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SECURITIES AND EXCHANGE COMMISSION,
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
GUARDIAN INTERNATIONAL, INC
(formerly Everest Securities Systems Corporation,
formerly Everest Funding Corporation, formerly Burningham Enterprises, Inc.)
(Name of Issuer)
Class A Voting Common Stock, Par Value $.001 Per Share
(Title of Class of Securities)
401376 10 8
(CUSIP Number)
Rita A. Sharpe
President
Westar Capital, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
(785)575-8020
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
Copy to:
John K Rosenberg, Esq.
818 Kansas Avenue
Topeka, Kansas 66612
(785)575-6535
October 21, 1997
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box. [ ]
SCHEDULE 13D
CUSIP NO. 401376 10 8
(1) Names of reporting persons Westar Capital, Inc.
S.S. or I.R.S. Identification Nos. of above persons 48-1092416
(2) Check the appropriate box if a member of a group (a) [ ]
(see instructions) (b) [ ]
(3) SEC use only
(4) Source of Funds (see instructions) WC
(5) Check if disclosure of legal proceedings is required
pursuant to Items 2(d) or 2(e) [ ]
(6) Citizenship or place of organization State of Kansas
Number of shares beneficially owned by each reporting
person with:
(7) Sole voting power..................... 4,665,300
(8) Shared voting power ................... 0
(9) Sole dispositive power ................. 4,665,300
(10) Shared dispositive power .................. 0
(11) Aggregate amount beneficially owned by each
reporting person 4,665,300
(12) Check if the aggregate amount in Row (11) excludes
certain shares (see instructions) [ ]
(13) Percent of class represented by amount in row (11) 42.9%
(14) Type of reporting person (see instructions) CO
Item 1. Security and Issuer.
This Statement on Schedule 13D ("Statement") relates to the Class A
Voting Common Stock, par value $.001 per share ("Common Stock"), of
Guardian International, Inc. (formerly Everest Securities Systems
Corporation, formerly Everest Funding Corporation, formerly Burningham
Enterprises, Inc.), a Nevada corporation ("Company") The principal
executive offices of the Company are at 3880 N. 28th Terrace, Hollywood,
Florida 33020-1118.
Item 2. Identity and Background.
This Statement is filed on behalf of Westar Capital, Inc., a Kansas
corporation ("Reporting Person"). The Reporting Person is a holding
company that owns subsidiaries that deal in gathering, processing, and
marketing natural gas, as well as investments in energy-related
technology development and monitored security. The address of the
principal business and office of the Reporting Person is 818 S. Kansas
Ave., Topeka, Kansas 66601.
The Reporting Person is a wholly-owned subsidiary of Western Resources,
Inc., a Kansas corporation ("WRI"). Exhibit A hereto, which is
incorporated herein by reference, sets forth the name, the business
address and the present principal occupation or employment (and the
name, principal business and address of any corporation or other
organization or employment (and the name, principal business and address
of any corporation or other organization in which such employment is
conducted) of the executive officers and directors of the Reporting
Person and WRI. To the knowledge of the Reporting Person, each of the
persons named on Exhibit A is a United States Citizens.
During the five years prior to the date hereof, neither the Reporting
Person, WRI nor, to the Reporting Person's knowledge, any executive
officer or director of the Reporting Person or WRI (i) has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) has been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to a Stock Subscription Agreement, dated October 14, 1997
("Stock Subscription Agreement"), between the Company and the Reporting
Person, the Reporting Person (a) purchased on October 21, 1997
2,500,000 (two million five hundred thousand) shares of Common Stock
(the "Common Shares") for an aggregate of $3,750,000 (three million
seven hundred fifty thousand dollars), and (b) agreed to purchase
1,875,000 (one million seven hundred fifty thousand) shares of Series A
9 3/4% Convertible Cumulative Preferred Stock Shares ("Preferred Stock")
for an aggregate of $3,750,000 (three million seven hundred fifty
thousand dollars) with available cash. Each share of Preferred Stock
when issued may be converted into one share of Common Stock of the
Company.
The foregoing description of the Stock Subscription Agreement is a
summary of certain of its provisions and reference is made to a copy of
the Stock Subscription Agreement which is attached hereto as Exhibit B
and incorporated herein by reference for all of its terms and conditions
Item 4. Purpose of Transaction.
The Reporting Person acquired all of the Common Stock held by it and the
right to acquire the Preferred Stock in its normal course of business
and in connection with an investment by the Reporting Person in the
capital stock of the company as a result of negotiations between the
Reporting Person and the Company. By reason of its stock ownership, the
right to appoint directors to the Company, and certain rights granted to
it under the Stockholders Agreement and Registration Rights Agreement,
(as more fully described in Item 6), the Reporting Person may be in a
position to influence whether the Company engages in certain corporate
transactions including those transactions enumerated under paragraphs
(a) through (j) of Item 4 of Schedule 13d.
The Reporting Person shall continually review its ownership in the
Company and, based on its evaluation of market and economic conditions,
applicable regulatory requirements, the Reporting Person's contractual
obligations entered into in connection with such investment, the
Company's business prospects and future developments, it may from time
to time determine to modify its investment in the Company through any
available means, including open market purchases or sales or privately
negotiated transactions or actions of the type enumerated in clauses (a)
through (j) of Item 4 of Schedule 13D.
Pursuant to an agreement with Protection One, Inc., WRI, the Reporting
Person's parent company, has agreed to transfer all shares of the
Company held by the Reporting Person to Protection One, for the higher
of cost or the market value of the shares at the time of transfer, upon
consummation of WRI's acquisition of Protection One.
Except as indicated in this Statement or as may result from the
execution of the Stock Subscription Agreement, the Stockholders
Agreement, the Registration Rights Agreement or the Certificate of
Designation (each as described in Item 6), the Reporting Person
currently has no specific plans or proposals that relate to or would
result in any of the matters described in subparagraphs (a) through (j)
of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
Based on the Company's Quarterly Report on Form 10-QSB for its fiscal
quarter ended June 30, 1997, as amended to date, the Company had a total of
6,496,804 (six million four hundred ninety-six thousand eight hundred four)
shares of Common Stock outstanding as of June 30, 1997. As a result of a
purchase of the Common Shares pursuant to the Stock Subscription Agreement,
the right to acquire 1,875,000 (one million eight hundred seventy-five
thousand) shares of Common Stock upon conversion of the Preferred Shares,
and 290,300 shares of Common Stock acquired by the Reporting Person more
than sixty days prior to the date hereof, the Reporting Person beneficially
owns 4,665,300 (four million six hundred sixty-five thousand three hundred)
shares of Common Stock, constituting 42.9% (forty-two and nine-tenths
percent) of the Company's total outstanding Common Stock, as determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended ("Exchange Act"), has the sole power to vote or direct the vote of
4,665,300 shares of Common Stock, and has sole power to dispose of
4,665,300 shares of Common Stock.
Except as set forth in this Statement, neither the Reporting Person, WRI
nor, to the best of the Reporting Person's knowledge, any executive officer
or director of the Reporting Person or WRI beneficially owns any Common
Stock or has engaged in any transaction in any such shares during the sixty
day period immediately preceding the date hereof.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
On October 21, 1995, the Company, the Reporting Person, Harold Ginsburg,
Sheilah Ginsburg, Richard Ginsburg and Rhonda Ginsburg (the "Ginsburgs"), (the
Reporting Person and the Ginsburgs collectively being the "Stockholders),
executed a Stockholders Agreement, dated as of October 21, 1997 (the
"Stockholders Agreement") for the purposes, among others, of assuring
continuity in the management and ownership of the Company and limiting the
manner and terms by which the shares held by the Stockholders may be
transferred. Under the terms of the Stockholders Agreement, the Reporting
Person will limit its ownership of Common Stock to 45% of the outstanding
shares of the Common Stock on a fully diluted basis for a period of five
years from the purchase of the Common Shares (October 21, 1997) unless the
Reporting Person receives the Company's permission to exceed such limit.
Pursuant to the terms of the Stockholders Agreement, the Reporting
Person has the following rights:
(a) Preemptive rights to purchase its pro rata share of any equity
offerings of the Company on the same terms, but only if such offerings
(individually or in the aggregate) would reduce the Reporting Person''s
percentage ownership of the Company's outstanding equity securities to less
than 35%, on a fully diluted basis;
(b) Tag-along rights (on a pro rata basis) if the Ginsburgs effect a
sale or other transfer of more than half of their Common Stock holdings; and
(c) A right to match any third-party cash offer for the purchase of 100%
of the Common Stock or substantially all of the assets of the Company for a
period of 30 days.
Pursuant to the terms of the Stockholders Agreement, without the prior
approval of the Reporting Person, the Company shall not (a) so long as shares
of Preferred Stock are outstanding, (i) issue securities on a parity with or
senior to the Preferred Stock as to dividends and liquidation rights or (ii)
authorize or make any dividends or other distributions to the holders of
Common Stock, and (b) so long as the Reporting Person or its affiliates own or
control at least 15% of the outstanding equity securities of the Company,
issue any equity securities senior to the Common Stock of the Company. In
addition, if an independent committee of the Board recommends the acceptance
of a bona fide third-party cash offer for the purchase of 100% of the Common
Stock or substantially all of the assets of the Company, the Reporting Person
agrees to vote in favor of the offer or to purchase the Common Stock not
already owned by the Reporting Person on substantially the same terms and
conditions of such offer.
The terms of the Stockholders Agreement also prevent the Ginsburgs and
the Reporting Person (each party designated either the "Transferring
Stockholder" or the "Other Stockholder," as the case may be) from effecting a
private sale of its stock except in accordance with the following protocol:
For 15 days, the Transferring Stockholder will negotiate for the sale of the
stock exclusively with the Company, represented by an independent committee of
the Board. If the Transferring Stockholder is unable to reach satisfactory
terms for the sale of the stock with the Company, the Transferring Stockholder
will negotiate exclusively with the Other Stockholder for an additional 30
days to sell the stock for a price not less than 105% of the price offered by
the Company. If the Transferring Stockholder and the Other Stockholder are
unable to agree to terms for the sale, the Transferring Stockholder is then
free for an additional 120 days to sell to any third party for a price not
less than 110% of the price offered by the Other Stockholder; provided,
however, that the Reporting Person may transfer its equity securities at any
time to an entity in which the Reporting Person, its parent or subsidiaries
own or control 50% or more of the outstanding voting securities at any time.
The Stockholders Agreement also provides that the Reporting Person may
appoint 2 of 8 board members of the Company prior to, and 3 of 9 board members
after, conversion of the Preferred Stock to Common Stock.
The Common Shares purchased by the Reporting Person (including Common Stock
issued upon conversion of the Preferred Shares) are not registered under the
Securities Act of 1933, as amended. The Company and the Reporting Person have
entered into a Registration Rights Agreement dated October 21, 1997 granting
the Reporting Person three demand registrations and unlimited piggy-back
registration rights with respects to the Common Shares (including Common Stock
issued upon conversion of the Preferred Shares).
