Return. To the best knowledge of the Company,\nthere are no liens for material amounts of Taxes on the assets of the Company or\nany of its subsidiaries except for statutory liens for current Taxes not yet due\nand payable. \n\n (b) For purposes of this Agreement, the term \"TAX\" shall mean any\nfederal, state, local, foreign or provincial income, gross receipts, property,\nsales, use, license, excise, franchise, employment, payroll, alternative or\nadd-on minimum, ad valorem, transfer or excise tax, or any other tax, custom,\nduty, governmental fee or other like assessment or charge of any kind\nwhatsoever, together with any interest or penalty imposed by any Governmental\nAuthority. The term \"TAX RETURN\" shall mean a report, return or other\ninformation (including any attached schedules or any amendments to such report,\nreturn or other information) required to be supplied to or filed with a\ngovernmental entity with respect to any Tax, including an information return,\nclaim for refund, amended return or declaration or estimated Tax.\n\n (c) (i) Neither the Company nor any of its subsidiaries has ever been\na member of an affiliated group within the meaning of Section 1504 of the Code\nor filed or been included in a combined, consolidated or unitary Tax Return,\nother than of the Company and its subsidiaries; (ii) other than with respect to\nthe Company and its subsidiaries, neither the Company nor any of its\nsubsidiaries is liable for Taxes of any other Person, or is \n\n -23-\n\n\ncurrently under any contractual obligation to indemnify any person with respect\nto Taxes (except for customary agreements to indemnify lenders or\nsecurityholders in respect of taxes other than income taxes), or is a party to\nany tax sharing agreement or any other agreement providing for payments by the\nCompany or any of its subsidiaries with respect to Taxes; (iii) neither the\nCompany nor any of its subsidiaries is a party to any joint venture, partnership\nor other arrangement or contract which could be treated as a partnership for\nfederal income tax purposes; (iv) neither the Company nor any of its\nsubsidiaries has entered into any sale leaseback or any leveraged lease\ntransaction that fails to satisfy the requirements of Revenue Procedure 75-21\n(or similar provisions of foreign law); (v) neither the Company nor any of its\nsubsidiaries has agreed or is required, as a result of a change in method of\naccounting or otherwise, to include any adjustment under Section 481 of the Code\n(or any corresponding provision of state, local or foreign law) in taxable\nincome; (vi) neither the Company nor any of its subsidiaries is a party to any\nagreement, contract, arrangement or plan that would result (taking into account\nthe transactions contemplated by this Agreement), separately or in the\naggregate, in the payment of any \"excess parachute payments\" within the meaning\nof Section 280G of the Code; (vii) the prices for any property or services (or\nfor the use of property) provided by the Company or any of its subsidiaries to\nany other subsidiary or to the Company have been arm's length prices, determined\nusing a method permitted by the Treasury Regulations under Section 482 of the\nCode; (viii) neither the Company nor any of its subsidiaries is liable with\nrespect to any indebtedness the interest of which is not deductible for\napplicable federal, foreign, state or local income tax purposes; (ix) neither\nthe Company nor any of its subsidiaries is a \"consenting corporation\" under\nSection 341(F) of the Code or any corresponding provision of state, local or\nforeign law; and (x) none of the assets owned by the Company or any of its\nsubsidiaries is property that is required to be treated as owned by any other\nperson pursuant to Section 168(g)(8) of the Internal Revenue Code of 1954, as\namended, as in effect immediately prior to the enactment of the Tax Reform Act\nof 1986, or is \"tax-exempt use property\" within the meaning of Section 168(h) of\nthe Code; PROVIDED that each of the statements made in clauses (i) through (x)\nabove shall be deemed true and correct for purposes of this Agreement unless in\nany such case any failure of such statement to be true or correct would\nreasonably be expected to result in a Material Adverse Effect. \n\n (d) The amount of net operating losses (as defined in Section 172 of\nthe Code) of the Company and its subsidiaries as of the end of the fiscal year\nended December 31, 1996, and any limitation on the use of such losses as a\nresult of an ownership change within the meaning of Section 382(g) of the Code\noccurring on or prior to December 31, 1996, is as set forth in the Company's\nfinancial statements for such year.\n\n 2.17. INTELLECTUAL PROPERTY. The Company or its subsidiaries \nown, or are licensed or otherwise possess legal enforceable rights to use, \nall patents, trademarks, trade names, service marks, copyrights and any \napplications therefor, \n\n\n -24-\n\n\n\ntechnology, know-how, trade secrets, computer software programs or applications,\ndomain names and tangible or intangible proprietary information or materials\nthat are used in the respective businesses of the Company and its subsidiaries\nas currently conducted, except for any such failures to own, be licensed or\npossess that would not reasonably be expected to have a Material Adverse Effect.\nTo the best knowledge of the Company, there are no valid grounds for any bona\nfide claims (i) to the effect that the business of the Company or any of its\nsubsidiaries infringes on any copyright, patent, trademark, service mark or\ntrade secret; (ii) against the use by the Company or any of its subsidiaries of\nany trademarks, trade names, trade secrets, copyrights, patents, technology,\nknow-how or computer software programs and applications used in the business of\nthe Company or any of its subsidiaries as currently conducted or as proposed to\nbe conducted; (iii) challenging the ownership, validity or effectiveness of any\nof the patents, registered and material unregistered trademarks and service\nmarks, registered copyrights, trade names and any applications therefor owned by\nthe Company or any of its subsidiaries (the \"COMPANY INTELLECTUAL PROPERTY\nRIGHTS\") or other trade secret material to the Company; or (iv) challenging the\nlicense or legally enforceable right to use of any third-party patents,\ntrademarks, service marks and copyrights by the Company or any of its\nsubsidiaries, except, in the case of each of clauses (i), (ii), (iii) and (iv)\nabove, for matters that, if determined adversely to the Company, would not\nreasonably be expected to have a Material Adverse Effect. To the best knowledge\nof the Company, all material patents, registered trademarks, service marks and\ncopyrights held by the Company are valid and subsisting. Except as set forth in\nthe Company Securities Filings, to the Company's knowledge, there is no material\nunauthorized use, infringement or misappropriation of any of the Company\nIntellectual Property by any third party, including any employee or former\nemployee of the Company or any of its subsidiaries.\n\n 2.18. DISCLOSURE DOCUMENTS. The Proxy Statement will comply in all\nmaterial respects with the applicable requirements of the Securities Exchange\nAct except that no representation or warranty is being made by the Company with\nrespect to the Parent Information included in the Proxy Statement. The Proxy\nStatement will not, at the time the Proxy Statement is filed with the SEC or\nfirst sent to stockholders, at the time of the Company's stockholders' meeting\nor at the Effective Time, contain any untrue statement of a material fact or\nomit to state any material fact required to be stated therein or necessary in\norder to make the statements therein, in light of the circumstances under which\nthey were made, not misleading except that no representation or warranty is\nbeing made by the Company with respect to the Parent Information included in the\nProxy Statement. The Schedule 14D-9 will comply in all material respects with\nthe Securities Exchange Act except that no representation or warranty is being\nmade by the Company with respect to the Parent Information included in the\nSchedule 14D-9. Neither the Schedule 14D-9 nor any of the information relating\nto the Company or its affiliates provided by or on behalf of the Company\nspecifically for inclusion in the Schedule 14D-1 or the \n\n -25-\n\n\nOffer Documents will, at the respective times the Schedule 14D-9, the Schedule\n14D-1 and the Offer Documents are filed with the SEC and are first published,\nsent or given to stockholders of the Company, contain any untrue statement of a\nmaterial fact or omit to state any material fact required to be stated therein\nor necessary in order to make the statements made therein, in light of the\ncircumstances under which they were made, not misleading.\n\n 2.19. LABOR MATTERS. Except as set forth in the Company Securities\nFilings, (i) there are no controversies pending or, to the knowledge of the\nCompany or any of its subsidiaries, threatened, between the Company or any of\nits subsidiaries and any of their respective employees, which controversies\nwould reasonably be expected to have a Material Adverse Effect; (ii) neither the\nCompany nor any of its subsidiaries is a party to any material collective\nbargaining agreement or other labor union contract applicable to persons\nemployed by the Company or its subsidiaries, nor, as of the date of this\nAgreement, does the Company or any of its subsidiaries know of any activities or\nproceedings of any labor union to organize any such employees; and (iii) neither\nthe Company nor any of its subsidiaries has any knowledge of any strikes,\nslowdowns, work stoppages, lockouts, or threats thereof, by or with respect to\nany employees of the Company or any of its subsidiaries which would reasonably\nbe expected to have a Material Adverse Effect.\n\n 2.20. LIMITATION ON BUSINESS CONDUCT. Except as set forth in the \nCompany Securities Filings, neither the Company nor any of its subsidiaries \nis a party to, or has any obligation under, any contract or agreement, \nwritten or oral, which contains any covenants currently or prospectively \nlimiting in any material respect the freedom of the Company or any of its \nsubsidiaries to engage in any line of business or to compete with any entity.\n\n 2.21. TITLE TO PROPERTY. Except as set forth in the Company \nSecurities Filings, each of the Company and each of its subsidiaries owns the \nproperties and assets that it purports to own free and clear of all liens, \ncharges, mortgages, security interests or encumbrances of any kind (\"LIENS\"), \nexcept for Liens which arise in the ordinary course of business and do not \nmaterially impair the Company's or its subsidiaries' ownership or use of such \nproperties or assets, Liens for taxes not yet due and Liens securing \nobligations under the Credit Agreement. With respect to the property and \nassets it leases, the Company , its subsidiaries, and to the best of the \nCompany's knowledge each of the other parties thereto, is in material \ncompliance with such leases, and the Company or its subsidiaries, as the case \nmay be, hold a valid leasehold interest free of any Liens, except those \nreferred to above. The rights, properties and assets presently owned, leased \nor licensed by the Company and its subsidiaries include all rights, \nproperties and assets necessary to permit the Company and its subsidiaries to \nconduct their business in all material respects in the same manner as their \nbusinesses have been conducted prior to the date hereof.