This report contains forward-looking statements, which are subject to inherent uncertainties which are difficult to
predict, and may be beyond the ability of Argyle Security, Inc. (the “Company”) to control. Certain statements in this
Current Report on Form 8-K constitute forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, that are not historical facts but rather reflect the Company’s current expectations
concerning future results and events. The words “believes,” “expects,” “intends,” “plans,” “anticipates,” “hopes,”
“likely,” “will,” and similar expressions identify such forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties and other important factors that could cause the actual results,
performance or achievements of the Company (or entities in which the Company has interests), or industry results, to
differ materially from future results, performance or achievements expressed or implied by such forward-looking
statements.
The forward-looking statements are subject to risks and uncertainties, including the possibility that the proposed
transaction could be withdrawn, rejected, or unable to be consummated because of various contingencies, including, but
not limited to, the outcome of any legal proceedings that may be instituted against the Company and/or others relating
to the proposed transaction, the effect of the announcement on the Company’s customer relationships, operating results
and business generally, the risk that the proposed transaction disrupts current plans and operations and the potential
difficulties in employee relations as a result of the transaction, the inability to satisfy any material conditions to
consummation of the proposed transaction, downturns in economic conditions generally, the Company’s business or the
state of the corporate credit markets, and the impact of the substantial indebtedness expected to be incurred to
accomplish the proposed transaction. Consider these factors carefully in evaluating the forward-looking statements. The
risk factors listed in the Company’s Form 10-K for the year ended December 31, 2008 and subsequently filed Forms 10-Q
and 8-K also provide examples of risks, uncertainties and events that could cause actual results to differ materially
from those contained in forward-looking statements. The forward-looking statements made herein are only made as of the
date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements
and is not responsible for changes made to this press release for Internet or wire services.
This Current Report on
Form 8-K
, including the exhibits incorporated herein, is not a solicitation of a proxy, an offer
to purchase nor a solicitation of an offer to sell shares of Argyle Security, Inc., and it is not a substitute for any
proxy statement or other filings that may be made with the Securities and Exchange Commission (“SEC”) should this
proposed transaction go forward. If such documents are filed with the SEC, investors will be urged to thoroughly review
and consider them because they will contain important information, including risk factors. Any such documents, once
filed, will be available free of charge at the SEC’s website (www.sec.gov) and from Argyle Security, Inc.
Item 8.01 Other Events
On
June 15, 2009, Argyle Security, Inc. (the “Company”)
announced that the Company and MML Capital Partners LLC, in its
capacity as advisor to, and on behalf of, Mezzanine Management
Fund IV ‘A’ L.P. and Mezzanine Management Fund Coinvest A
L.P. (collectively “MML”) entered into a non-binding letter of intent (the “Letter”) to enter into a transaction whereby an entity
controlled by MML (the “Acquiring Company”) would merge its wholly-owned subsidiary into the Company, resulting in the
Company becoming a wholly-owned subsidiary of the Acquiring Company. Pursuant to the merger, existing stockholders and
unitholders of the Company would receive $2.00 per share or unit, as applicable, in cash.
The Company’s Board of Directors (the “Board”) appointed a special committee (the “Special Committee”) composed
solely of independent directors to consider the proposal and recommend it to the Board for approval. The special
committee has engaged Houlihan Lokey, as its independent financial advisor, to assist it with its assessment of MML’s
offer.
The Company had received an original conditional offer from MML on May 19, 2009. Following negotiations, during
which the proposed offer price was increased from $1.00 per share to
$2.00 per share, the Special Committee recommended that the Board authorize the Company to enter into the Letter. Based on the recommendation of the Special
Committee, the Board voted to approve the Company entering into the Letter.
The proposed offer price of $2.00 per share would represent a premium to the Company’s closing price of $0.71 on
the last trading day prior to the communication of the original May 19, 2009 offer.
Pursuant to the Letter, MML has been granted an exclusivity period expiring on the earlier of the execution of a
definitive agreement or 45 days after June 15, 2009 (the “Exclusivity Period”) in which to complete its confirmatory due
diligence and execute definitive documentation with the Company. During the Exclusivity Period, the Company will not,
and it will cause its subsidiaries and the respective representatives and agents of the Company and its subsidiaries
not to, contact, negotiate or discuss with, or solicit any offer from, and third party for the sale of the Company or
any of its subsidiaries, its capital stock or any material portion of its assets (by merger, sale of capital stock or
assets or otherwise). In addition, the Company will, and will cause its subsidiaries and the respective representatives
and agents of the Company and its subsidiaries to cease any pending negotiations or discussions for the sale of the
Company or any of its subsidiaries, its capital stock or any material portion of its assets. In addition, during the
Exclusivity Period, MML and its affiliates will be subject to a standstill provision whereby they will be prohibited
from acquiring additional securities of the Company or otherwise engaging in any activity that would enable them to control the
Company.
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