Pursuant to the Certificate of Designation for the Preferred Stock, upon the
failure of the Company to pay quarterly dividends for any four quarters (a
"Default Event") and for the duration of the Default Event, the Reporting
Person, as the holder of the Preferred Stock prior to conversion, in addition
to any other voting rights it may have, shall be entitled to vote (voting as a
class by a majority of the outstanding shares thereof) for the election to the
Board of Directors of the Company of such number of members thereof as equals
at any given time a majority of the number of members of the Board of
Directors. Each share of Preferred Stock is convertible at any time at the
option of the Reporting Person into ne fully paid and nonassessable share of
Common Stock. The Preferred Stock must be converted to Common Stock: (i) upon
secondary public offering by the Company of at least 2,500,000 shares of
Common Stock at not less than $2.00 per share; or (ii) if, at any time after
two years from the date of issuance of the Preferred Stock, the Common Stock
of the Company trades above $3.00 per share for 20 consecutive trading days.
The foregoing description of the Stockholders Agreement, Registration Rights
Agreement and Certificate of Designation are a summary of certain of their
provisions and reference is made to a copy of such Agreements which are
attached hereto as Exhibit C, D and E respectively.
Except as described in this Statement neither the Reporting Person, WRI nor,
to the best of the Reporting Person's knowledge, any executive officer or
director of the Reporting Person or WRI has any contract, arrangement,
understanding or relationship with one or more security holder of the Company
or others, with respect to the purchase, holding, voting or disposition of
Common Shares or other securities of the Company which are convertible or
exercisable into Common Shares. Each of such persons reserves the right to
enter into any such contract, arrangement, understanding or relations in the
future.
Item 7. Material to be Filed as Exhibits.
Exhibit A: List of Officers and Directors of the Reporting Person and
Western Resources, Inc.
Exhibit B: Stock Subscription Agreement, dated as of October 14, 1997, by
and among the Reporting Person and the Company.
Exhibit C: Stockholders Agreement, dated as of October 21, 1997, by and
among the Company, Harold Ginsburg, Sheilah Ginsburg, Richard Ginsburg and
Rhonda Ginsburg, and the Reporting Person.
Exhibit D: Registration Rights Agreement, dated October 21, 1997, between
the Company and the Reporting Person.
Exhibit E: Certificate of Designation for Preferred Stock.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
WESTAR CAPITAL, INC.
By: /s/ Rita A. Sharpe
Rita A. Sharpe
President
Dated: October 24, 1997
Exhibit 99.A
Executive Officers and Directors of
Westar Capital, Inc. ("Westar") and
Western Resources, Inc. ("WRI")
Name
Position
Address
Rita A. Sharpe
President, Westar
1112 Oak Tree Drive
Lawrence, KS 66049
Marilyn K. Dalton
Secretary and Treasurer,
Westar
3321 SW Jardine Court
Topeka, Kanas 66611
John E. Hayes,
Jr.
Chairman of the Board,
Chief Executive Officer,
WRI
1535 SW Pembroke Lane
Topeka, Kansas 66604
David C. Wittig
President and Director, WRI
#5, Westboro Place
Topeka, Kansas 66604
Steven L. Kitchen
Executive Vice President
and Chief Financial
Officer, WRI
Director, Westar
10047 SW 101st Street
Auburn, Kansas 66042
Carl M. Koupal
Executive Vice President,
Chief Administrative
Officer , WRI
3768 SW Clarion Park Drive
Topeka, Kansas 66610
John K. Rosenberg
Executive Vice President
and General Counsel, WRI
5450 SW Fairlawn
Topeka, Kansas 66610
Jerry D.
Courington
Controller, WRI
Director, Westar
3624 SE Arrowhead Drive
Topeka, Kansas 66605
Frank J. Becker
Director, WRI
4408 Heritage Drive
Lawrence, Kansas 66047
Gene A. Budig
Director, WRI
40 Mercer Street
Princeton, New Jersey 08540
C. Q. Chandler
Director, WRI
1515 Foliage Court
Wichita, Kansas 67206
Thomas R.
Clevenger
Director, WRI
9215 Killarney
Wichita, Kansas 67206
John C. Dicus
Director, WRI
1524 Lakeside Drive
Topeka, Kansas 66604
David H. Hughes
Director, WRI
2110 W. 67th Terrace
Shawnee Mission, Kansas
66208
Russell W. Meyer,
Jr.
Director, WRI
600 Tara Court
Wichita, Kansas 67206
John H. Robinson
Director, WRI
3223 W. 67th Street
Shawnee Mission, Kansas
66208
Louis W. Smith
Director, WRI
11705 Brookwood
Leawood, Kansas 66211
EXHIBIT 99.B
STOCK SUBSCRIPTION AGREEMENT
STOCK SUBSCRIPTION AGREEMENT dated as of October 14, 1997, between
Guardian International, Inc., a Nevada corporation (the "Company"), and Westar
Capital, Inc., a Kansas corporation (the "Purchaser").
The Purchaser desires to acquire from the Company, and the Company
wishes to sell to the Purchaser, certain securities to be issued by the
Company, on the terms and conditions set forth below.
1. AUTHORIZATION OF SECURITIES. The Company has authorized the
issuance and sale to the Purchaser of 2,500,000 shares (the "Common Shares")
of its Class A Voting Common Stock, par value $.001 per share (the "Common
Stock"), for an aggregate purchase price of $3,750,000. Subject to the
satisfaction of the conditions set forth in Section 5, the Company has
authorized the issuance and sale to the Purchaser of 1,875,000 shares (the
"Preferred Shares") of Series A 9 3/4% Convertible Cumulative Preferred Stock,
par value $.001 per share (the "Preferred Stock"), for an aggregate purchase
price of $3,750,000. The Preferred Shares will have the terms and conditions
set forth in the Certificate of Amendment and the Certificate of Designations
to the Articles of Incorporation of the Company attached hereto as Exhibits
A-1 and A-2, (collectively, the "Articles of Amendment"). The Common Shares and
the Preferred Shares may be collectively referred to as the "Shares".
2. CLOSINGS
2.1 COMMON SHARES CLOSING. The Company will sell to the Purchaser
and, subject to the terms and conditions hereof, the Purchaser will purchase
from the Company, at the closing provided for in this Section 2.1, the Common
Shares at an aggregate purchase price of $3,750,000. The closing of the sale
and purchase of the Common Shares (the "Common Closing") shall take place at
the offices of the Company at 3880 N. 28th Terrace, Hollywood, Florida, 33020,
following the satisfaction or waiver (not violative of law) of the conditions
set forth in Sections 3 and 4, on October 21, 1997 (the "Common Closing
Date"), unless otherwise agreed between the Purchaser and the Company. At the
Common Closing, the Company will deliver to the Purchaser one or more stock
certificates (as the Purchaser may designate in advance), each dated the
Common Closing Date and duly registered in the Purchaser's name (or in the
name of any nominee the Purchaser designates to hold the Common Shares for its
account), representing the Common Shares, against receipt of $3,750,000 from
the Purchaser by delivery of federal funds payable to the Company.
2.2 PREFERRED SHARES CLOSING. The Company will sell to the Purchaser
and, subject to the terms and conditions hereof, the Purchaser will purchase
from the Company, at the closing provided for in this Section 2.2, the
Preferred Shares at an aggregate purchase price of
$3,750,000. The closing of the sale and purchase of the Preferred Shares (the
"Preferred Closing") shall take place at the offices of the Company at 3880 N.
28th Terrace, Hollywood, Florida, 33020 or by mail if the parties agree,
following the satisfaction or waiver (not violative of law) of the conditions
set forth in Section 5 and the consummation of the Common Closing, on November
30, 1997 (the "Preferred Closing Date"), unless otherwise agreed between the
Purchaser and the Company. At the Preferred Closing, the Company will deliver
to the Purchaser one or more stock certificates (as the Purchaser may
designate), each dated the Preferred Closing Date and duly registered in the
Purchaser's name (or in the name of any nominee the Purchaser designates to
hold the Preferred Shares for its account), representing the Preferred Shares
against receipt of $3,750,000 from the Purchaser by delivery of federal funds
payable to the Company. The Preferred Closing and the Common Closing may be
hereinafter referred to as the "Closings."
3. CONDITIONS TO THE PURCHASER'S OBLIGATIONS RE: COMMON CLOSING. The
Purchaser's obligation to acquire the Common Shares is subject to the
fulfillment, prior to or at the Common Closing, of the following conditions:
3.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties of the Company contained in Section 6 shall be correct as of the
date hereof and at and as of the time of the Common Closing.
3.2 PERFORMANCE AND COMPLIANCE. The Company shall have performed all
agreements and complied with all conditions contained herein required to be
performed or complied with by it prior to or at the Common Closing.
3.3 OFFICER'S CERTIFICATE. The Purchaser shall have received a
certificate of the President and Chief Executive Officer of the Company, dated
the Common Closing Date, certifying that the conditions specified in Sections
3.1, 3.2 and 3.8 have been fulfilled.
3.4 OPINIONS OF COUNSEL OF THE COMPANY. The Purchaser shall have
received an opinion from Steel Hector & Davis LLP, counsel to the Company,
dated the Common Closing Date and substantially in the form of Exhibit B, and
an opinion from Lionel Sawyer & Collins, Nevada counsel to the Company, dated
the Common Closing Date in such form as may be reasonably acceptable to the
Purchaser.
3.5 WAIVERS AND CONSENTS. All waivers and consents required to be
obtained by the Company in connection with the Common Closing shall be
satisfactory in substance and form to the Purchaser, including but not limited
to the consent of Heller Financial, Inc.
3.6 OTHER AGREEMENTS.
(a) The Stockholders Agreement attached hereto as Exhibit C
(the "Stockholders Agreement") shall have been executed and delivered by the
Company, the Ginsburgs (as defined
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therein), and the Purchaser. All such action shall have been taken as may be
necessary to elect a Board of Directors of the Company, effective upon the
Common Closing, as provided in the Stockholders Agreement.
(b) The Registration Rights Agreement attached hereto as
Exhibit D (the "Registration Rights Agreement") shall have been executed and
delivered by the Company and the Purchaser.
(c) The Employment Agreements attached hereto as Exhibit E
and F (the "Employment Agreements") shall have been executed and delivered by
Richard Ginsburg and Darius G. Nevin and the Company.
(d) The Employment Agreement attached hereto as Exhibit G
(the "Harold Ginsburg Employment Agreement") shall have been executed and
delivered by Harold Ginsburg and the Company.
3.7 CORPORATE ACTION. The Company shall have delivered to the
Purchaser certified copies of (a) the resolutions duly adopted by an
independent committee of the, and the full, board of directors of the Company
authorizing the execution, delivery and performance of this Agreement, and
each of the other agreements contemplated hereby, the filing of the Articles
of Amendment, the issuance and sale of the Preferred Shares and the Common
Shares, the reservation for issuance upon conversion of the Preferred Shares
of an aggregate of 2,273,385 shares of Common Stock and the consummation of
all other transactions contemplated by this Agreement, (b) the written
consents of the Company's stockholders adopting the Articles of Amendment, (c)
the Articles of Incorporation and Bylaws of the Company, each as amended to
date, and (d) incumbency of the Company's officers.
3.8 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, assets, liabilities, prospects, results of
operations or condition, financial or otherwise, of the Company and its
subsidiaries, taken as a whole ( "Material Adverse Change").
3.9 STATUS OF PREFERRED STOCK CLOSING. All third party conditions and
consents to the Preferred Stock Closing shall have been satisfied, except the
passage of time with respect to the information statement delivered to
stockholders of the Company in connection with the adoption of the Articles of
Amendment and the filing of the Articles of Amendment with the Secretary of
State of the State of Nevada.