\n\n\n -26-\n\n\n 2.22. LEASED PREMISES. Neither the Company nor any of its \nsubsidiaries owns any real property. Each of the buildings, structures and \npremises leased by the Company or any of its subsidiaries is in reasonably \ngood repair and operating condition, except as would not reasonably be \nexpected to have a Material Adverse Effect.\n\n 2.23. ENVIRONMENTAL MATTERS. (a) Except as set forth in the \nCompany Securities Filings, the Company and its subsidiaries are in material \ncompliance with the Environmental Laws (as hereinafter defined), which \ncompliance includes the possession by the Company and its subsidiaries of all \nmaterial permits and governmental authorizations required under applicable \nEnvironmental Laws, and compliance in all material respects with the terms \nand conditions thereof, except in each case where such non-compliance would \nnot reasonably be expected to have a Material Adverse Effect. Neither the \nCompany nor any of its subsidiaries has received any communication (written \nor oral), whether from a governmental authority, citizens group, employee or \notherwise, that alleges that the Company or any of its subsidiaries is not in \nsuch material compliance, and there are no circumstances that may prevent or \ninterfere with such compliance in the future, except where such \nnon-compliance would not reasonably be expected to have a Material Adverse \nEffect.\n\n (b) There are no Environmental Claims (as hereinafter defined),\nincluding claims based on \"arranger liability,\" pending or, to the best\nknowledge of the Company, threatened against the Company or any of its\nsubsidiaries or against any person or entity whose liability for any\nEnvironmental Claim the Company or any of its subsidiaries has retained or\nassumed either contractually or by operation of law, except for such\nEnvironmental Claims that would not reasonably be expected to have a Material\nAdverse Effect.\n\n\n (c) To the best knowledge of the Company, there are no past or\npresent actions, inactions, activities, circumstances, conditions, events or\nincidents, including the release, emission, discharge, presence or disposal of\nany Material of Environmental Concern (as hereinafter defined), that would form\nthe basis of any Environmental Claim against the Company or any of its\nsubsidiaries or against any person or entity whose liability for any\nEnvironmental Claim the Company or any of its subsidiaries have retained or\nassumed either contractually or by operation of law, except for such\nEnvironmental Claims that would not reasonably be expected to have a Material\nAdverse Effect.\n\n (d) The Company is in compliance in all material respects with\nEnvironment Laws as they relate to any on-site or off-site locations where the\nCompany or any of its subsidiaries has stored, disposed or arranged for the\ndisposal of Materials of Environmental Concern for itself (but not on behalf of\nothers) or (ii) any underground storage tanks located on property owned or\nleased by the Company or any of its subsidiaries. There is no asbestos\ncontained in or forming part of any building, building component, structure or\noffice space owned or leased by the Company or any of its subsidiaries. No\npolychlorinated biphenyls \n\n -27-\n\n\n(PCB's) or PCB-containing items are used or stored at any property owned or\nleased by the Company or any of its subsidiaries.\n\n (e) For purposes of this Agreement:\n\n (i) \"Environmental Claim\" means any claim, action, cause of action,\ninvestigation or notice (written or oral) by any person or entity alleging\npotential liability (including potential liability for investigatory costs,\ncleanup costs, governmental response costs, natural resources damages, property\ndamages, personal injuries, or penalties) arising out of, based on or resulting\nfrom (x) the presence, or release into the environment, of any Material of\nEnvironmental Concern at any location, whether or not owned or operated by the\nCompany or any of its subsidiaries, or (y) circumstances forming the basis of\nany violation, or alleged violation, of any Environmental Law.\n \n (ii) \"Environmental Laws\" means all Federal, state, local and foreign\nlaws or regulations relating to pollution or protection of human health and the\nenvironment (including ambient air, surface water, ground water, land surface or\nsub-surface strata), including laws and regulations relating to emissions,\ndischarges, releases or threatened releases of Materials of Environmental\nConcern, or otherwise relating to the manufacture, processing, distribution,\nuse, treatment, storage, disposal, transport or handling of Materials of\nEnvironmental Concern.\n \n (iii) \"Materials of Environmental Concern\" means chemicals,\npollutants, contaminants, hazardous materials, hazardous substances and\nhazardous wastes, toxic substances, petroleum and petroleum products.\n \n 2.24. INSURANCE. The Company maintains insurance that provides \nadequate coverage for normal risks incident to the business of the Company \nand its subsidiaries and their respective properties and assets and in \ncharacter and amount comparable to that carried by persons engaged in similar \nbusinesses. The insurance polices maintained by the Company are with \nreputable insurance carriers and have no premium delinquencies.\n\n 2.25. CUSTOMERS. No customer of the Company accounted for more \nthan 4% of the revenues of the Company and its subsidiaries for the fiscal \nyear ended December 31, 1996.\n\n 2.26. INTERESTED PARTY TRANSACTIONS. Except as set forth in the \nCompany Securities Filings, since the date of the Company's proxy statement \ndated April 30, 1997, no event has occurred that would be required to be \nreported as a Certain Relationship or Related Transaction, pursuant to Item \n404 of Regulation S-K promulgated by the SEC, except for contracts entered \ninto in the ordinary course of business of the Company, on an arms-length \nbasis, with terms no less favorable to the Company than would reasonably be \nexpected in a similar transaction with an unaffiliated third party.\n\n\n -28-\n\n\n 2.27. ALARM CONTRACTS. The Chief Executive Officer and the Chief \nFinancial Officer of the Company believe, following reasonable inquiry, that \nno more than 20% of accounts for alarm system monitoring and\/or service owned \nby the Company or any Company Subsidiary are not evidenced by a written \ncontract.\n\n 2.28. FINDERS AND INVESTMENT BANKERS. Neither the Company nor \nany of its officers or directors has employed any broker, finder or financial \nadvisor or otherwise incurred any liability for any brokerage fees, \ncommissions, or financial advisors' or finders' fees in connection with the \ntransactions contemplated hereby, other than pursuant to an agreement with \nJ.P. Morgan Securities Inc., the terms of which have been disclosed to Parent.\n\n 2.29. FAIRNESS OPINION. The Company's Board of Directors has \nreceived from its financial advisor, J.P. Morgan Securities Inc., a written \nopinion addressed to it for inclusion in the Schedule 14D-9 and the Proxy \nStatement to the effect that the consideration to be received by the \nstockholders of the Company pursuant to each of the Offer and the Merger is \nfair to the Company's stockholders from a financial point of view.\n\n 2.30. TAKEOVER STATUTES. Assuming Parent and its \"associates\" and\n\"affiliates\" (as defined in Section 203 of the Delaware Code) collectively\nbeneficially own and have beneficially owned at all times during the three-year\nperiod prior to the date hereof less than fifteen percent (15%) of the Company\nStock outstanding, Section 203 of the Delaware Code is, and shall be,\ninapplicable to the acquisition of Shares pursuant to the Offer and the Merger.\n\n 2.31. FULL DISCLOSURE. No statement contained in any certificate or\nschedule furnished or to be furnished by the Company or its subsidiaries to\nParent or Purchaser in, or pursuant to the provisions of, this Agreement\ncontains or shall contain any untrue statement of a material fact or omits or\nwill omit to state any material fact necessary, in the light of the\ncircumstances under which it was made, in order to make the statements herein or\ntherein not misleading. \n\n\n ARTICLE III\n\n REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER\n\n Parent and Purchaser jointly and severally represent and warrant to\nthe Company that:\n\n 3.1. ORGANIZATION AND GOOD STANDING. Each of Parent and \nPurchaser is a corporation duly organized, validly existing and in good \nstanding under the laws of the jurisdiction of its incorporation and has all \nrequisite corporate power and authority to own, lease and operate its \nproperties and to carry on its business as now being conducted.\n\n\n -29-\n\n\n 3.2. AUTHORIZATION; BINDING AGREEMENT. Parent and Purchaser have \nall requisite corporate power and authority to execute and deliver this \nAgreement and to consummate the transactions contemplated hereby. The \nexecution and delivery of this Agreement and the consummation of the \ntransactions contemplated hereby, including, but not limited to, the Merger, \nhave been duly and validly authorized by the respective Boards of Directors \nof Parent and Purchaser, as appropriate, and no other corporate proceedings \non the part of Parent, Purchaser or any other subsidiary of Parent are \nnecessary to authorize the execution and delivery of this Agreement or to \nconsummate the transactions contemplated hereby (other than the requisite \napproval by the sole stockholder of Purchaser of this Agreement and the \nMerger). This Agreement has been duly and validly executed and delivered by \neach of Parent and Purchaser and constitutes the legal, valid and binding \nagreement of Parent and Purchaser, enforceable against each of Parent and \nPurchaser in accordance with its terms, subject to the Enforceability \nExceptions.\n\n 3.3. GOVERNMENTAL APPROVALS. No Consent from or with any \nGovernmental Authority on the part of Parent or Purchaser is required in \nconnection with the execution or delivery by Parent and Purchaser of this \nAgreement or the consummation by Parent and Purchaser of the transactions \ncontemplated hereby other than (i) filings with the SEC and (ii) filings \nunder the HSR Act.\n\n 3.4. NO VIOLATIONS. The execution and delivery of this \nAgreement, the consummation of the transactions contemplated hereby and \ncompliance by Parent or Purchaser with any of the provisions hereof will not \n(i) conflict with or result in any breach of any provision of the Certificate \nof Incorporation or Bylaws or other governing instruments of Parent or any \nsubsidiary of Parent, (ii) require any Consent under or result in a violation \nor breach of, or constitute (with or without notice or lapse of time or both) \na default (or give rise to any right of termination, cancellation or \nacceleration) under any of the terms, conditions or provisions of, any \nmaterial note, bond, mortgage, indenture, contract, lease, license, agreement \nor instrument to which Parent is a party or by which Parent or any of its \nassets or property is subject, (iii) result in the creation or imposition of \nany material lien or encumbrance of any kind upon any of the assets of Parent \nor any subsidiary of Parent or (iv) subject to obtaining the Consents from \nGovernmental Authorities referred to in SECTION 3.3 hereof, violate any Law \nto which Parent or any subsidiary of Parent or its assets or properties are \nsubject, except in any such case for any such conflicts, violations, \nbreaches, defaults or other occurrences that would not prevent or delay \nconsummation of the Offer or the Merger, or otherwise materially and \nadversely affect the ability of Parent or Purchaser to perform their \nrespective obligations under this Agreement.\n\n 3.5. DISCLOSURE DOCUMENTS. None of the information supplied by \nParent, its officers, directors, representatives, agents or employees (the \n\"PARENT INFORMATION\") \n\n\n -30-\n\n\nfor inclusion in the Proxy Statement will, at the time the Proxy Statement is\nfiled with the SEC or first mailed to the Company's stockholders, at the time of\nthe Company's stockholders' meeting or at the Effective Time, contain any untrue\nstatement of a material fact, or will omit to state any material fact necessary\nin order to make the statements therein, in light of the circumstances in which\nthey were made not misleading or necessary to correct any statement in any\nearlier communication with respect to the solicitation of proxies for such\nstockholders' meeting which has become false or misleading. Neither the\nSchedule 14D-1 or the Offer Documents or any amendments thereof or supplements\nthereto nor any of the Parent Information provided specifically for inclusion in\nthe Schedule 14D-9 will, at the respective times the Schedule 14D-1, the Offer\nDocuments or the Schedule 14D-9 are filed with the SEC or first published, sent\nor given to the Company's stockholders, contain any untrue statement of a\nmaterial fact or omit to state any material fact necessary in order to make the\nstatements therein, in light of the circumstances under which they were made,\nnot misleading. Notwithstanding the foregoing, neither Parent nor Purchaser\nmakes any representation or warranty with respect to any information that has\nbeen supplied by the Company or its accountants, counsel or other authorized\nrepresentatives for use in any of the foregoing documents. The Schedule 14D-1\nand the Offer Documents will comply as to form in all material respects with the\nprovisions of the Securities Exchange Act.\n\n 3.6. FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of its\nofficers or directors has employed any broker, finder or financial advisor or\notherwise incurred any liability for any brokerage fees, commissions or\nfinancial advisors' or finders' fees in connection with the transactions\ncontemplated hereby.\n\n 3.7. FINANCING ARRANGEMENTS. Parent (including for this purpose \none or more of its wholly-owned subsidiaries) has funds available to it \nsufficient to enable the Purchaser to purchase the Shares in accordance with \nthe terms of this Agreement and to pay all amounts due (or which will, as a \nresult of the transactions contemplated hereby, become due) in respect of any \nindebtedness of the Company for money borrowed.\n\n 3.8. NO PRIOR ACTIVITIES. Except for obligations or liabilities\nincurred in connection with its incorporation or organization or the negotiation\nand consummation of this Agreement and the transactions contemplated hereby\n(including any financing in connection therewith), Purchaser has not incurred\nany obligations or liabilities and has not engaged in any business or activities\nof any type or kind whatsoever or entered into any agreements or arrangements\nwith any person or entity.\n\n ARTICLE IV\n\n ADDITIONAL COVENANTS OF THE COMPANY\n\n The Company covenants and agrees as follows:\n\n -31-\n\n\n 4.1. CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY \nSUBSIDIARIES. (a) Unless Parent shall otherwise agree in writing and except \nas expressly contemplated by this Agreement or in the Company Disclosure \nLetter, during the period from the date of this Agreement to the Effective \nTime, (i) the Company shall conduct, and it shall cause the Company \nSubsidiaries to conduct, its or their businesses in the ordinary course and \nconsistent with past practice, and the Company shall, and it shall cause the \nCompany Subsidiaries to, use its or their reasonable best efforts to preserve \nsubstantially intact its business organization, to keep available the \nservices of its present officers and employees and to preserve the present \ncommercial relationships of the Company and the Company Subsidiaries with \npersons with whom the Company or the Company Subsidiaries do significant \nbusiness and (ii) without limiting the generality of the foregoing, neither \nthe Company nor any of the Company Subsidiaries will:\n\n (A) amend or propose to amend its Certificate of\n Incorporation or Bylaws in any material respect;\n\n (B) authorize for issuance, issue, grant, sell, pledge,\n dispose of or propose to issue, grant, sell, pledge or dispose of any\n shares of, or any options, warrants, commitments, subscriptions or rights\n of any kind to acquire or sell any shares of, the capital stock or other\n securities of the Company or any of the Company Subsidiaries, including,\n but not limited to, any securities convertible into or exchangeable for\n shares of stock of any class of the Company or any of the Company\n Subsidiaries, except for (a) the issuance of shares pursuant to the\n exercise of Company Options outstanding on the date of this Agreement in\n accordance with their present terms, (b) the issuance of shares upon the\n exercise of Company Warrants, or conversion of the Company Debentures,\n outstanding on the date of this Agreement in accordance with their present\n terms and (c) the issuance of not more than an aggregate of 15,000 shares\n of Company Stock to the sellers under the agreements pursuant to which the\n Company acquired Certified Systems, Inc., Certified Systems Central\n Station, Inc. and Security Solutions, Inc. to the extent required pursuant\n to the terms of such agreements;\n\n (C) split, combine or reclassify any shares of its capital\n stock or declare, pay or set aside any dividend or other distribution\n (whether in cash, stock or property or any combination thereof) in respect\n of its capital stock, other than dividends or distributions to the Company\n or a subsidiary of the Company, or directly or indirectly redeem, purchase\n or otherwise acquire or offer to acquire any shares of its capital stock or\n other securities;\n\n (D) create, incur or assume any indebtedness for borrowed\n money or issue any debt securities, except pursuant to the Credit\n Agreement, or make any loans (except as provided in paragraph (E) (b)\n below);\n\n (E) other than in the ordinary course of business \n\n -32-\n\n\n consistent with past practice, (a) assume, guarantee, endorse or otherwise\n become liable or responsible (whether directly, indirectly, contingently or\n otherwise) for the obligations of any person (other than the Company or a\n Company Subsidiary); (b) make any capital expenditures (it being understood\n that the acquisition of the stock or substantially all the assets of any\n other person shall not be deemed a \"capital expenditures\" for these\n purposes) or make any advances or capital contributions to, or investments\n in, any other person (other than to a Company Subsidiary); (c) voluntarily\n incur any material liability or obligation (absolute, accrued, contingent\n or otherwise); or (d) sell, transfer, mortgage, pledge or otherwise dispose\n of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise\n dispose of or encumber, any assets or properties, real, personal or mixed,\n material to the Company and the Company Subsidiaries taken as a whole other\n than to secure debt permitted under paragraph (D);\n\n (F) increase in any manner the compensation of any of its\n officers or employees (other than, except with respect to employees who are\n executive officers or directors, in the ordinary course of business\n consistent with past practice) or enter into, establish, amend or terminate\n any employment, consulting, retention, change in control, collective\n bargaining, bonus or other incentive compensation, profit sharing, health\n or other welfare, stock option or other equity, pension, retirement,\n vacation, severance, deferred compensation or other compensation or benefit\n plan, policy, agreement, trust, fund or arrangement with, for or in respect\n of, any stockholder, officer, director, employee, consultant or affiliate\n other than, in any such case referred to above, as may be required by Law\n or as required pursuant to the terms of agreements in effect on the date of\n this Agreement and other than arrangements with new employees (other than\n employees who will be officers of the Company) hired in the ordinary course\n of business consistent with past practice and providing for compensation\n (other than equity-based compensation) and other benefits consistent with\n those provided for similarly situated employees of the Company as of the\n date hereof;\n\n (G) alter through merger, liquidation, reorganization,\n restructuring or in any other fashion the corporate structure or ownership\n of any subsidiary or the Company;\n\n (H) except as may be required as a result of a change in\n law or as required by the SEC, change any of the accounting principles or\n practices used by it;\n\n (I) make any material tax election or settle or compromise\n any material income tax liability;\n \n (J) pay, discharge or satisfy any material claims,\n liabilities or obligations (absolute, accrued, asserted or unasserted,\n contingent or otherwise), other than \n\n\n -33-\n\n\n the payment, discharge or satisfaction in the ordinary course of business\n and consistent with past practice of liabilities reflected or reserved\n against in, or contemplated by, the financial statements (or the notes\n thereto) of the Company or incurred in the ordinary course of business\n consistent with past practice;\n \n (K) except to the extent necessary for the exercise of its\n fiduciary duties by the Board of Directors of the Company as set forth in,\n and consistent with the provisions of, SECTION 4.8 hereof, waive, amend or\n allow to lapse any term or condition of any confidentiality or \"standstill\"\n agreement to which the Company or any subsidiary is a party; or \n \n (L) take, or agree in writing or otherwise to take, any of\n the foregoing actions or any action which would make any of the\n representations or warranties of the Company contained in this Agreement\n untrue or incorrect in any material respect at or prior to the Effective\n Time. \n\n (b) The Company shall, and the Company shall cause each of the\nCompany Subsidiaries to, comply with all Laws applicable to it or any of its\nproperties, assets or business and maintain in full force and effect all the\nCompany Permits necessary for such business, except in any such case for any\nfailure so to comply or maintain that would not reasonably be expected to result\nin a Material Adverse Effect.\n\n 4.2. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt\nnotice to Parent if any of the following occur after the date of this Agreement:\n(i) receipt of any notice or other communication in writing from any third party\nalleging that the Consent of such third party is or may be required in\nconnection with the transactions contemplated by this Agreement, provided that\nsuch Consent would have otherwise been required to have been disclosed in this\nAgreement; (ii) receipt of any material notice or other communication from any\nGovernmental Authority (including, but not limited to, the NASD or any\nsecurities exchange) in connection with the transactions contemplated by this\nAgreement; (iii) the occurrence of an event which would be reasonably likely to\n(A) have a Material Adverse Effect or (B) cause any condition set forth in ANNEX\nI hereto to be unsatisfied in any material respect at any time prior to the\nconsummation of the Offer or (iv) the commencement or threat of any Litigation\ninvolving or affecting the Company or any of the Company Subsidiaries, or any of\ntheir respective properties or assets, or, to its knowledge, any employee,\nagent, director or officer, in his or her capacity as such, of the Company or\nany of the Company Subsidiaries which, if pending on the date hereof, would have\nbeen required to have been disclosed in this Agreement or which relates to the\nconsummation of the Merger.\n\n 4.3. ACCESS AND INFORMATION. Between the date of this Agreement \nand the Effective Time, and without intending by this SECTION 4.3 to limit \nany of the other obligations of the parties under this Agreement, the Company \nwill \n\n\n -34-\n\n\ngive, and shall direct its accountants and legal counsel to give, Parent and its\nauthorized representatives (including, without limitation, its financial\nadvisors, accountants and legal counsel), at reasonable times and without undue\ndisruption to or interference with the normal conduct of the business and\naffairs of the Company, access as reasonably required in connection with the\ntransactions provided for in this Agreement to all offices and other facilities\nand to all contracts, agreements, commitments, books and records of or\npertaining to the Company and its subsidiaries and will furnish Parent with\n(a) such financial and operating data and other information with respect to the\nbusiness and properties of the Company and its subsidiaries as Parent may from\ntime to time reasonably request in connection with such transactions and (b) a\ncopy of each material report, schedule and other document filed or received by\nthe Company or any of its subsidiaries pursuant to the requirements of\napplicable securities laws or the NASD.\n\n 4.4. STOCKHOLDER APPROVAL. As soon as practicable following the\nconsummation of the Offer, the Company will take all steps necessary to duly\ncall, give notice of, convene and hold a meeting of its stockholders for the\npurpose of voting upon the Company Proposals and for such other purposes as may\nbe necessary or desirable in connection with effectuating the transactions\ncontemplated hereby, if such meeting is required. Except as otherwise\ncontemplated by this Agreement, the Board of Directors of the Company will\nrecommend to the stockholders of the Company that they approve the Company\nProposals.\n\n 4.5. REASONABLE BEST EFFORTS. Subject to the terms and conditions\nherein provided, the Company agrees to use reasonable best efforts to take, or\ncause to be taken, all actions and to do, or cause to be done, all things\nnecessary, proper or advisable to consummate and make effective as promptly as\npracticable the transactions contemplated by this Agreement, including, but not\nlimited to, (i) obtaining all Consents from Governmental Authorities and other\nthird parties required for the consummation of the Offer and the Merger and the\ntransactions contemplated thereby and (ii) timely making all necessary filings\nunder the HSR Act. Upon the terms and subject to the conditions hereof, the\nCompany agrees to use reasonable best efforts to take, or cause to be taken, all\nactions and to do, or cause to be done, all things necessary to satisfy the\nother conditions of the Closing set forth herein.\n\n 4.6. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in \neffect, the Company shall not, and shall use reasonable best efforts to cause \nits affiliates not to, issue or cause the publication of any press release or \nany other announcement with respect to the Offer or the Merger or the \ntransactions contemplated hereby without the consent of Parent (such consent \nnot to be unreasonably withheld or delayed), except where such release or \nannouncement is required by applicable Law or pursuant to any applicable \nlisting agreement with, or rules or regulations of, the NASD, in which case \nthe Company, prior to making such announcement, will consult with Parent \nregarding the same.\n\n\n -35-\n\n\n 4.7. COMPLIANCE. In consummating the transactions contemplated \nhereby, the Company shall comply in all material respects with the provisions \nof the Securities Exchange Act and the Securities Act and shall comply, and \ncause the Company Subsidiaries to comply or to be in compliance, in all \nmaterial respects, with all other applicable Laws.\n\n 4.8. NO SOLICITATION. (a) The Company shall, and shall cause its\nofficers, directors, employees, representatives and agents to, immediately cease\nany discussions or negotiations with any parties that may be ongoing with\nrespect to a Company Takeover Proposal (as hereinafter defined). The Company\nshall not, nor shall it permit any of its subsidiaries to, nor shall it\nauthorize or permit any of its officers, directors or employees or any\ninvestment banker, financial advisor, attorney, accountant or other\nrepresentative retained by it or any of its subsidiaries to, directly or\nindirectly, (i) solicit, initiate or encourage (including by way of furnishing\ninformation), or take any other action designed or reasonably likely to\nfacilitate, any inquiries or the making of any proposal which constitutes, or\nmay reasonably be expected to lead to, any Company Takeover Proposal or\n(ii) participate in any discussions or negotiations regarding any Company\nTakeover Proposal; PROVIDED, HOWEVER, that if, at any time prior to the\nEffective Time, the Board of Directors of the Company determines in good faith,\nwith the advice of outside counsel, that the failure to do so could reasonably\nbe determined to be a breach of its fiduciary duties to the Company's\nstockholders under applicable law, the Company many (and may authorize or permit\nany of the other persons referred to above in this SECTION 4.8 to), in response\nto a Company Takeover Proposal, and subject to compliance with SECTION 4.8(C),\n(x) furnish information with respect to the Company or its subsidiaries to any\nperson pursuant to a confidentiality agreement similar in form to that between\nan affiliate of Parent and the Company and (y) participate in discussions or\nnegotiations regarding such Company Takeover Proposal. \"COMPANY TAKEOVER\nPROPOSAL\" means any inquiry, proposal or offer, in each case not solicited in\nviolation of this Agreement, from any person or persons relating to any direct\nor indirect acquisition or purchase of a substantial amount of the assets of the\nCompany and its subsidiaries or 10% or more of any class of equity securities of\nthe Company or any Company Subsidiary, any tender offer or exchange offer that\nif consummated would result in any person or group of related persons\nbeneficially owning 10% or more of any class of equity securities of the Company\nor any Company Subsidiary or any merger, consolidation, share exchange, business\ncombination, recapitalization, liquidation, dissolution or similar transaction\ninvolving the Company or any Company Subsidiary, other than the transactions\ncontemplated by this Agreement.\n\n Except as set forth in this SECTION 4.8, neither the Board of\nDirectors of the Company nor any committee thereof shall (i) withdraw or modify,\nor indicate publicly its intention to withdraw or modify, in a manner adverse to\nParent, the approval or recommendation by such Board of Directors or such\ncommittee of the Offer or the Company \n\n -36-\n\n\nProposals, (ii) approve or recommend, or indicate publicly its intention to\napprove or recommend, any Company Takeover Proposal or (iii) cause the Company\nto enter into any letter of intent, agreement in principle, acquisition\nagreement or other similar agreement (each, a \"COMPANY ACQUISITION AGREEMENT\")\nrelated to any Company Takeover Proposal. Notwithstanding the foregoing, in the\nevent that prior to the Effective Time the Board of Directors of the Company\ndetermines in good faith, with the advice of outside counsel, that the failure\nto do so could reasonably be determined to be a breach of its fiduciary duties\nto the Company's stockholders under applicable law, the Board of Directors of\nthe Company may (subject to this and the following sentences) (x) withdraw or\nmodify its approval or recommendation of the Offer or the Company Proposals or\n(y) approve or recommend a Company Superior Proposal (as hereinafter defined) or\nterminate this Agreement (and concurrently with or after such termination, if it\nso chooses, cause the Company to enter into any Company Acquisition Agreement\nwith respect to any Company Superior Proposal), but in each of the cases set\nforth in this clause (y), only at a time that is after the third business day\nfollowing Parent's receipt of written notice advising Parent that the Board of\nDirectors of the Company has received a Company Superior Proposal and, in the\ncase of any previously received Company Superior Proposal that has been\nmaterially modified or amended, such modification or amendment and specifying\nthe material terms and conditions of such Company Superior Proposal,\nmodification or amendment (PROVIDED that such material terms shall not be deemed\nto include the identity of the person or persons making such Company Superior\nProposal). For purposes of this Agreement, a \"COMPANY SUPERIOR PROPOSAL\" means\nany bona fide proposal, not solicited in violation of this Agreement, made by a\nthird party or third parties to acquire, directly or indirectly, for\nconsideration consisting of cash and\/or securities, more than 50% of the\ncombined voting power of the Shares then outstanding or all or substantially all\nthe assets of the Company and otherwise on terms which the Board of Directors of\nthe Company determines in its good faith judgment (based on the advice of its\nadvisors) to be more favorable to the Company's stockholders than the Offer and\nthe Merger (taking into account all factors relating to such proposed\ntransaction deemed relevant by the Board of Directors of the Company, including,\nwithout limitation, the financing thereof, the proposed timing thereof and all\nother conditions thereto).\n\n In addition to the obligations of the Company set forth in\nparagraphs (a) and (b) of this SECTION 4.8, the Company shall promptly advise\nParent orally and in writing of any request for information, or for access to\ninformation, or of any Company Takeover Proposal and the material terms and\nconditions of such request or Company Takeover Proposal or any amendment or\nmodification thereto (PROVIDED that such material terms shall not be deemed to\ninclude the identity of the person or persons making such request or Company\nTakeover Proposal).\n\n Nothing contained in this SECTION 4.8 shall prohibit the Company\nfrom taking and \n\n -37-\n\n\ndisclosing to its stockholders a position contemplated by Rule 14e-2(a)\npromulgated under the Securities Exchange Act or from making any disclosure to\nthe Company's stockholders if, in the good faith judgment of the Board of\nDirectors of the Company, with the advice of outside counsel, failure so to\ndisclose could be determined to be a breach of its fiduciary duties to the\nCompany's stockholders under applicable law; PROVIDED, HOWEVER, that neither the\nCompany nor its Board of Directors nor any committee thereof shall, except as\npermitted by SECTION 4.8(B), withdraw or modify, or indicate publicly its\nintention to withdraw or modify, its position with respect to the Offer or the\nCompany Proposals or approve or recommend, or indicate publicly its intention to\napprove or recommend, a Company Takeover Proposal.