3.10 NO PROCEEDINGS OR LITIGATION. There shall be no proceeding or
action pending or threatened before any tribunal or governmental agency which
seeks to restrain or effect any of the transactions contemplated herein.
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4. CONDITIONS TO COMPANY'S OBLIGATIONS RE: COMMON CLOSING. The
Company's obligation to sell the Common Shares is subject to the fulfillment,
prior to or at the Common Closing, of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties of the Purchaser contained in Section 7 shall be correct at and as
of the time of the Common Closing.
4.2 PERFORMANCE AND COMPLIANCE. The Purchaser shall have performed
all agreements and complied with all conditions contained herein required to
be performed or complied with by it prior to or at the Common Closing.
4.3 OFFICER'S CERTIFICATE. The Company shall have received a
certificate of the President and Chief Executive Officer of the Purchaser,
dated the Common Closing Date, certifying that the conditions specified in
Sections 4.1 and 4.2 have been fulfilled.
4.4 OPINION OF COUNSEL OF THE COMPANY. The Company shall have
received an opinion from John K. Rosenberg, counsel of the Purchaser, dated
the Common Closing Date and substantially in the form of Exhibit H.
4.5 WAIVERS AND CONSENTS. All waivers and consents required to be
obtained by the Purchaser in connection with the Common Closing shall be
satisfactory in substance and form to the Company, including but not limited
to the consent of Protection One, Inc.
4.6 OTHER AGREEMENTS.
(a) The Stockholders Agreement shall have been executed and
delivered by the Company, the Ginsburgs, and the Purchaser. All such action
shall have been taken as may be necessary to elect a Board of Directors of the
Company, effective upon the Common Closing, as provided in the Stockholders
Agreement.
(b) The Registration Rights Agreement shall have been
executed and delivered by the Company and the Purchaser.
(c) The Employment Agreements shall have been executed and
delivered by Richard Ginsburg and Darius G. Nevin and the Company.
(d) The Harold Ginsburg Employment Agreement shall have been
executed and delivered by Harold Ginsburg and the Company.
4.7 FAIRNESS OPINION. The Company shall have received an opinion of
Raymond James & Associates, Inc. stating that the transactions contemplated
hereby are fair from a
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financial point of view to the existing stockholders of the Company and such
opinion shall not have been withdrawn or adversely modified.
5. CONDITIONS RE: PREFERRED CLOSING. The parties' obligations to
consummate the purchase of the Preferred Shares are subject to the
fulfillment, prior to or at the Preferred Closing, of the following
conditions:
5.1 COMMON CLOSING. The consummation of the Common Closing shall have
occurred prior to the Termination Date set forth in Section 11.
5.2 STOCKHOLDER APPROVAL. The Articles of Amendment shall have been
approved by the stockholders of the Company to the extent required by
applicable law.
5.3 ARTICLES OF AMENDMENT. The Articles of Amendment shall have been
filed with the Secretary of the State of Nevada and shall be in full force and
effect under the laws of such state.
6. CONDITIONS TO THE PURCHASER'S OBLIGATIONS RE: PREFERRED CLOSING.
The Purchaser's obligation to acquire the Preferred Shares is subject to the
fulfillment, prior to or at the Preferred Closing, of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties of the Company contained in Section 7 shall be correct as of the
date hereof and at and as of the time of the Preferred Closing.
6.2 PERFORMANCE AND COMPLIANCE. The Company shall have performed all
agreements and complied with all conditions contained herein required to be
performed or complied with by it prior to or at the Preferred Closing.
6.3 OFFICER'S CERTIFICATE. The Purchaser shall have received a
certificate of the President and Chief Executive Officer of the Company, dated
the Preferred Closing Date, certifying that the conditions specified in
Sections 6.1, 6.2 and 6.6 have been fulfilled.
6.4 OPINION OF COUNSEL OF THE COMPANY. The Purchaser shall have
received an opinion from Steel Hector & Davis LLP, counsel to the Company,
dated the Preferred Closing Date and substantially in the form of Exhibit B,
and an opinion from Lionel Sawyer & Collins, Nevada counsel to the Company,
dated the Common Closing Date in such form as may be reasonably acceptable to
the Purchaser.
6.5 WAIVERS AND CONSENTS. All waivers and consents required to be
obtained by the Company in connection with the Preferred Closing shall be
satisfactory in substance and form to the Purchaser, including but not limited
to the consent of Heller Financial, Inc.
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6.6 NO MATERIAL ADVERSE CHANGE. There shall have been no Material
Adverse Change.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants that:
7.1 ORGANIZATION; GOOD STANDING; VALID AND BINDING. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to enter into this Agreement, to issue
and sell the Common Shares and the Preferred Shares, and to carry out the
terms hereof and thereof. Each of the Company's subsidiaries is duly
organized, validly existing and in good standing under the laws of its state
of incorporation. Each of the Company and its subsidiaries is duly qualified
as a foreign corporation to do business, and is in good standing in each
jurisdiction where the character of its properties owned or leased or the
nature of its activities makes qualification necessary, except where failure
to so qualify would not individually or in the aggregate have a Material
Adverse Change. The execution, delivery and performance of this Agreement and
all other agreements contemplated hereby to which the Company is a party have
been duly authorized by the Company. Each of such agreements has been duly and
validly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, liquidation, moratorium,
receivership, conservatorship, readjustment of debts, fraudulent conveyance or
similar laws affecting the enforcement of creditors rights generally.
7.2 INFORMATION FURNISHED; BUSINESS. The Company has furnished the
Purchaser with true and complete copies of (a) the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1996, as amended to date,
(b) any and all of the Company's Current Reports on Form 8-K which have been
filed with the Securities and Exchange Commission ("SEC") since December 31,
1996, (c) the Company's Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 1997 and June 30, 1997, as amended to date, (collectively "SEC
Documents") and (d) all other reports and documents filed by the Company with
the SEC under the Exchange Act since January 1, 1997. The financial statements
contained in the SEC Documents have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as stated
in the notes thereto), and present fairly (subject, in the case of unaudited
statements, to normal recurring adjustments) the financial condition of the
Company as of their respective dates and the results of operations and cash
flows for the respective periods. Except as disclosed in the SEC Documents or
as set forth on Schedule A, since January 1, 1997 there has been no Material
Adverse Change. Since January 1, 1997, the Company has made all filings
required to be made in compliance with the Exchange Act, and such filings, as
modified by subsequent reports filed pursuant to the Exchange Act conformed in
all material respects to the requirements of the Exchange Act, and the rules
and regulations of the SEC thereunder, and such filings did not contain any
untrue statement of a material fact and did
-6-
not omit to state any material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which
such statements were made as of their respective dates of filing.
7.3 LITIGATION. Except as disclosed on Schedule A, there are no
actions, proceedings or investigations nor any judgment, decree, injunction,
rule, or order pending or threatened which question or affect the validity of
this Agreement, the Common Shares or the Preferred Shares, or any action taken
or to be taken pursuant hereto or thereto, or which might result, either in
any case or in the aggregate, in any Material Adverse Change, or in any
liabilities on the part of the Company which, either in any case or in the
aggregate, are or might be material and which liabilities have not been
disclosed in the notes to the Company's financial statements contained in the
SEC Documents and adequately reserved for on the Company's balance sheet as at
June 30, 1997.
7.4 COMPLIANCE WITH OTHER INSTRUMENTS. Except for consents and
approvals required to be obtained as set forth on Schedule A, the execution,
delivery and performance of this Agreement and the other agreements
contemplated hereby, and the issuance of the Common Shares and the Preferred
Shares, do not and will not result in any violation of or be in conflict with
or constitute (with or without due notice or lapse of time or both) a default
or result in an adverse event under any term of the Articles of Incorporation,
as amended (the "Charter"), or by-laws of the Company, or of any material
agreement, instrument, obligation, license, judgment, decree, order, statute,
rule or governmental regulation applicable to the Company, its assets or
properties or result in the imposition or creation of any lien or encumbrance
upon any asset or property of the Company. The Company is not in violation of
any term of its Charter or by-laws, or of any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation which is material to
the business, operations, prospects, or affairs of the Company.
7.5 GOVERNMENTAL CONSENTS. Except for such consents, approvals and
authorizations as are set forth on Schedule A, neither the Company, nor any of
its subsidiaries is or will be required to obtain any consent, approval or
authorization of, or to make any declaration or filing with, any governmental
authority as a condition precedent to the valid execution and delivery of this
Agreement and the other agreements contemplated hereby, and, the valid offer,
issue and delivery of the Common Shares and the Preferred Shares. Schedule 6.5
correctly sets forth the names and jurisdictions of domicile of each
subsidiary of the Company.
7.6 CAPITAL STOCK. Schedule A correctly describes each class of the
authorized capital stock of the Company on the date hereof, including, as to
each such class, the number of shares thereof authorized and the number of
shares thereof issued and outstanding. All of the outstanding shares of the
Company are validly issued and outstanding, fully paid and non- assessable and
free of preemptive rights. The Company has no outstanding securities
convertible into or exchangeable for capital stock and no outstanding options,
warrants or other rights to subscribe for or purchase, or agreements for the
purchase from or the issue or sale by the Company of, capital stock, other
than as set forth in such Schedule A, which correctly describes
-7-
each such security, right or agreement and the number of shares subject
thereto, whether or not reserved for on the books of the Company. Schedule A
also sets forth all shares of capital stock reserved or required for issuance
pursuant to any employee benefit, stock option or other similar plan.
7.7 DISCLOSURE. There is no fact known to the Company which
materially adversely affects the business, operations, affairs, prospects,
properties, assets or condition of the Company which has not been set forth in
this Agreement or in Schedule A hereto. No representation or warranty
contained in this Agreement, the other agreements contemplated hereby, or the
Schedules hereto or thereto, or any officers certificate furnished thereunder,
at the date hereof, or at the Common Stock Closing Date and the Preferred
Stock Closing Date contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
7.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
SEC Documents or as set forth on Schedule A hereto, since January 1, 1997, the
Company has in all material respects conducted its business in the ordinary
course consistent with past practices.
7.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Schedule A and in the SEC Documents, and liabilities incurred after January 1,
1997 in the ordinary course of business and consistent with past practices,
the Company does not have any liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of a nature required by GAAP to be reflected
in a consolidated balance sheet (or reflected in the notes thereto).
7.10 NO DEFAULT. Except as set forth on Schedule A hereto, neither
the Company nor any of its subsidiaries is in violation or breach of, or
default under (and no event has occurred which with notice or the lapse of
time or both would constitute a violation or breach of, or a default under)
any term, condition or provision of (i) any material note, bond, mortgage,
deed of trust, security interests, indenture, license, contract, agreement,
plan or other instrument or obligation to which the Company or any such
subsidiary is a party or by which the Company or any such subsidiary or any of
their respective properties or assets may be bound or affected, (ii) any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company, any subsidiary of the Company or any of their respective properties
or assets or (iii) any registration, license, permit or other consent or
approval of any governmental agency, except in each case for breaches,
defaults or violations which would not individually or in the aggregate have a
material adverse effect on the business, assets, liabilities, results of
operations or condition, financial or otherwise, of the Company and its
subsidiaries, taken as a whole.
8. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants that:
8.1 NO DISTRIBUTION. The Purchaser is acquiring the Preferred Shares
and the Common Shares for its own account with the present intention of
holding such securities for
-8-
purposes of investment, and it has no intention of selling such securities in
a public distribution in violation of the federal securities laws or any
applicable state securities laws. The Purchaser understands that the Common
Shares and the Preferred Shares are "restricted securities" as defined in Rule
144 under the Securities Act of 1933, as amended (the "Securities Act"), and
have not been registered pursuant to the provisions of the Securities Act, in
as much as the proposed purchase of the Common Shares and the Preferred Shares
is taking place in a transaction not involving any public offering.
8.2 SOPHISTICATION. The Purchaser is knowledgeable, experienced and
sophisticated in financial and business matters and is able to evaluate the
risks and benefits of the investment in the Common Shares and the Preferred
Shares.
8.3 ECONOMIC RISK. The Purchaser is able to bear the economic risk of
its investment in the Common Shares and the Preferred Shares for an indefinite
period of time because the Common Shares and the Preferred Shares have not
been registered under the Securities Act and, therefore, cannot be sold unless
subsequently registered under the Securities Act or an exemption from such
registration is available.
8.4 ACCESS TO INFORMATION. The Purchaser has been furnished or
otherwise had full access to such other information concerning the Company and
its subsidiaries as it has requested and that was necessary to enable the
Purchaser to evaluate the merits and risks of an investment in the Company,
and after a review of this information, has had an opportunity to ask
questions and receive answers concerning the financial condition and business
of the Company and the terms and conditions of the securities purchased
hereunder, and has had access to and has obtained such additional information
concerning the Company and the securities as it deemed necessary. The
Purchaser has carefully reviewed the information furnished pursuant to Section
7.2.
8.5 ACCREDITED INVESTOR. The Purchaser is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
8.6 LEGEND. The Purchaser understands that the certificate(s)
representing the Common Shares and the Preferred Shares (and any Common Stock
issued upon conversation of the Preferred Shares) will bear restrictive
legends thereon as follows:
"The securities represented by this certificate have been acquired
directly or indirectly from the Company without being registered
under
the Securities Act of 1933, as amended (the "Act"), or any other
applicable securities laws, and are restricted securities as that
term
is defined under Rule 144 promulgated under the Act. These securities
may not be sold, pledged, transferred, distributed or otherwise
disposed of in any manner unless they are registered under the Act
and
all other applicable securities laws, or unless the request for
transfer is accompanied by a favorable opinion of counsel, reasonably
satisfactory to the
-9-
Company, stating that the transfer will not result in a violation of
the Act and all other applicable state securities law."
8.7 ADDITIONAL PURCHASER REPRESENTATIONS. The Purchaser is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. The execution, delivery and performance of
this Agreement and all other agreements contemplated hereby to which such
Purchaser is a party have been duly authorized by the Purchaser. Each of such
agreements constitutes a valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, liquidation, moratorium, receivership, conservatorship,
readjustment of debts, fraudulent conveyance or similar laws affecting the
enforcement of creditors rights generally. The Purchaser has made or obtained
all material third party and governmental consents, approvals and filings to
be made or obtained prior to the Closings by the Purchaser in connection with
the consummation of the transactions hereunder. The execution and delivery by
the Purchaser of each of the Agreement and all other agreements contemplated
hereby and the fulfillment of and compliance with the respective terms thereof
by the Purchaser do not and shall not (a) conflict with or result in a breach
of the terms, conditions or provisions of, (b) constitute a default under, or
(c) result in a violation of the organizational documents of the Purchaser or
any material agreement or instrument to which Purchaser is subject.
9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY THE COMPANY. In addition to all other sums due
hereunder or provided for in this Agreement and any other rights and remedies
available to Purchaser under applicable law, the Company agrees to hold
harmless and indemnify the Purchaser and all directors, officers and
controlling persons of the Purchaser (within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (individually referred to as an "Indemnified
Person") from and against any losses, claims, damages, costs and expenses, and
liabilities (including attorneys' fees and expenses of investigation) incurred
by each Indemnified Person pursuant to any action, suit, proceeding or
investigation against any one or more of the Company and such Indemnified
Person, and arising out of or in connection with a breach by the Company of
any agreement, representation, warranty, covenant, or obligation contained in
this Agreement or any other agreement contemplated hereby or delivered
hereunder and any and all costs and expenses incurred by any Indemnified
Person in connection with the enforcement of its rights under this Agreement
and the other agreements contemplated hereby. The Company further agrees,
promptly upon demand by an Indemnified Person, from time to time, to reimburse
each Indemnified Person for, or pay, any loss, claim, damage, liability or
expense as to which the Company has indemnified the Indemnified Person
pursuant to this Agreement.
9.2 INDEMNIFICATION BY THE PURCHASER. In addition to all other sums
due hereunder or provided for in this Agreement, the Purchaser agrees to hold
harmless and indemnify the Company and all directors, officers and controlling
persons of the Company (within the meaning
-10-
of Section 15 of the Securities Act or Section 20 of the Exchange Act)
(individually referred to as an "Indemnified Person") from and against any
losses, claims, damages, costs and expenses and liabilities (including
attorneys' fees and expenses of investigation) incurred by each Indemnified
Person pursuant to any action, suit, proceeding or investigation against any
one or more of the Purchaser and such Indemnified Person, and arising out of
or in connection with a breach by the Purchaser of any agreement,
representation, warranty, covenant or obligation contained in this Agreement
or any agreement contemplated hereby or delivered hereunder and any and all
costs and expenses incurred by any Indemnified Person in connection with the
enforcement of its rights under this Agreement and the agreements contemplated
hereby. The Purchaser further agrees, promptly upon demand by an Indemnified
Person, from time to time, to reimburse each Indemnified Person for, or pay,
any loss, claim, damage, liability or expense as to which the Purchaser has
indemnified the Indemnified Person pursuant to this Agreement.
9.3 PROCEDURE. Each Indemnified Person agrees to give prompt written
notice to the indemnifying party after the receipt by the Indemnified Person
of any written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such Indemnified
Person will claim indemnification or contribution pursuant to this Agreement,
PROVIDED that the failure of any Indemnified Person to give notice shall not
relieve the indemnifying party of its obligations except to the extent that
the indemnifying party is actually prejudiced by the failure to give notice.
If any such action is brought against an indemnified party, the indemnifying
party will be entitled to participate in and to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party for any legal or other expenses incurred by the latter
in connection with the defense thereof unless (i) in the reasonable opinion of
counsel for the indemnifying party a conflict of interest exists between the
indemnified party and indemnifying party, (ii) the indemnified party
reasonably objects to such assumption on the basis that there may be defenses
available to it which are different from or in addition to the defenses
available to the indemnifying party, (iii) the indemnifying party has failed
to timely assume the defense of any such action or proceeding or (iv) the
indemnifying party and its counsel do not actively and vigorously pursue the
defense of such action . Whether or not such defense is assumed by the
indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent. No indemnifying party
will consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
of such claim or litigation. An indemnifying party who elects not to assume
the defense of an action or where a potential conflict of interest or other
defenses may able available, shall not be obligated to pay the fees and
expenses of more than one counsel and local counsel where appropriate for all
parties indemnified by such indemnifying party with respect to such action,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such action. Cost and expenses incurred by
the indemnified party shall be reimbursed, from time to time, by the Company
as and when bills are received or expenses are incurred.
-11-
9.4 GROSS UP. Any payment required to be made under this Section 9
shall be increased so that the net amount retained by the Indemnified Person,
after deduction of any federal, state, local or foreign tax due thereon
(assuming a maximum effective total statutory tax rate), shall be equal to the
amount otherwise due.
10. EXCHANGE AND REPLACEMENT OF SECURITIES. Upon surrender of any
Preferred Share or Common Share certificate by the Purchaser for exchange at
the office of the Company, the Company, at its expense (exclusive of
applicable transfer taxes or other similar taxes) will issue or cause to be
issued, in exchange, a new Preferred Share or Common Share certificate in such
denominations as may be requested for the same number of Preferred Shares or
Common Shares, as the case may be, and registered as the Purchaser may
request. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any Preferred Share or Common Share
certificate, upon delivery of a written agreement of indemnity reasonably
satisfactory to the Company in form or amount, or, in the case of any such
mutilation upon surrender and cancellation thereof, the Company, at its
expense, will issue or cause to be issued a new Preferred Share or Common
Share certificate in replacement of such lost, stolen, destroyed or mutilated
Preferred Share or Common Share certificate.
10.1 SURVIVAL. All agreements, representations and warranties
contained herein or made in writing by or on behalf of the Company or by or on
behalf of the Purchaser in connection with the transactions contemplated
hereby shall survive the execution and delivery of this Agreement, all
investigations made by Purchaser or on Purchaser's behalf, and the issue and
delivery of the Preferred Shares and the Common Shares.
11.01 TERMINATION. This Agreement may be terminated:
(a) by the mutual written consent of the Purchaser and the
Company;
(b) by either party if the Common Closing has not occurred
on or before November 30, 1997, or such later date as the parties may agree
upon (the "Termination Date"); provided that the party electing termination
pursuant to this clause (b) is not in material breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement;
(c) by the Purchaser if the Preferred Stock Closing has not
occurred on or before December 31, 1997, or such later date as the parties may
agree upon.
(d) (i) by the Purchaser if any of the conditions in Section
3 have not been satisfied as of the Common Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of
the Purchaser to comply with its obligations under this Agreement) and the
Purchaser has not waived such condition on or before the Common Closing Date;
-12-
(ii) by the Company, if any of the conditions in
Section 4 have not been satisfied as of the Common Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of the Company to comply with its obligations under this
Agreement) and the Company has not waived such condition on or before the
Common Closing Date;
(iii) by either party, if any of the conditions in
Section 5 have not been satisfied as of the Preferred Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of the electing party to comply with its obligations under this
Agreement) and such condition has not been waived on or before the Preferred
Closing Date; or
(e) by either party if a breach of any provision of this
Agreement has been committed by the other party or any representation or
warranty made by the other party shall have been incorrect when made and such
breach, failure or misrepresentation has not been cured within 20 days after
notice thereof or waived.
11.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 11.01, this Agreement shall forthwith become
void and there shall be no liability on the part of either party hereto except
(a) as set forth in Section 9, 13 and 15 and (b) that nothing herein shall
relieve either party from liability for any breach of this Agreement.
12. NO BROKER. Each party hereto represents and warrants that it has
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection
with this Agreement.
13. BREAK-UP FEE . In the event that this Agreement is terminated as
a result of a breach of this Agreement by the Company, failure of the Company
to obtain any required consents or approvals, or in connection with the
Company entering into another transaction, the Company will pay Purchaser in
same day funds a cash fee of $300,000 immediately upon termination.
14. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
hand delivered or sent by first class registered or certified mail (return
receipt requested), postage prepaid, to the respective addresses of the
Company and the Purchaser set forth below, unless subsequently changed by
written notice. Any notice shall be deemed to be effective when it is
received.
To the Purchaser:
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Westar Capital, Inc.
818 South Kansas Avenue
P.O. Box 889
Topeka, Kansas 66601
Attention: President
Phone: 785-575-6322
Fax: 785-575-1788
With a copy to:
John K. Rosenberg, Esq.
818 South Kansas Avenue
P.O. Box 889
Topeka, Kansas 66601
Phone: 785-575-6322
Fax: 785-224-1788
To the Company:
Guardian International, Inc.
3880 North 28th Terrace
Hollywood, Florida 33020-1118
Attention: Richard Ginsburg, President
Phone: 954-926-5200
Fax: 954-926-1822
With a copy to:
Harvey Goldman, Esq.
Steel Hector & Davis LLP
200 South Biscayne Boulevard
41st Floor
Miami, FL 33131-2398
Phone: 305-577-7011
Fax: 305-577-7001
15. COSTS AND EXPENSES. Whether or not the transactions contemplated
hereby close, each party will bear its own costs and expenses for due
diligence and for the preparation and negotiation of this Agreement and the
agreements referenced herein. The Company agrees to pay, or cause to be paid,
all documentary and similar taxes levied under the laws of the United States
of America or any state or local taxing authority thereof or therein in
connection with the issuance and sale of the Preferred Shares and the Common
Shares and the execution and delivery
-14-
of the other agreements and documents contemplated hereby and any modification
of any of such documents and will hold the Purchaser harmless without
limitation as to time against any and all liabilities with respect to all such
taxes.
16. RESERVED.
17. MUTUAL COVENANTS. Each of the Company and Purchaser agrees to
promptly use its best efforts to secure such consents as may be necessary to
effect the transactions contemplated hereunder.
18. PRESS RELEASES. Simultaneously with the execution of this
Agreement, the parties hereto shall issue a press release in mutually
acceptable form (the "Press Release"). The parties hereto agree to consult
with each other prior to any press release regarding the transactions
contemplated herein.
19. ASSIGNMENT, SUCCESSORS AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other party, except that the Purchaser may assign any of its rights under
this Agreement to any "affiliate" of the Purchaser as defined in Regulation D
of the Act including, but not limited to, Protection One, Inc. following the
closing of the proposed transaction in which Western Resources, Inc. shall
acquire not less than 50% of the outstanding equity of Protection One, Inc.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement
will be construed to give any person other than the parties to this Agreement
any legal or equitable right, remedy or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
20. SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions
of this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable. In the
event any provision of this Agreement shall be held invalid, the parties agree
to enter into such further agreements as may be necessary in order to carry
out the intent and purposes of the parties herein.
21. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Florida without
regard to conflict of law principles thereunder.
22. ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the
-15-
agreement between the parties with respect to its subject matter. This
Agreement may be not amended except by a written agreement executed by the
party to be charged with the Amendment.
23. WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor the delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by any party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of an obligation of such party or of
the right of the party giving such notice or demand to take further notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
24. ACQUISITION PROPOSALS. The Company will not, and will use its
best efforts to cause its officers, directors, employees, representatives and
agents not to, initiate, encourage or solicit, directly or indirectly, any
inquiries or the making of any proposal with respect to, or, except to the
extent advised in writing by outside counsel that said disclosure is required
by their fiduciary duties, engage in negotiations concerning, provide any
confidential information or data to, or have any discussions with, any person
relating to, any acquisition, or purchase of all or any significant portion of
the assets of, or any equity interest in, such party or any of its
subsidiaries or any merger, consolidation or other business combination of
such party or any of its subsidiaries with any other Person. The Company
represents that as of the date hereof it has ceased any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. The Company agrees to notify the
Purchaser immediately if any such negotiations, provision of confidential
information or data or discussions are entered into or made or any such
inquiries are received in respect thereof, and shall provide details with
respect thereto. Notwithstanding the above, the Company may engage in such
described behavior with respect to any proposal meeting the above definition
of acquisition proposal pursuant to which the Company shall acquire the stock
or assets of another entity for an aggregate purchase price not to exceed
$4,000,000.
25. NOTICE OF CERTAIN EVENTS. The Company and the Purchaser shall
promptly notify the other of:
(a) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;
-16-
(b) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting any party which, if pending on
the date of this Agreement, would have been required to have been disclosed
pursuant to this Agreement or which relate to the consummation of the
transactions contemplated by this Agreement.
26. SECTION HEADINGS; COUNTERPARTS. The headings in this Agreement
are for purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
27. DISPUTE RESOLUTION. Any dispute arising from, relating to, or in
connection with the matters contained herein shall be resolved in accordance
with procedures set forth in Schedule B hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on their behalf as of the date first written above.
GUARDIAN INTERNATIONAL, INC.
By: /s/ RICHARD GINSBURG
---------------------------------------
Richard Ginsburg,
President and Chief Executive Officer
WESTAR CAPITAL, INC.
By: /s/ RITA A. SHARPE
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Rita A. Sharpe
President
-17-
EXHIBIT 99.C
GUARDIAN INTERNATIONAL, INC.
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "Agreement"), dated as of October 21,
1997, is made by and among Guardian International, Inc., a Nevada corporation
(the "Company"), Harold Ginsburg, Sheilah Ginsburg, Richard Ginsburg and
Rhonda Ginsburg (the "Ginsburgs"), and Westar Capital, Inc., a Kansas
corporation ("Westar"). The Ginsburgs and Westar are referred to collectively
as the "Stockholders" and individually as a "Stockholder." Capitalized terms
used herein and not defined in the text are defined in Section 1 hereof.
Simultaneously with the execution hereof, Westar shall subscribe to
shares (the "Shares") of Common Stock and Preferred Stock pursuant to the
Stock Subscription Agreement between Westar and the Company dated as of
October 14, 1997 (the "Subscription Agreement").
The Company and the Stockholders desire to enter into this Agreement for
the purposes, among others, of (i) establishing the composition of the
Company's Board of Directors (the "Board") and certain other voting
agreements, (ii) assuring continuity in the management and ownership of the
Company and (iii) limiting the manner and terms by which the Stockholder
Shares may be transferred. The execution and delivery of this Agreement is a
condition to Westar's subscription and the Company's sale of the Shares
pursuant to the Subscription Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement hereby agree
as follows:
1. Definitions.
"AFFILIATE" has the meaning set forth in Section 8(e).
"BOARD" has the meaning set forth in the preamble.
"CERTIFICATE OF DESIGNATIONS," means the Certificate of Designations to
the Articles of Incorporation of the Company dated as of _________ ___, 1997
defining the rights and preferences of the Preferred Stock.
"COMMON SHARES" means the 2,500,000 shares of Common Stock subscribed by
Westar pursuant to the Subscription Agreement.
"COMMON SHARES CLOSING" has the meaning set forth for such term in the
Subscription Agreement.
"COMMITTEE" has the meaning set forth in Section 8(b).
"COMMON STOCK" means the Company's Class A Common Stock, par value $.001
per share.
"COMPANY" has the meaning set forth in the preamble.
"DEFAULT" has the meaning set forth for such term in the Certificate of
Designations.
"FAMILY GROUP" has the meaning set forth in Section 8(e).
"FULLY DILUTED BASIS" means, at any date as of which the number of
shares is to be determined, (a) all shares of capital stock outstanding at
such date, and (b) the maximum number of shares of capital stock issuable
pursuant to warrants, options or other rights to purchase or acquire (whether
or not such warrants, options or other rights are then exercisable), or
pursuant to securities convertible into or exchangeable (whether or not such
securities are then convertible or exchangeable) for, shares of capital stock
outstanding on such date (including any shares issuable pursuant to any
outstanding warrants).
"NON-AFFILIATE" means any entity other than one of which Westar, its
parent or its subsidiaries own or control more than 20% of the voting
securities or one which Westar, its parent or its subsidiaries control, are
controlled by or are under common control with. For purposes of this
definition and the definition of "Affiliate", "control" means the power to
direct the management and policies of an entity whether through the ownership
of voting securities, contract or otherwise.
"OFFER NOTICE" has the meaning set forth in Section 8(b).
"OTHER STOCKHOLDER" means the Stockholder other than the Transferring
Stockholder.
"PERMITTED TRANSFEREE" has the meaning forth in Section 8(e).
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
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"PREFERRED SHARES" means the 1,875,000 shares of Preferred Stock of the
Company to be sold to Westar pursuant to the terms of the Subscription
Agreement.
"PREFERRED STOCK" means the Company's Series A 9 3/4% Convertible
Cumulative Preferred Stock, par value $.001 per share, having the rights and
preferences set forth in the Certificate of Designations.
"PUBLIC SALE" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule
144 promulgated under the Securities Act.
"SALE NOTICE" has the meaning set forth in Section 8(c).
"SALE OF THE COMPANY" has the meaning set forth in Section 9(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated pursuant thereto.
"STOCKHOLDER SHARES" means (i) any Common Stock or Preferred Stock held,
purchased or otherwise acquired by any Stockholder, (ii) any Common Stock
issued or issuable directly or indirectly upon conversion of the Preferred
Stock and (iii) any Common Stock or Preferred Stock issued or issuable with
respect to the securities referred to in clauses (i) or (ii) above. For
purposes of this Agreement, any Person who holds Preferred Stock shall be
deemed to be the holder of the Stockholder Shares issuable directly or
indirectly upon conversion of the Preferred Stock in connection with the
transfer thereof or otherwise and regardless of any restriction or limitation
on the conversion thereof.
"STOCKHOLDERS" has the meaning set forth in the preamble.
"SUBSCRIPTION AGREEMENT" has the meaning set forth in the preamble.
"TRANSFER" has the meaning set forth in Section 8(a).
"TRANSFERRING STOCKHOLDER" has the meaning set forth in Section 8(b).
2. BOARD OF DIRECTORS.
a. COMPOSITION OF THE BOARD.
i. From and after the Common Shares Closing and until the
conversion of the Preferred Shares into Common Stock pursuant to the
terms of the Certificate of Designations (the "Conversion"), each
Stockholder shall vote all of its Stockholder Shares which are voting
shares and any other voting securities of the
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Company over which such Stockholder has voting control and shall take
all other necessary or desirable actions within its control (whether in
its capacity as a stockholder, director, member of a board committee or
officer of the Company or otherwise, and including, without limitation,
attendance at meetings in person or by proxy for purposes of obtaining
a quorum and execution of written consents in lieu of meetings), and
the Company shall take all necessary or desirable actions within its
control (including, without limitation, calling special board and
stockholder meetings), so that, subject to the remainder of this
Section 2:
(1) The authorized number of directors on the Board
shall be estblished at eight directors; and
(2) The following individuals shall be elected to the
Board:
(a) four representatives nominated by the
Ginsburgs, who shall initially be Harold Ginsburg,
Sheilah Ginsburg, Richard Ginsburg and one
additional representative to be nominated by the
Ginsburgs.