\n\n The Company shall advise its officers and directors and any\ninvestment banker or attorney retained by the Company in connection with the\ntransactions contemplated by this Agreement of the restrictions set forth in\nthis SECTION 4.8.\n\n 4.9. SEC AND STOCKHOLDER FILINGS. The Company shall send to \nParent a copy of all material public reports and materials as and when it \nsends the same to its stockholders, the SEC or any state or foreign \nsecurities commission.\n\n 4.10. TAKEOVER STATUTES. If any \"fair price,\" \"moratorium,\" \n\"control share acquisition\" or other similar anti-takeover statute or \nregulation enacted under state or federal laws in the United States (each a \n\"TAKEOVER STATUTE\"), including, without limitation, Section 203 of the \nDelaware Code, is or may become applicable to the Offer or the Merger, the \nCompany will use reasonable best efforts to grant such approvals and take \nsuch actions as are necessary so that the transactions contemplated by this \nAgreement and the Company Proposals may be consummated as promptly as \npracticable on the terms contemplated hereby and otherwise act so as to \neliminate or minimize the effects of any Takeover Statute on any of the \ntransactions contemplated hereby.\n\n\n -38-\n\n\n ARTICLE V\n\n ADDITIONAL COVENANTS OF PURCHASER AND PARENT\n\n Parent and Purchaser covenant and agree as follows:\n\n 5.1. REASONABLE BEST EFFORTS. Subject to the terms and conditions\nherein provided, Purchaser agrees to use reasonable best efforts to take, or\ncause to be taken, all actions and to do, or cause to be done, all things\nnecessary, proper or advisable to consummate and make effective as promptly as\npracticable the transactions contemplated by this Agreement, including, but not\nlimited to, (i) obtaining all Consents from Governmental Authorities and other\nthird parties required for the consummation of the Offer and the Merger and the\ntransactions contemplated thereby and (ii) timely making all necessary filings\nunder the HSR Act. Upon the terms and subject to the conditions hereof, Parent\nagrees to use reasonable best efforts to take, or cause to be taken, all actions\nand to do, or cause to be done, all things necessary to satisfy the other\nconditions of the closing set forth herein.\n\n 5.2. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,\nParent and Purchaser shall not, and shall use reasonable best efforts to cause\nits affiliates not to, issue or cause the publication of any press release or\nany other announcement with respect to the Offer or the Merger or the\ntransactions contemplated hereby without the consent of the Company (such\nconsent not to be unreasonably withheld or delayed), except where such release\nor announcement is required by applicable Law or pursuant to any applicable\nlisting agreement with, or rules or regulations of, any stock exchange on which\nshares of Parent's capital stock are listed or the NASD, or other applicable\nsecurities exchange, in which case Parent, prior to making such announcement,\nwill consult with the Company regarding the same.\n\n 5.3. COMPLIANCE. In consummating the transactions contemplated \nhereby, Parent and Purchaser shall comply in all material respects with the \nprovisions of the Securities Exchange Act and the Securities Act and shall \ncomply, and cause its subsidiaries to comply or to be in compliance, in all \nmaterial respects, with all other applicable Laws.\n\n EMPLOYEE BENEFIT PLANS.\n\n 5.4. BENEFIT PLANS. As of the Effective Time, Parent shall cause \nthe Surviving Corporation to honor and satisfy all obligations and \nliabilities with respect to the Employee Plans. Notwithstanding the \nforegoing, the Surviving Corporation shall not be required to continue any \nparticular Employee Plan after the Effective Time, and any Employee Plan may \nbe amended or terminated in accordance with its terms and applicable Law. To \nthe extent that any Employee Plan is terminated or amended after the \nEffective Time so as to reduce the benefits that are then being provided with \nrespect to participants thereunder, Parent shall arrange for each individual \n\n\n -39-\n\n\nwho is then a participant in such terminated or amended plan to participate in a\ncomparable Parent Benefit Plan (\"PARENT BENEFIT PLAN\") in accordance with the\neligibility criteria thereof, provided that (i) such participants shall receive\nfull credit for years of service with the Company or any of its subsidiaries\nprior to the Effective Time for all purposes for which such service was\nrecognized under the applicable Employee Plan, including, but not limited to,\nrecognition of service for eligibility, vesting (including acceleration thereof\npursuant to the terms of the applicable Employee Plan) and, to the extent not\nduplicative of benefits received under such Employee Plan, the amount of\nbenefits, (ii) such participants shall participate in the Parent Benefit Plans\non terms no less favorable than those offered by Parent to similarly situated\nemployees of Parent and (iii) Parent shall cause any and all pre-existing\ncondition limitations (to the extent such limitations did not apply to a\npre-existing condition under the Employee Plans) and eligibility waiting periods\nunder any group health plans to be waived with respect to such participants and\ntheir eligible dependents.\n\n CHANGE IN CONTROL PROVISIONS. Parent and the Company hereby\nacknowledge that the consummation of the Offer and the transactions contemplated\nunder this Agreement will be treated as a \"Change in Control\" for purposes of\neach of the applicable Employee Plans, and each applicable employment, severance\nor similar agreement applicable to any employee of the Company or any of its\nsubsidiaries, listed in SECTION 5.4(B) of the Company Disclosure Letter (such\nPlans and agreements collectively, \"CHANGE IN CONTROL AGREEMENTS\") and agree to\nabide by the provisions of any Change in Control Agreements which relate to a\nChange in Control, including, but not limited to, the accelerated vesting\nand\/or payment of equity-based awards.\n\n (c) The provisions of this Section 5.4 are not intended to and do not\ncreate rights of third party beneficiaries.\n\n 5.5. INDEMNIFICATION. (a) From and after the Effective Time, the\nSurviving Corporation shall indemnify and hold harmless all past and present\nofficers and directors (the \"INDEMNIFIED PARTIES\") of the Company and of its\nsubsidiaries to the full extent such persons may be indemnified by the Company\npursuant to Delaware law, the Company's Certificate of Incorporation and Bylaws,\nas each is in effect on the date of this Agreement, for acts and omissions (x)\narising out of or pertaining to the transactions contemplated by this Agreement\nor arising out of the Offer Documents or (y) otherwise with respect to any acts\nor omissions occurring or arising at or prior to the Effective Time and shall\nadvance reasonable litigation expenses incurred by such persons in connection\nwith defending any action arising out of such acts or omissions, PROVIDED that\nsuch persons provide the requisite affirmations and undertaking, as set forth in\nSection 145(e) of the Delaware Code.\n\n In addition, Parent will provide, or cause the Surviving\nCorporation to provide, for a period of not less than six years after the\nEffective Time, the Company's \n\n -40-\n\n\ncurrent directors and officers an insurance and indemnification policy that\nprovides coverage for events occurring or arising at or prior to the Effecting\nTime (the \"D&O INSURANCE\") that is no less favorable than the existing policy\nor, if substantially equivalent insurance coverage is unavailable, the best\navailable coverage; PROVIDED, HOWEVER, that Parent and the Surviving Corporation\nshall not be required to pay an annual premium for the D&O Insurance in excess\nof 300% of the annual premium currently paid by the Company for such insurance,\nbut in such case shall purchase as much such coverage as possible for such\namount.\n\n This SECTION 5.5 is intended to benefit the Indemnified Parties and\nshall be binding on all successors and assigns of Parent, Purchaser, the Company\nand the Surviving Corporation. Parent hereby guarantees the performance by the\nSurviving Corporation of the indemnified obligations pursuant to this SECTION\n5.5, which guaranty is absolute and unconditional and shall not be affected by\nany circumstance whatsoever, including the bankruptcy or insolvency of the\nSurviving Corporation or any other person. The Indemnified Parties shall be\nintended third-party beneficiaries of this SECTION 5.5.\n\n 5.6. VOTING OF SHARES. At any meeting of the Company's \nstockholders held for the purpose of voting upon the Company Proposals, all \nof the Shares then owned by Parent, Purchaser or any other subsidiaries of \nParent shall be voted in favor of the Company Proposals.\n\n 5.7. GUARANTEE OF PARENT. Parent hereby guarantees the payment by\nPurchaser of the Per Share Amount and any other amounts payable by Purchaser\npursuant to this Agreement and will cause Purchaser to perform all of its other\nobligations under this Agreement in accordance with their terms.\n\n ARTICLE VI\n\n MERGER CONDITIONS\n\n The respective obligations of each party to effect the Merger shall be\nsubject to the fulfillment or waiver at or prior to the Effective Time of the\nfollowing conditions:\n\n 6.1. OFFER. The Offer shall have been consummated; provided that \nthis condition shall be deemed to have been satisfied with respect to the \nobligation of Parent and Purchaser to effect the Merger if Parent fails to \naccept for payment or pay for Shares pursuant to the Offer in violation of \nthe terms of the Offer or of this Agreement.\n\n 6.2. STOCKHOLDER APPROVAL. If required, the Company Proposals \nshall have been approved at or prior to the Effective Time by the requisite \nvote of the stockholders of the Company in accordance with the Delaware Code.\n\n 6.3. NO INJUNCTION OR ACTION. No order, statute, rule, regulation,\nexecutive order, stay, decree, \n\n\n -41-\n\n\njudgment or injunction shall have been enacted, entered, promulgated or enforced\nby any court or other Governmental Authority which prohibits or prevents the\nconsummation of the Merger which has not been vacated, dismissed or withdrawn\nprior to the Effective Time. The Company and Parent shall use all reasonable\nbest efforts to have any of the foregoing vacated, dismissed or withdrawn by the\nEffective Time.\n\n 6.4. GOVERNMENTAL APPROVALS. All Consents of any Governmental \nAuthority required for the consummation of the Merger and the transactions \ncontemplated by this Agreement shall have been obtained or those Consents the \nfailure to obtain which will not have a material adverse effect on the \nbusiness, assets, condition (financial or other), liabilities or results of \noperations of the Surviving Corporation and its subsidiaries taken as a whole.\n\n ARTICLE VII\n\n TERMINATION AND ABANDONMENT\n\n 7.1. TERMINATION. This Agreement may be terminated at any time \nprior to the Effective Time, whether before or after approval of the \nstockholders of the Company described herein:\n\n (a) by mutual written consent of Parent and the Company;\n\n (b) by either Parent or the Company if any Governmental Authority\nshall have issued an order, decree or ruling or taken any other action\npermanently enjoining, restraining or otherwise prohibiting the consummation of\nthe transactions contemplated by this Agreement and such order, decree or ruling\nor other action shall have become final and nonappealable;\n\n (c) by Parent if\n\n (i) the Company shall have breached or failed to perform in any\n material respect any of its covenants or other agreements contained in this\n Agreement, which breach or failure to perform is incapable of being cured\n or has not been cured within 5 days after the giving of written notice\n thereof to the Company (but not later than the expiration of the twenty\n (20) business day period provided for the Offer under SECTION 1.1(b)\n hereof);\n \n (ii) any representation or warranty of the Company shall not have been\n true and correct in all material respects when made;\n \n (iii) any representation or warranty of the Company shall cease to be\n true and correct in all material respects at any later date as if made on\n such date (other than representations and warranties made as of a specified\n date) other than as a result of a breach or failure to perform by \n\n -42-\n\n\n the Company of any of its covenants or agreements under this Agreement;\n\nPROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this\nSECTION 7.1(C) shall not be available to Parent if Purchaser or any other\naffiliate of Parent shall acquire shares of Common Stock pursuant to the Offer;\n\n (d) by Parent if (i) the Board of Directors of the Company or any\ncommittee thereof shall have withdrawn or modified in a manner adverse to Parent\nits approval or recommendation of the Offer or any of the Company Proposals or\nshall have approved or recommended any Company Takeover Proposal or (ii) the\nBoard of Directors of the Company or any committee thereof shall have resolved\nto take any of the foregoing actions;\n\n (e) by either Parent or the Company if the Offer shall have expired\nor been terminated without any Shares being purchased thereunder by Purchaser as\na result of the occurrence of any of the events set forth in ANNEX I hereto;\n\n (f) by either the Company or Parent if either (x) as the result of\nthe failure of the Minimum Condition or any of the other conditions set forth in\nAnnex I hereto, the Offer shall have terminated or expired in accordance with\nits terms without Purchaser having purchased any Shares pursuant to the Offer or\n(y) the Offer shall not have been consummated on or before March 31, 1998,\nPROVIDED that the right to terminate this Agreement pursuant to this SECTION\n7.1(F) shall not be available to any party whose failure to perform any of its\nobligations under this Agreement results in the failure of the Offer to be\nconsummated by such time;\n\n (g) by the Company if Parent or Purchaser shall have breached or\nfailed to perform in any material respect any of its representations,\nwarranties, covenants or other agreements contained in this Agreement, which\nbreach or failure to perform is incapable of being cured or has not been cured\nwithin 5 days after the giving of written notice thereof to Parent; or\n\n (h) by the Company in accordance with SECTION 4.8(B) hereof;\nPROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this\nSECTION 7.1(H) shall not be available (x) if the Company has breached in any\nmaterial respect its obligations under SECTION 4.8 hereof, or (y) if the Company\nshall fail to pay when due the fees and expenses contemplated by SECTION 8.7\nhereof.\n\n The party desiring to terminate this Agreement pursuant to the\npreceding paragraphs shall give written notice of such termination to the other\nparty in accordance with SECTION 8.5 hereof.\n\n 7.2. EFFECT OF TERMINATION AND ABANDONMENT. In the event of \ntermination of this Agreement and the abandonment of the Offer or the Merger \npursuant to this ARTICLE VII, this \n\n\n -43-\n\n\nAgreement (other than SECTIONS 7.2, 8.1, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.10,\n8.11, 8.12, 8.13, 8.14 and 8.15 hereof) shall become void and of no effect with\nno liability on the part of any party hereto (or of any of its directors,\nofficers, employees, agents, legal or financial advisors or other\nrepresentatives); PROVIDED, HOWEVER, that no such termination shall relieve any\nparty hereto from any liability for any breach of this Agreement prior to\ntermination. If this Agreement is terminated as provided herein, each party\nshall use all reasonable best efforts to redeliver all documents, work papers\nand other material (including any copies thereof) of any other party relating to\nthe transactions contemplated hereby, whether obtained before or after the\nexecution hereof, to the party furnishing the same.\n\n ARTICLE VIII\n\n MISCELLANEOUS\n\n 8.1. CONFIDENTIALITY. (a) Unless (i) otherwise expressly \nprovided in this Agreement, (ii) required by applicable Law or any listing \nagreement with, or the rules and regulations of, any applicable securities \nexchange or the NASD, (iii) necessary to secure any required Consents as to \nwhich the other party has been advised or (iv) consented to in writing by \nParent and the Company, all information (whether oral or written) and \ndocuments furnished in connection herewith together with analyses, \ncompilations, studies or other documents prepared by such party which contain \nor otherwise reflect such information shall be kept strictly confidential by \nthe Company, Parent and their respective officers, directors, employees and \nagents. Prior to any disclosure pursuant to the preceding sentence, the \nparty intending to make such disclosure shall consult with the other party \nregarding the nature and extent of the disclosure. Nothing contained herein \nshall preclude disclosures to the extent necessary to comply with accounting, \nSEC and other disclosure obligations imposed by applicable Law. In the event \nthe transactions contemplated by this Agreement are not consummated, each \nparty shall return to the other any documents furnished by the other and all \ncopies thereof that any of them may have made and will hold in confidence any \ninformation obtained from the other party except to the extent (a) such party \nis required to disclose such information by Law or such disclosure is \nnecessary or desirable in connection with the pursuit or defense of a claim, \n(b) such information was known by such party prior to such disclosure (and \nPROVIDED that, except with respect to information referred to in the \nfollowing clause (c), such party shall have advised the other party of such \nknowledge upon or promptly after its receipt of such information) or was \nthereafter developed or obtained by such party independent of such disclosure \nor (c) such information is or becomes generally available to the public other \nthan by breach of this SECTION 8.1 (or, to such party's knowledge, breach of \na confidentiality agreement with the other party). Prior to any disclosure \nof information pursuant to the exception in clause (a) of the preceding \nsentence, the party intending to disclose the same shall so notify the party \nwhich provided the same in order that such party may seek a protective \n\n\n -44-\n\n\norder or other appropriate remedy should it choose to do so.\n\n (b) The Parent and the Company further acknowledge that certain of \nthe business and activities of each of them is competitive with business and \nactivities of the other party, and each of them therefore agrees that it will \nnot use, or seek to obtain any competitive or other business advantage as a \nresult of, the information or documents so received by it in connection \nherewith, such party acknowledging that such use would be unfair and \nmaterially detrimental to the other party, PROVIDED that the provisions of \nthis SECTION 8.1(b) shall not apply to information referred to in clause (c) \nof SECTION 8.1(a) hereof.\n\n 8.2. AMENDMENT AND MODIFICATION. This Agreement may be amended,\nmodified or supplemented only by a written agreement among the Company, Parent\nand Purchaser.\n\n 8.3. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company \non the one hand, or Parent and Purchaser on the other hand, to comply with \nany obligation, covenant, agreement or condition herein may be waived by \nParent on the one hand, or the Company on the other hand, only by a written \ninstrument signed by the party granting such waiver, but such waiver or \nfailure to insist upon strict compliance with such obligation, covenant, \nagreement or condition shall not operate as a waiver of, or estoppel with \nrespect to, any subsequent or other failure. Whenever this Agreement \nrequires or permits consent by or on behalf of any party hereto, such consent \nshall be given in writing in a manner consistent with the requirements for a \nwaiver of compliance as set forth in this SECTION 8.3.\n\n 8.4. SURVIVAL. The respective representations, warranties, \ncovenants and agreements of the Company and Parent contained herein or in any \ncertificates or other documents delivered prior to or at the Closing shall \nsurvive the execution and delivery of this Agreement, notwithstanding any \ninvestigation made or information obtained by the other party, but shall \nterminate at the Effective Time, except for those contained in SECTIONS 1.7, \n1.8, 1.9, 1.14, 5.4, 5.5, 5.7 and 8.8 hereof and this SECTION 8.4, which \nshall survive beyond the Effective Time.\n\n 8.5. NOTICES. All notices and other communications hereunder \nshall be in writing and shall be deemed to have been duly given when \ndelivered in person, by facsimile, receipt confirmed, or on the next business \nday when sent by overnight courier or on the second succeeding business day \nwhen sent by registered or certified mail (postage prepaid, return receipt \nrequested) to the respective parties at the following addresses (or at such \nother address for a party as shall be specified by like notice):\n\n\n -45-\n\n\n (i) if to the Company, to:\n\n Holmes Protection Group, Inc.\n 440 Ninth Avenue\n New York, New York 10001\n Attention: George V. Flagg, President\n Telecopy: (212) 629-6763\n\n with a copy to:\n\n Dennis M. Stern, Esq.\n Senior Vice President and General Counsel\n Holmes Protection Group, Inc.\n 440 Ninth Avenue\n New York, New York 10001\n Telecopy: (212) 563-0129\n \n and to\n \n Willkie Farr & Gallagher\n One Citicorp Center\n 153 East 53rd Street\n New York, New York 10022\n Attention: Cornelius T. Finnegan, III, Esq.\n Telecopy: (212) 821-8111\n \n and\n \n (ii) if to Parent or Purchaser, to:\n\n Tyco International Ltd.\n The Gibbons Building\n 10 Queen Street, Suite 301\n Hamilton HM11 Bermuda\n Attention: Secretary\n Telecopy: (441) 295-9647\n\n with a copy to:\n\n Tyco International (US) Inc.\n One Tyco Park\n Exeter, New Hampshire 03833\n Attention: Mark H. Swartz\n Telecopy: (603) 778-7700\n\n and to\n\n Kramer, Levin, Naftalis & Frankel\n 919 Third Avenue\n New York, New York 10022\n Attention: Abbe L. Dienstag, Esq.\n Telecopy: (212) 715-8000\n\n 8.6. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the\nprovisions hereof shall be binding upon and inure to the benefit of the parties\nhereto and their respective successors and permitted assigns. Neither this \n\n\n -46-\n\n\n\nAgreement nor any of the rights, interests or obligations hereunder shall be\nassigned by any of the parties hereto prior to the Effective Time without the\nprior written consent of the Company, in the case of a proposed assignment by\nParent or Purchaser, or by Parent, in the case of a proposed assignment by the\nCompany, except that Purchaser may assign its rights, interest and obligations\nhereunder to any other wholly-owned direct or indirect subsidiary of Parent,\nprovided that the provisions of SECTION 5.7 hereof shall apply to such other\nsubsidiary.\n\n 8.7. EXPENSES. (a) Except as provided in SECTION 8.7(b) or 8.7(c)\nhereof, all costs and expenses incurred in connection with this Agreement and\nthe transactions contemplated hereby shall be paid by the party incurring such\ncosts or expenses.\n\n (b) The Company agrees that if this Agreement is terminated pursuant\nto\n (i) Section 7.1(d);\n\n (ii) Section 7.1(h); or\n\n (iii) SECTION 7.1(F) and, with respect to this clause (iii), at the\n time of such termination any person, entity or group (as defined in Section\n 13(d)(3) of the Exchange Act) (other than Parent or any of its affiliates\n or any person identified in the Company's Proxy Statement dated April 30,\n 1997 and who has executed a Stockholder Agreement of even date herewith\n with Parent and Purchaser, provided that such person has not breached the\n terms of such Stockholder Agreement) shall have become the beneficial owner\n of more than 20% of the outstanding shares of Company Stock and such\n person, entity or group (or any affiliate of such person, entity or group)\n thereafter (x) shall make a Company Takeover Proposal and, in the case of a\n consensual transaction with the Company, shall substantially have\n negotiated the terms thereof, at any time on or prior to the date which is\n six months after such termination of this Agreement, and (y) shall\n consummate such Company Takeover Proposal at any time on or prior to the\n date which is one year after termination of this Agreement, in the case of\n a consensual transaction, or six months after termination of this\n Agreement, in the case of a non-consensual transaction, in each case with a\n value per share of Company Stock of at least $17.00 (with appropriate\n adjustments for reclassifications of capital stock, stock dividends, stock\n splits, reverse stock splits and similar events);\n\nthen the Company shall pay to Parent the sum of (a) $3.5 million. Any payment\nrequired by this SECTION 8.7(b) shall be made as promptly as practicable but in\nno event later than two business days following termination of this Agreement\npursuant to SECTION 7.1(d) OR 7.1(h) hereof, or, in the case of clause (iii) of\nthis SECTION 8.7(b), upon consummation of such Company Takeover Proposal, and\nshall be made by wire transfer of immediately \n\n -47-\n\n\navailable funds to an account designated by Parent.\n\n (c) The Company further agrees that if this Agreement is terminated\npursuant to SECTION 7.1(C)(I) hereof,\n\n (i) the Company will pay to Parent, as promptly as practicable\n but in no event later than two business days following termination of\n this Agreement, the amount of all documented and reasonable costs and\n expenses incurred by Parent, Purchaser and their affiliates (including\n but not limited to fees and expenses of counsel and accountants and\n out-of-pocket expenses (but not fees) of financial advisors) in an\n aggregate amount not to exceed $350,000 in connection with this\n Agreement or the transactions contemplated hereby (\"PARENT EXPENSES\");\n and \n\n (ii) in the event that the Company consummates a Company Takeover\n Proposal (whether or not solicited in violation of this Agreement)\n within one year from the date of termination of this Agreement, the\n sum of $3.5 million, less the amount of any payment made pursuant\n to clause (i) of this Section 8.7(c), which payment shall be made not\n later than two business days following consummation of such Company\n Takeover Proposal. \n\n (d) The Company further agrees that if this Agreement is terminated\npursuant to SECTION 7.1(C)(II) hereof, the Company will pay to Parent, as\npromptly as practicable but in no event later than two business days following\ntermination of this Agreement, the Parent Expenses.\n\n 8.8. GOVERNING LAW. This Agreement shall be deemed to be made \nin, and in all respects shall be interpreted, construed and governed by and \nin accordance with the laws of, the State of New York.\n\n 8.9. COUNTERPARTS. This Agreement may be executed in one or more\ncounterparts, each of which shall be deemed an original, but all of which\ntogether shall constitute one and the same instrument.\n\n 8.10. INTERPRETATION. The article and section headings contained \nin this Agreement are solely for the purpose of reference, are not part of \nthe agreement of the parties and shall not in any way affect the meaning or \ninterpretation of this Agreement. As used in this Agreement, (i) the term \n\"PERSON\" shall mean and include an individual, a partnership, a joint \nventure, a corporation, a limited liability company, a trust, an association, \nan unincorporated organization, a Governmental Authority and any other \nentity, (ii) unless otherwise specified herein, the term \"AFFILIATE,\" with \nrespect to any person, shall mean and include any person controlling, \ncontrolled by or under common control with such person and (iii) the term \n\"SUBSIDIARY\" of any specified person shall mean any corporation 50 percent or \nmore of the outstanding voting power of which, or any \n\n\n -48-\n\n\npartnership, joint venture, limited liability company or other entity 50 percent\nor more of the total equity interest of which, is directly or indirectly owned\nby such specified person.\n\n 8.11. ENTIRE AGREEMENT. This Agreement and the documents or \ninstruments referred to herein including, but not limited to, the Annex(es) \nattached hereto and the Disclosure Letter referred to herein, which Annex(es) \nand Disclosure Letter are incorporated herein by reference, embody the entire \nagreement and understanding of the parties hereto in respect of the subject \nmatter contained herein. There are no restrictions, promises, \nrepresentations, warranties, covenants, or undertakings other than those \nexpressly set forth or referred to herein. This Agreement supersedes all \nprior agreements and understandings among the parties with respect to such \nsubject matter. Notwithstanding the foregoing provisions of this SECTION \n8.11, the provisions of the letter agreement dated October 14, 1997 between \nTyco International (US) Inc. and J.P. Morgan Securities Inc., as agent for \nthe Company, shall remain in effect in accordance with their terms.\n\n 8.12. SEVERABILITY. In case any provision in this Agreement \nshall be held invalid, illegal or unenforceable in a jurisdiction, such \nprovision shall be modified or deleted, as to the jurisdiction involved, only \nto the extent necessary to render the same valid, legal and enforceable, and \nthe validity, legality and enforceability of the remaining provisions hereof \nshall not in any way be affected or impaired thereby nor shall the validity, \nlegality or enforceability of such provision be affected thereby in any other \njurisdiction.\n\n 8.13. SPECIFIC PERFORMANCE. The parties hereto agree that \nirreparable damage would occur in the event that any of the provisions of \nthis Agreement were not performed in accordance with their specific terms or \nwere otherwise breached. Accordingly, the parties further agree that each \nparty shall be entitled to an injunction or restraining order to prevent \nbreaches of this Agreement and to enforce specifically the terms and \nprovisions hereof in any court of the United States or any state having \njurisdiction, this being in addition to any other right or remedy to which \nsuch party may be entitled under this Agreement, at law or in equity.\n\n 8.14. THIRD PARTIES. Nothing contained in this Agreement or in \nany instrument or document executed by any party in connection with the \ntransactions contemplated hereby shall create any rights in, or be deemed to \nhave been executed for the benefit of, any person that is not a party hereto \nor thereto or a successor or permitted assign of such a party; PROVIDED \nHOWEVER, that the parties hereto specifically acknowledge that the provisions \nof SECTION 5.5 hereof are intended to be for the benefit of, and shall be \nenforceable by, the Indemnified Parties.\n\n 8.15. DISCLOSURE LETTER. Parent acknowledges that the Company \nDisclosure Letter (i) relates to certain matters concerning the disclosures \nrequired and transactions contemplated \n\n\n -49-\n\n\nby this Agreement, (ii) is qualified in its entirety by reference to specific\nprovisions of this Agreement, (iii) is not intended to constitute and shall not\nbe construed as indicating that such matter is required to be disclosed, nor\nshall such disclosure be construed as an admission that such information is\nmaterial with respect to the Company, except to the extent required by this\nAgreement.\n\n -50-\n\n\n IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this\nAgreement to be signed and delivered by their respective duly authorized\nofficers as of the date first above written.\n\n TYCO INTERNATIONAL LTD.\n\n\n\n By:\/s\/ Mark H. Swartz\n ------------------\n Name: Mark H. Swartz\n Title: Vice President and Chief\n Financial Officer\n\n T9 ACQUISITION CORP.\n\n By:\/s\/ Mark H. Swartz\n ------------------\n Name: Mark H. Swartz\n Title: Vice President\n\n HOLMES PROTECTION GROUP, INC.\n\n By:\/s\/ George V. Flagg\n -------------------\n Name: George V. Flagg\n Title: President\n\n -51-\n\n\n ANNEX I\n\n CONDITIONS TO THE OFFER. Notwithstanding any other provision of the\nOffer, Purchaser shall not be required to accept for payment or, subject to any\napplicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated\nunder the Securities Exchange Act (relating to Purchaser's obligation to pay for\nor return tendered Shares promptly after termination or withdrawal of the\nOffer), pay for, and (subject to any such rules or regulations) may delay the\nacceptance for payment of any tendered Shares and (except as provided in this\nAgreement) amend or terminate the Offer as to any Shares not then paid for if\n(i) the condition that there shall be validly tendered and not withdrawn prior\nto the expiration of the Offer a number of Shares which represents at least 51%\nof the total number of Shares on a fully-diluted basis shall not have been\nsatisfied (the \"MINIMUM CONDITION\") or (ii) any applicable waiting period under\nthe HSR Act shall not have expired or been terminated prior to the expiration of\nthe Offer or (iii) at any time after the date of this Agreement and before the\ntime of payment for any such Shares (whether or not any Shares have theretofore\nbeen accepted for payment or paid for pursuant to the Offer), any of the\nfollowing conditions exists:\n\n (a) there shall be in effect an injunction or other order, decree,\njudgment or ruling by a Governmental Authority of competent jurisdiction or a\nLaw shall have been promulgated, or enacted by a Governmental Authority of\ncompetent jurisdiction which in any such case (i) restrains or prohibits the\nmaking or consummation of the Offer or the consummation of the Merger, (ii)\nprohibits or restricts the ownership or operation by Parent (or any of its\naffiliates or subsidiaries) of any portion of the Company's business or assets,\nor Parent's business or assets