(b) two representatives nominated by Westar, and
(c) two representatives who shall not be officers or
employees of the Company or of Westar or related by
blood or marriage to or affiliated with any of the
Ginsburgs (the "Independent Directors") nominated
mutually by the Stockholders; and
(3) If at any time prior to the Conversion, Westar
Transfers Shares to a Non-Affiliate, Westar shall forfeit the
right to nominate
(a) one Board seat if it Transfers 40% or more but
less than 75% of the Shares, which Board seat shall
thereafter become an Independent Director seat, and
(b) two Board seats if it Transfers 75% or more of
the Shares.
ii. After the Conversion, each Stockholder shall
vote all of its Stockholder Shares which are voting shares and any
other voting securities of the Company over which such Stockholder has
voting control and shall take all other necessary or desirable actions
within its control (whether in its capacity as a stockholder, director,
member of a board committee or officer of the Company or otherwise, and
including, without limitation, attendance at meetings in person or by
proxy for purposes of obtaining a quorum and execution of written
consents in lieu of meetings), and the
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Company shall take all necessary or desirable actions within its
control (including, without limitation, calling special board and
stockholder meetings), so that, subject to the remainder of this
Section 2:
(1) The authorized number of directors on the Board
shall be established at nine directors; and
(2) The following individuals shall be elected to the
Board:
(a) three representatives nominated by the Ginsburgs,
(b) three representatives nominated by Westar,
(c) three representatives who shall be Independent
Directors nominated mutually by the Stockholders;
and
(3) If at any time after the Conversion, Westar
Transfers Shares of Common Stock (including those acquired
upon Conversion) to a Non-Affiliate, Westar shall forfeit the
right to nominate
(a) one Board seat if it Transfers 25% or more but
less than 45% of the Shares, which Board seat shall
thereafter become an Independent Director seat,
(b) two Board seats if it Transfers 45% or more but
less than 70% of the Shares, which Board seats
shall thereafter become Independent Director seats,
and
(c) three Board seats if it Transfers 70% of more
of the Shares.
iii. Any committees of the Board shall be created and the
composition thereof determined only upon the approval of not less than
one Ginsburg nominee, one Westar nominee and one Independent Director.
iv. The removal from the Board (with or without cause)
of any representative nominated hereunder shall be at the written
request of the Person nominating such representative, but only upon
such written request and under no other circumstances, subject to
applicable law.
v. In the event that any representative nominated
hereunder resigns, is removed or otherwise ceases to serve as a member
of the Board during his term of office, the resulting vacancy on the
Board shall be filled by a representative nominated by the Person
nominating such representative as provided hereunder.
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vi. No transferee of Stockholder Shares (including
Common Stock issued upon Conversion), other than Permitted Transferees,
shall have any right hereunder to cause any representatives to be
appointed to the Board.
vii. The Company agrees to include each such designated
nominee to be added to or retained on the Board pursuant to this
Agreement in the slate of nominees recommended by the Board to the
Company's stockholders for election as directors and shall use its best
efforts to cause the election or reelection of each such nominee to the
Board, including soliciting proxies in favor of the election of such
persons.
b. LIMITATIONS ON BOARD COMPOSITION. Notwithstanding the provisions
contained in Section 2(a),
i. in the event of a Default, Westar shall have the
right to elect a majority of the Board until such time as the Default
is cured; and
ii. the election of directors to the Board shall be
subject at all times to applicable law.
c. BOARD EXPENSES. The Company shall pay the reasonable out-of-pocket
expenses incurred by each director in connection with attending the meetings
of the Board and any committee thereof, and each Board member shall otherwise
be compensated as determined from time to time by the Board. The Company shall
use its best efforts to obtain and to maintain directors and officers
indemnity insurance coverage at a commercially reasonable price, and the
Company's articles of incorporation and bylaws shall provide for
indemnification and exculpation of directors to the fullest extent permitted
under applicable law.
d. WRITTEN CONSENT. Each director entitled to vote at a meeting of
the Board or to express consent or dissent to corporate action in writing
without a meeting may authorize another director to act for him or her by
proxy, but no such proxy shall be noted or acted upon after six months from
its date or if such proxy is not permitted by applicable law.
3. EXECUTIVE EMPLOYMENT AGREEMENTS. In order to provide for
continuity of operations and management of the Company, Westar agrees that it
will, and will cause its nominees to the Board to, subject to exercise of such
directors' fiduciary duties to all the stockholders of the Company, vote and
take any and all action necessary or appropriate as a stockholder of the
Company to cause the Company to uphold and comply with those certain
Employment Agreements dated as of October __, 1997 between the Company and
Richard Ginsburg, between the Company and Darius G. Nevin and between the
Company and Harold Ginsburg (the "Employment Agreements") pursuant to the
terms thereof for the duration set forth in such Employment Agreements or its
earlier termination thereof as provided therein.
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4. INCENTIVE STOCK OPTION PLAN. Westar agrees to vote in favor of the
establishment of a management incentive stock option plan (the "Plan")
pursuant to which options not to exceed 5% of the Common Stock outstanding on
the date of adoption on a Fully Diluted Basis may be issued. The Plan will
contain terms customary to such incentive stock option plans, including
provisions governing change of control. Options granted under the Plan will
vest one-fifth each year over a five-year period.
5. FUTURE FINANCING. Westar agrees to vote in favor of a secondary
public offering by the Company of up to 4,000,000 shares of Common Stock at
not less than $2.00 per share in connection with an offering of Common Stock,
convertible debt or debt-with-equity securities.
6. REPRESENTATIONS AND WARRANTIES. Each Stockholder represents and
warrants that (i) such Stockholder is the record owner of the number of shares
of the Company's capital stock set forth opposite its name on the Schedule A
attached hereto, (ii) this Agreement has been duly authorized executed and
delivered by such Stockholder and constitutes the valid and binding obligation
of such Stockholder, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, liquidation, moratorium receivership,
conservatorship, readjustment of debts, fraudulent conveyance or other laws
affecting the enforcement of creditors' rights generally, and (iii) such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement. No holder of Stockholder Shares shall grant any
proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
7. LIMITATION ON OWNERSHIP. For a period commencing on the Common
Shares Closing and ending on the earlier of (a) the fifth anniversary thereof,
(b) the occurrence of a Default, (c) a Sale of the Company, and (d) the date
of a third party offer which could result in the sale of the Company to a
third party, or an unsolicited tender offer or proxy contest for control of
the Company by a third party, Westar agrees to limit its ownership of the
Common Stock to 45% of the Common Stock of the Company outstanding at any time
on a Fully Diluted Basis, unless Westar receives the prior written consent of
the Company to exceed that limit.
8. RESTRICTIONS ON TRANSFER OF STOCKHOLDER SHARES.
a. TRANSFER OF STOCKHOLDER SHARES. No Stockholder shall sell,
transfer, assign, pledge or otherwise dispose of (whether with or without
consideration and whether voluntarily or involuntarily) any interest in its
Stockholder Shares (a "Transfer"), except in compliance with the provisions of
this Section 8 or pursuant to a Public Sale. Each Stockholder agrees not to
consummate any such Transfer (other than a Public Sale) until 45 days after
the later of the delivery to the Company and the Other Stockholder of such
Stockholder's Offer Notice or Sale Notice (if any) (the "Election Period").
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b. FIRST OFFER RIGHT.
i. FIRST OFFER RIGHT OF THE COMPANY.
(1) At least 45 days prior to making any Transfer of any
Stockholder Shares (other than a Public Sale), the transferring
Stockholder (the "Transferring Stockholder") shall deliver a written
notice (an "Offer Notice") to an independent committee established by
the Board (a "Committee") and the Other Stockholder(s). The Offer
Notice shall disclose in reasonable detail the proposed number of
Stockholder Shares to be transferred, the proposed terms and conditions
of the Transfer and the identity of the prospective transferee(s) (if
known).
(2) The Company may, by recommendation of the Committee, elect
to purchase all, but not less than all of the Stockholder Shares
specified in the Offer Notice at the price and on the terms specified
therein by delivering written notice of such election to the
Transferring Stockholder and the Other Stockholder(s) as soon as
practical but in any event within 15 days after the delivery of the
Offer Notice.
ii. FIRST OFFER RIGHT OF THE OTHER STOCKHOLDER.
(1) If the Company has not elected to purchase the Stockholder
Shares within such 15-day period, the Other Stockholder(s) may elect to
purchase all or any portion of its pro rata share (based on the number
of Stockholder Shares held by such Person on a Fully Diluted Basis) of
the Stockholder Shares specified in the Offer Notice for a price not
less than 105% of the price and on the terms offered by the Company by
delivering written notice of such election to the Transferring
Stockholder as soon as practical but in any event within 45 days after
delivery of the Offer Notice; provided, however, that the Transferring
Stockholder shall not be required to sell any of the Stockholder Shares
specified in the Offer Notice to any Other Stockholder(s) unless all
such offered Shares are elected to be and are so purchased.
(2) If the Company or the Other Stockholder(s) have elected to
purchase the Stockholder Shares offered in the Offer Notice from the
Transferring Stockholder, the Transfer of such shares shall be
consummated as soon as practicable after the delivery of the election
notice to the Transferring Stockholder, but in any event within 30 days
after the expiration of the Election Period.
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iii. TRANSFER TO THIRD PARTIES.
(1) If the Company and the Other Stockholder have not elected
to purchase all of such Stockholder Shares being offered, the
Transferring Stockholder may, within 120 days after the expiration of
the Election Period and subject to the provisions of subsection (c)
below, Transfer all such Stockholder Shares to one or more third
parties at a price not less than 110% of the price offered by the Other
Stockholder(s) and on other terms no more favorable to the transferees
thereof than offered to the Company and the Other Stockholder(s) in the
Offer Notice.
(2) Any Stockholder Shares not transferred within such 120-
day period shall be re-offered to the Company and the Other
Stockholder(s) under this Section 8(b) prior to any subsequent
Transfer.
iv. The purchase price specified in any Offer Notice shall be
payable solely in cash at the closing of the transaction or, if provided in
the Offer Notice, in installments over time.
c. TAG-ALONG RIGHTS.
i. In the event the Ginsburgs shall Transfer more than 50% of
their aggregate Stockholder Shares (other than pursuant to a Public Sale), at
least 30 days prior to such Transfer, the Ginsburgs will deliver a written
notice (the "Sale Notice") to the Company and to Westar, specifying in
reasonable detail the identity of the prospective transferee(s) and the terms
and conditions of the Transfer. Westar may elect to participate in the
contemplated Transfer by delivering written notice to the Ginsburgs within 30
days after delivery of the Sale Notice.
ii. If Westar has elected to participate in such Transfer, the
Ginsburgs and Westar will be entitled to sell in the contemplated Transfer, at
the same price and terms, a number of Stockholder Shares equal to the product
of (i) the quotient determined by dividing the percentage of the class of
Stockholder Shares held by such person by the aggregate percentage of the
class of Stockholder Shares owned by the Ginsburgs and Westar participating in
such sale and (ii) the number of Stockholder Shares of such class to be sold
in the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100
shares of Common Stock by the Ginsburgs (assuming such 100
shares represents more than 50% of the Ginsburgs' stock
holdings), and if the Ginsburgs at such time owns 30% of all
shares of Common Stock and if Westar elects to participate and
owns 20% of all
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shares of Common Stock, the Transferring Stockholder would be
entitled to sell 60 shares [(30% / 50%) x 100 shares] and the
Other Stockholder wold be entitled to sell 40 shares [(20% /
50%) x 100 shares].
iii. The Ginsburgs shall use best efforts to obtain the agreement
of the prospective transferee(s) to the participation of Westar in any
contemplated Transfer, and the Ginsburgs shall not Transfer any of its
Stockholder Shares to the prospective transferee(s) if the prospective
transferee(s) declines to allow the participation of Westar as provided
herein.
d. PREEMPTIVE RIGHTS.
i. If (1) the Company authorizes the issuance or sale of any
equity securities (other than as a dividend on the outstanding Common Stock)
to any Person and if, and only if, (2) such issuance or sale (individually or
in the aggregate) would reduce Westar's equity ownership percentage of the
Company to less than 35% of the outstanding Common Stock as of the date or
dates of such authorization on a Fully Diluted Basis, the Company shall first
offer to sell to Westar a portion of such equity securities equal to the
quotient determined by dividing (a) the number of shares of Common Stock held
by Westar on a Fully Diluted Basis by (b) the total number of shares of
outstanding Common Stock on a Fully Diluted Basis (prior to giving effect to
any anti-dilution adjustments with respect to any such options, warrants or
convertible securities). Westar shall be entitled to purchase such equity
securities for the same price and on the same terms as such equity securities
are to be offered to such Person. The purchase price for all equity securities
offered to Westar shall be payable in cash by wire transfer of immediately
available funds.
ii. To exercise its purchase rights hereunder, Westar must within
30 days after receipt of written notice from the Company describing in
reasonable detail the equity securities being offered, the purchase price
thereof, the payment terms and Westar's percentage allotment, deliver a
written notice to the Company describing its election hereunder.
iii. Upon the expiration of the offering period described above,
the Company shall be entitled to sell such equity securities which Westar has
not elected to purchase during the 90 days following such expiration on terms
and conditions no more favorable to the purchasers thereof than those offered
to Westar. Any equity securities offered or sold by the Company to any other
Person after such 90-day period must be re- offered to Westar pursuant to the
terms of this subsection 8(d).
e. PERMITTED TRANSFERS. The restrictions set forth in this Section 8
shall not apply with respect to any Transfer of Stockholder Shares by any
Stockholder (i) in the case of the
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Ginsburgs, pursuant to applicable laws of descent and distribution or among
the Ginsburgs' Family Group or (ii) in the case of Westar, among its
Affiliates (collectively referred to herein as "Permitted Transferees");
provided that the restrictions contained in this Section 8 shall continue to
be applicable to the Stockholder Shares after any such Transfer and provided
further that the transferees of such Stockholder Shares shall have agreed in
writing to be bound by the provisions of this Agreement affecting the
Stockholder Shares so transferred. For purposes of this Agreement, "Family
Group" means an individual's spouse and descendants (whether natural or
adopted) and spouses of descendants and any trust, family limited partnership
or similar entity solely for the benefit of the individual and/or the
individual's spouse and/or descendants and/or spouses of their descendants,
and "Affiliate" or "subsidiary" of Westar means each Person as to which
Westar, directly or indirectly, (i) owns or controls 50% or more of the
aggregate capital stock, partnership interests or other equity interests or
(ii) any Person which controls, is controlled by or is under common control
with Westar. For purposes hereof "Affiliate" shall specifically include, but
not be limited to, Westar's parent, Western Resources, Inc., and any of such
parent's subsidiaries including, but not limited to, Protection One, Inc.,
following closing of the pending acquisition by Western Resources, Inc. of not
less than 50% of the outstanding equity of Protection One, Inc.
9. SALE OF THE COMPANY.
a. If a Committee shall approve a cash sale of all or
substantially all of the Company's assets determined on a consolidated basis
or a cash sale of all of the Company's outstanding capital stock to any other
person or entity (collectively, a "Sale of the Company"), Westar shall either
(i) vote for, consent to and raise no objections against, such Sale of the
Company or (ii) purchase the shares of outstanding Common Stock it does not
then own on substantially the same terms and conditions as approved by the
Committee. Westar shall have thirty days from the date of notice from the
Committee of approval of any such sale to agree to such purchase. If the Sale
of Company is structured as a sale of stock, each Stockholder shall agree to
sell all of its shares of capital stock of the Company and rights to acquire
shares of capital stock of the Company on the terms and conditions approved by
the Committee. Each Stockholder shall take all necessary or desirable actions
in connection with the consummation of the Sale of the Company as reasonably
requested by the Company.
b. The obligations of the Stockholders with respect to the Sale of
the Company are subject to the satisfaction of the following conditions:
i. If any holders of a class of the Company's capital stock are
given an option as to the form and amount of consideration to be
received, each holder of such class of capital stock shall be given
the
same option; and
ii. Each holder of then currently exercisable rights to acquire
shares of a class of the Company's capital stock shall be given an
opportunity to either
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(1) exercise such rights prior to the consummation of the Sale
of the Company and participate in such sale as holders of such class of
capital stock, or
(2) upon the consummation of the Sale of the Company, receive
in exchange for such rights consideration equal to the amount
determined by multiplying (a) the same amount of consideration per
share of the Company's capital stock received by holders of such class
of capital stock in connection with the Sale of the Company less the
exercise price per share of such capital stock of such rights to
acquire such class of capital stock by (b) the number of shares of such
class of capital stock represented by such rights.
iii. The Stockholder shall not be required to make any
unqualified representations or warranties to any Person in connection with
such sale, except as to (i) good title to the stock being sold, (ii) the
absence of encumbrances with respect to the Stock being sold, (iii) the
valid existence and good standing of the Stockholder (if applicable), (iv)
the authority for, and validity and binding effect of (as against such
Stockholder), any agreement entered into by such Stockholder in connection
with such sale, (v) all required material consents to such Stockholder's
sale and material governmental approvals having been obtained (excluding
any securities laws) and (vi) the fact that no broker's commission is
payable by the such Stockholder as result of Stockholder's conduct in
connection with the sale; and
c. The Stockholder shall not be required to provide any indemnities
in connection with such sale except for breach of the representations and
warranties contained in Section 9(b)(iii).
10. LEGEND. Each certificate evidencing Stockholder Shares or
securities convertible into Stockholder Shares and each certificate issued in
exchange for or upon the Transfer of any such securities (if such securities
remain Stockholder Shares or remain convertible into Stockholder Shares after
such Transfer) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
The securities represented by this certificate are subject to
voting obligations, transfer restrictions and certain other
provisions set forth in a Stockholders Agreement dated as of
October ____, 1997, among the issuer of such securities (the
"Company") and certain of the Company's stockholders, as
amended and modified from time to time. A copy of such
Stockholders Agreement shall be furnished without charge by
the Company to the holder hereof upon written request to the
Company at its principal executive office.
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The Company shall imprint such legend on certificates evidencing Stockholder
Shares and securities convertible into Stockholder Shares outstanding as of
the date hereof. The legend set forth above shall be removed from the
certificates evidencing any shares which cease to be Stockholder Shares in
accordance with Section 11 hereof.
11. REMOVAL OF RESTRICTIONS ON TRANSFERS.
a. RESTRICTIONS. Stockholder Shares are transferable in (i) a public
offering registered under the Securities Act or (ii) in a transaction pursuant
to Rule 144 or any other legally available means of Transfer after the
Transferring Stockholder has satisfied the conditions specified in subsection
(b) below.
b. REMOVAL OF LEGEND. In connection with the Transfer of any
Stockholder Shares (other than a Transfer in a public offering registered
under the Securities Act), a Stockholder shall deliver written notice to the
Company describing in reasonable detail the Transfer or proposed Transfer,
together with an opinion of counsel which (to the Company's reasonable
satisfaction) is knowledgeable in securities laws matters, to the effect that
such Transfer of Stockholder Shares may be effected without registration of
such Stockholder Shares under the Securities Act.
c. TRANSFERS. If the Company is not required to deliver new
certificates for such Stockholder Shares without the legend described in
Section 10, a Stockholder shall not Transfer any Stockholder Shares to any
Person until the prospective transferee has agreed to be bound by this
Agreement and to execute and deliver to the Company and the Other Stockholder
a counterpart of this Agreement.
12. TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
13. TERMINATION. Notwithstanding anything to the contrary contained
herein,
a. This Agreement shall terminate automatically and be of no further
force or effect upon the fifteenth anniversary of the date hereof unless
extended by the parties hereto in accordance with applicable law.
b. Sections 8 and 9 of this Agreement shall terminate and be of no
further force or effect upon a Sale of the Company or the consummation of a
Public Sale with respect to the Stockholder Shares sold in such Public Sale.
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c. This Agreement shall terminate and be of no further force and
effect upon Westar's ownership of Shares being less than 10% of the
outstanding Shares on a Fully Diluted Basis.
14. NEGATIVE COVENANTS. Without the prior approval of Westar, the
Company will not so long as Preferred Shares are outstanding: (a) authorize or
issue any equity securities equal to or senior as to dividends or upon
liquidation to the Preferred Stock; or (b) authorize or make any dividends or
other distributions to the holders of Common Stock. Without the prior approval
of Westar, the Company will not, so long as Westar or its Affiliates own or
control at least 15% of the outstanding equity securities of the Company,
issue any equity security senior to the Common Stock.
15. DIVIDEND DEDUCTION.
a. The purchase of the Shares by Westar has been entered into on the
assumption that for federal income tax purposes the dividends on Westar's
Preferred Shares will be eligible for the 80% dividends received deduction
provided by Section 243 of the Internal Revenue Code of 1986, as amended to
the date hereof (the "Code") (the "Dividends Received Deduction").
b. If (i) by reason of any change in the Code or the regulations
thereunder as in effect on the date hereof or (ii) as a result of any change
in the interpretation thereof by any Court, administrative body or the
Internal Revenue Service and Westar shall not be eligible to claim the
Dividends Received Deduction with respect to dividends on the Preferred Shares
(other than partly or wholly as a result of Westar's failure to meet the
current requirements of Section 243 of the Code), then (A) the Company shall
pay to Westar, not later than 60 days following written notice to the Company
by Westar of such ineligibility, such sums as, when taken together with the
dividends paid to Westar as of the date of such notice of ineligibility with
respect to the Preferred Shares, shall be required to cause Westar's effective
after-tax yield with respect to such dividends to be the same as Westar's
effective after-tax yield with respect to such dividends would have been had
such ineligibility not occurred, (B) the Company shall pay to Westar, on each
dividend payment date with respect to the Preferred Shares, commencing with
the first such date following written notice of such ineligibility to the
Company by Westar, such sums as, when taken together with the dividends paid
to Westar on such dates with respect to the Preferred Shares, shall be
required to cause Westar's effective after-tax yield with respect to such
dividends to be the same as Westar's effective after-tax yield with respect to
such dividends would have been had such ineligibility not occurred and (C) the
sum due to Westar shall be calculated as follows: if X is the face amount of
the Preferred Stock then outstanding, Y is the new Dividends Received
Deduction rate expressed as a decimal (which shall not be less than 0.50), and
Z is the number of days for which the calculation is being performed, then the
sum due to Westar equals ((X *.0975) * (0.80 - Y) * (0.40) * (Z / 360)) /
(0.60); PROVIDED, however, that if the Company shall have received any such
notice of ineligibility, then, in lieu of making any indemnity payments
described in the foregoing clause (B) of this sentence, the Company, upon
14
written notice to Westar not later than 60 days after receipt of such notice
of ineligibility, shall have the right to purchase all the Preferred Shares
(subject to Westar's right to convert the Preferred Shares to Common Stock)
then outstanding on the date specified in such notice (which date shall not be
more than 120 days from the date of such notice) at a price equal to the
greater of the average closing stock price for Common Stock for the 20
consecutive trading days immediately preceding the date of such notice and
$2.00 per share plus (i) the dividends accrued but unpaid to the date of
purchase, and (ii) such sums, as when taken together with the dividends paid
or accrued to the date of repurchase, as shall be required to cause Westar's
effective after-tax yield with respect to such dividends to be the same as
Westar's effective after-tax yield with respect to such dividends would have
been had such ineligibility not occurred.
c. The indemnity payments provided for herein shall not been deemed
to represent amounts payable on or with respect to the Preferred Shares or to
Westar, as the holder of the Preferred Shares, and shall represent a separate
obligation of the Company to Westar and its Permitted Transferees.