relating to the security services business, which\nis material to the security services business of all such entities taken as a\nwhole, or compels Parent (or any of its affiliates or subsidiaries) to dispose\nof or hold separate any portion of the Company's business or assets, or Parent's\nbusiness or assets relating to the security services business, which is material\nto the security services business of all such entities taken as a whole, (iii)\nimposes material limitations on the ability of Purchaser effectively to acquire\nor to hold or to exercise full rights of ownership of the Shares, including,\nwithout limitation, the right to vote the Shares purchased by Purchaser on all\nmatters properly presented to the stockholders of the Company, or (iv) imposes\nany material limitations on the ability of Parent or any of its affiliates or\nsubsidiaries effectively to control in any material respect the business and\noperations of the Company, or (v) seeks to restrict any future business activity\nby Parent (or any of its affiliates) relating to the security services business,\nincluding, without limitation, by requiring the prior consent of any person or\nentity (including any Governmental Authority) to future transactions by Parent\n(or any of its affiliates); or\n\n\n\n (b) there shall have been instituted, pending or threatened an \naction by a Governmental Authority seeking to restrain or prohibit the making \nor consummation of the Offer or the consummation of the Merger or to impose \nany other restriction, prohibition or limitation referred to in the foregoing \nparagraph (a); or \n\n (c) this Agreement shall have been terminated by the Company or \nParent in accordance with its terms; or\n\n (d) there shall have occurred (i) any general suspension of, or \nlimitation on prices for, trading in the Shares on the NASDAQ National Market \nSystem, (ii) any decline, measured from the date of this Agreement, in the \nDow Jones Industrial Average or Standard & Poor's 500 Index by an amount in \nexcess of 15%, (iii) a declaration of a banking moratorium or any general \nsuspension of payments in respect of banks in the United States or (iv) in \nthe case of any of the foregoing existing at the time of the execution of \nthis Agreement, a material acceleration or worsening thereof; or\n\n (e) Parent and the Company shall have agreed that Purchaser shall \namend the Offer to terminate the Offer or postpone the payment for Shares \npursuant thereto; or\n\n (f) any of the representations and warranties made by the Company \nin the Merger Agreement shall not have been true and correct in all material \nrespects when made, or shall thereafter have ceased to be true and correct in \nall material respects as if made as of such later date (other than \nrepresentations and warranties made as of a specified date), or the Company \nshall not in all material respects have performed each obligation and \nagreement and complied with each covenant to be performed and complied with \nby it under this Agreement, PROVIDED, however, that such breach or future to \nperform is incapable of being cured or has not been cured within 5 days after \nthe giving of written notice thereof to the Company, PROVIDED, however, that \nno such 5-day cure period shall require extension of the Offer beyond the \ntwenty (20) business days provided under Section 1.1(b) of the Agreement; or\n\n (g) the Company's Board of Directors shall have modified or \namended its recommendation of the Offer in any manner adverse to Parent or \nshall have withdrawn its recommendation of the Offer, or shall have \nrecommended acceptance of any Company Takeover Proposal or shall have \nresolved to do any of the foregoing; or\n\n (h) any corporation, entity or \"group\" (as defined in Section \n13(d)(3) of the Exchange Act) (\"PERSON\"), other than Parent and Purchaser and \nany person identified in the Company's Proxy Statement dated April 30, 1997 \nand who has executed a Stockholder Agreement of even date herewith with \nParent and Purchaser, provided that such person has not breached the terms of \nsuch Stockholder Agreement, shall have acquired beneficial ownership of more \nthan 20% of the outstanding Shares, or shall have been granted any options or \nrights, conditional or \n\n\n A-2\n\n\notherwise, to acquire a total of more than 20% of the outstanding Shares; (ii)\nany new group shall have been formed which beneficially owns more than 20% of\nthe outstanding Shares; or (iii) any person (other than Parent or one or more of\nits affiliates) shall have entered into an agreement in principle or definitive\nagreement with the Company with respect to a tender or exchange offer for any\nShares or a merger, consolidation or other business combination with or\ninvolving the Company; or\n\n (i) any change, development, effect or circumstance shall have \noccurred or be threatened that would reasonably be expected to have a \nMaterial Adverse Effect with respect to the Company; or\n\n (j) the Company shall commence a case under any chapter of Title \nXI of the United States Code or any similar law or regulation; or a petition \nunder any chapter of Title XI of the United States Code or any similar law or \nregulation is filed against the Company which is not dismissed within 2 \nbusiness days.\n\n The foregoing conditions are for the sole benefit of Parent and Purchaser\nand may be asserted by Parent or Purchaser regardless of the circumstances\ngiving rise to any such condition and may be waived by Parent or Purchaser, in\nwhole or in part, at any time and from time to time, in the sole discretion of\nParent. The failure by Parent or Purchaser at any time to exercise any of the\nforegoing rights shall not be deemed a waiver of any right, the waiver of such\nright with respect to any particular facts or circumstances shall not be deemed\na waiver with respect to any other facts or circumstances, and each right shall\nbe deemed an ongoing right which may be asserted at any time and from time to\ntime.\n\n Should the Offer be terminated pursuant to the foregoing provisions, all\ntendered Shares not theretofore accepted for payment shall forthwith be returned\nby the Exchange Agent to the tendering stockholders.\n\n\n\n A-3\n\n\nGLOSSARY OF DEFINED TERMS\n\n<\/pre>\n
\n
\n1996 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
\nAffiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
\nAgreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
\nBank Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
\nCertificate of Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
\nChange in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
\nChange in Control Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
\nClosing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
\nClosing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
\nCode . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
\nCompany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
\nCompany Acquisition Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
\nCompany Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
\nCompany Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
\nCompany Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
\nCompany Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . 26
\nCompany Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
\nCompany Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
\nCompany Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
\nCompany Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
\nCompany Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
\nCompany Securities Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
\nCompany Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
\nCompany Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
\nCompany Superior Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
\nCompany Takeover Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
\nCompany Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
\nConsent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
\nD&O Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
\nDefined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
\nDelaware Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
\nDissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
\nEffective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
\nEmployee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
\nEnforceability Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
\nEnvironmental Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
\nEnvironmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
\n<\/c><\/s><\/table>\n\n
\nERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
\nERISA Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
\nExchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
\nFairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
\nFinancial Advisor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
\nGovernmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
\nHSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
\nIndemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
\nIndependent Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
\nIRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
\nISO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
\nLaw. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
\nLiens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
\nLitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
\nMaterial Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
\nMaterials of Environmental Concern . . . . . . . . . . . . . . . . . . . . . . . . 29
\nMerger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
\nMinimum Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
\nOffer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
\nOffer Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
\nOffer to Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
\nOther Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
\nParent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
\nParent Benefit Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
\nParent Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
\nParent Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
\nParent Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
\nPBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
\nPer Share Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
\nPerson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
\nProxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
\nPurchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
\nSchedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
\nSchedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
\nSEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
\nSecurities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
\nSecurities Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
\nShares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
\n<\/c><\/s><\/table>\n\n
\nSubsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
\nSurviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
\nSurviving Corporation Common Stock . . . . . . . . . . . . . . . . . . . . . . . . .7
\nTakeover Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
\nTax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
\nTax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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