16. MISCELLANEOUS.
a. AMENDMENT AND WAIVER. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company and the
Stockholders. The failure of any party to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
b. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
In the event any provision of this Agreement shall be held invalid, the
parties agree to enter into such further agreements as may be necessary in
order to carry out the intent and purposes of the parties herein.
c. ENTIRE AGREEMENT. Except as otherwise expressly set forth herein,
this Agreement embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
15
d. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders (including
Permitted Transferees) and any subsequent holders of Stockholder Shares and
the respective successors and assigns of each of them, so long as they hold
Stockholder Shares; PROVIDED, HOWEVER, that the rights of Westar set forth in
Sections 8(c) and 8(d) shall not be assignable or Transferable (whether in
connection with the Transfer of its Stockholder Shares or otherwise) other
than to an Affiliate of Westar in connection with the Transfer of its
Stockholder Shares, and any assignment of such rights other than pursuant to
the terms of this section shall be null and void.
e. REMEDIES. The Company and the Stockholders shall be entitled to
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company or any Stockholder may in
its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without
posting a bond or other security) in order to enforce or prevent any violation
of the provisions of this Agreement.
f. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
hand delivered or sent by first class registered or certified mail (return
receipt requested), postage prepaid, to the respective addresses of Westar and
the Company set forth below, unless subsequently changed by written notice.
Any notice shall be deemed to be effective when it is received.
To Westar: Westar Capital, Inc.
818 South Kansas Avenue
P.O. Box 889
Topeka, Kansas 66601
Attention: President
Phone: 785-575-6322
Fax: 785-575-1788
With a copy to:
John K. Rosenberg, Esq.
818 South Kansas Avenue
P.O. Box 889
Topeka, Kansas 66601
Phone: 785-575-6322
Fax: 785-575-8136
16
To the Company: Guardian International, Inc.
3880 North 28th Terrace
Hollywood, Florida 33020-1118
Attention: Richard Ginsburg,
President
Phone: 954-926-5200
Fax: 954-926-1822
With a copy to:
Harvey Goldman, Esq.
Steel Hector & Davis LLP
200 South Biscayne Boulevard
41st Floor
Miami, FL 33131-2398
Phone: 305-577-7011
Fax: 305-577-7001
g. VISITATION RIGHTS. The Stockholders may, during normal business
hours, at the Stockholders' expense, and upon reasonable prior notice to a
member of the senior management of the Company (i) visit and inspect the
properties of the Company and its subsidiaries, (ii) examine and copy their
books of record and account, and (iii) discuss their affairs, finances and
accounts with its officers, employees and independent public accountants,
subject, in each case, to any confidentiality agreements to which the Company
is a party; PROVIDED, however, that no such visit, inspection, examination or
discussion shall unreasonably disrupt normal operations of the Company and
PROVIDED, however, that such Stockholder will hold, and will cause its
affiliates, representatives and advisors to hold, in strict confidence, all
confidential documents and information (the "Information") provided by the
Company, its officers, employees and independent public accountants, and will
not release or disclose the Information to any other Person except to any
Person who such Stockholder demonstrates has a need to know such Information,
except that the Stockholder will have no obligation to protect any portion of
the Information which is (i) publicly available, (ii) previously known to the
receiving party without an obligation to keep it confidential or (iii) is
required to be disclosed by law, rule, regulation or as a result of any legal
process.
h. AMENDMENT TO ARTICLES AND BY-LAWS. The Stockholders shall not
vote to amend the Articles of Incorporation of the Company, nor shall the
Company amend its by-laws in any manner which conflicts with the provisions of
this Agreement.
i. GOVERNING LAW. All issues and questions concerning the
construction, validity, interpretation and enforceability of this Agreement
and the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of Florida, without giving effect to
any choice of law or conflict of law rules or provisions (whether of the State
of
17
Florida or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Florida.
j. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED
IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS
AGREEMENT.
k. PREVAILING PARTY. If a party commences an action against another
party to interpret or enforce any of the terms of this Agreement or exhibits
hereto or as a result of a breach by another party of any terms hereof or of
the exhibits, the non-prevailing (or defaulting) party shall pay to the
prevailing party reasonable attorneys' fees, costs and expenses incurred in
connection with the prosecution or defense of such action (including at any
appellate level).
l. BUSINESS DAYS. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the states of Florida, Kansas, Nevada, or New York the time period shall
automatically be extended to the business day immediately following such
Saturday, Sunday or legal holiday.
m. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
n. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
* * * * *
18
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
GUARDIAN INTERNATIONAL, INC.
By: /s/ RICHARD GINSBURG
------------------------------------
Richard Ginsburg, President and Chief
Executive Officer
/s/ HAROLD GINSBURG
------------------------------------
Harold Ginsburg
/s/ SHEILAH GINSBURG
------------------------------------
Sheilah Ginsburg
/s/ RICHARD GINSBURG
------------------------------------
Richard Ginsburg
/s/ RHONDA GINSBURG
------------------------------------
Rhonda Ginsburg
WESTAR CAPITAL, INC.
By: /s/ RITA A. SHARPE
------------------------------------
Name: Rita A. Sharpe
Title: President
19
SCHEDULE A
SCHEDULE OF STOCKHOLDERS
NAME NUMBER OF SHARES AND CLASS OF CAPITAL STOCK
- ---- -------------------------------------------
Harold Ginsburg 1,403,533 shares
Sheilah Ginsburg 903,533 shares
Richard Ginsburg 629,246 shares
Rhonda Ginsburg 629,245 shares
Westar Capital, Inc. Common Stock: 2,790,300 shares *
Preferred Stock: 1,875,000 shares **
* As of the date of the Common Shares Closing.
** As of the date of the Closing of the Preferred Shares.
20
EXHIBIT 99.D
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated October 21, 1997 between Guardian
International, Inc., a Nevada corporation (the "Company"), and Westar
Capital, Inc., a Kansas corporation (the "Stockholder").
RECITALS
The Company has sold to the Stockholder 2,500,000
shares (the "Common Shares") of the Company's Class A Voting Common
Stock, par value $.001 per share (the "Common Stock") and has agreed to
sell to the stockholders 1,875,000 shares (the "Preferred Shares") of
Series A 9 3/4% Convertible Cumulative Preferred Stock (the "Preferred
Stock"), par value $.001 per share, which is convertible into Common
Stock. In this Agreement, the Common Shares and the Common Stock
issuable by the Company upon conversion of the Preferred Shares,
together with any stock dividends, distributions, or splits or any
shares issued or issuable in connection with any reclassification,
recapitalization, merger or consolidation or reorganization
("Adjustments"), shall be collectively referred to as the "Shares."
AGREEMENT
1. REGISTRATION RIGHTS.
(a) INCIDENTAL RIGHTS. If at any time or from time to time the
Company proposes to file with the Securities and Exchange Commission
(the "Commission") a registration statement (other than a registration
statement on Form S-8 covering solely an employee benefit plan or a
registration statement on Form S-3 covering solely offers pursuant to a
dividend or interest reinvestment plan) for the registration under the
Securities Act of 1933, as amended (the "Securities Act") of any shares
of Common Stock for sale to the public by the Company or on behalf of a
stockholder of the Company for cash (excluding shares of Common Stock
issuable by the Company upon the exercise of employee stock options or
in connection with the merger or consolidation of the Company with one
or more other corporations), the Company shall give the Stockholder and
Heller Financial, Inc. ("Heller") so long as Heller has Heller
Registration Rights as later defined, at least 30 days' prior written
notice of the filing of the proposed registration statement. The notice
shall include a list of the states and foreign jurisdictions, if any, in
which the Company intends to qualify such shares, the number of shares
so proposed to be registered, the proposed date of filing of such
registration statement, any proposed means of distribution of such
shares, any proposed managing underwriter or underwriters, and a good
faith estimate by the Company or managing underwriter of the maximum
offering price thereof, as such price is proposed to appear on the
facing page of such registration statement. On written request of the
Stockholder (and Heller, if applicable) received by the Company within
15 days after the date of the Company's delivery of its notice of
intention, the Company shall, subject to the conditions and in
accordance with the procedures set forth in Sections
1
1(c) and 1(d), and at its own expense as provided in Section 3, include
in the coverage of such registration statement and qualify for sale
under the blue sky or securities laws of the various states, the
aggregate number of Shares proposed to be registered (the "Registrable
Shares").
Notwithstanding any other provision in this Section 1(a), if in
connection with an underwritten offering the managing underwriter (which
shall be a nationally recognized independent investment banking firm or
such firm as the parties shall mutually agree) for the Company indicates
its reasonable belief in writing that the effect of including all or
part of the Registrable Shares in such underwritten offering will
materially and adversely affect the sale of the Registrable Shares
(which statement of the managing underwriter shall also state the
maximum number of shares (the "Maximum Shares"), if any, which can be
sold without materially adversely affecting the sale of the Registrable
Shares), then the number of Registrable Shares to be included in the
offering shall be reduced to the Maximum Shares and such Maximum Shares
shall be allocated (i) first, to the Company; and (ii) second, between
the Stockholder and Heller, in proportion, as nearly as practicable, as
such Person's Registrable Shares bears to the aggregate number of
Registrable Shares.
If the managing underwriter has not limited the number of
Shares to be underwritten, the Company and other holders of the
Company's securities, in addition to Heller, may include securities for
its (or their) own account in such registration if (A) the managing
underwriter so agrees and (B) the number of shares which would otherwise
have been included in such registration and underwriting will not
thereby be limited and (C) such other securities are then registrable on
Form S-3.
No registration statement effected under this Section 1(a)
shall release the Company of its obligations to file registration
statements on behalf of Stockholder under Section 1(b).
Notwithstanding any request for inclusion in any registration
statement under this Section 1(a), the Stockholder may elect to reduce
or withdraw its request for inclusion of its Shares at any time prior to
execution of the underwriting agreement with respect thereto by the
Stockholder.
The Company shall have the right to select all underwriters,
including the managing underwriter, of all public offerings of shares of
Common Stock subject to the provisions of this Section 1(a). The
Stockholder shall enter into (together with the Company) an underwriting
agreement with the underwriter or underwriters, provided that such
underwriting agreement is in a customary form and is reasonably
acceptable to the Stockholder. Nothing in this Section 1(a) shall create
any liability on the part of the Company to the Stockholder if the
Company for any reason decides not to file such a registration
statement.
(b) MANDATORY RIGHTS. Upon written request by the Stockholder,
the Company shall, subject to the conditions, and in accordance with the
procedures, set forth in this Section 1(b) and Sections 1 (c) and 1(d),
file a registration statement, including, without limitation, by means
of a shelf registration pursuant to Rule 415 under the Securities Act (a
"Shelf Registration") if so requested by the Stockholder, (and use its
best efforts to cause such registration statement to become effective)
and use its best efforts to qualify Shares owned by the Stockholder for
sale under the blue
2
sky or securities laws of such states as may be reasonably requested by
the Stockholder. The request for registration pursuant to this Section
1(b) shall specify the number of Shares to be registered. The
Stockholder shall have the right to select the underwriters and managers
to administer the offering, subject to approval of the Company, which
approval may not be unreasonably withheld. The Company shall enter into
(together with the Stockholder) an underwriting agreement with the
underwriter or underwriters, provided that such underwriting agreement
is in a customary form and is reasonably acceptable to the Company and
the Stockholder.
The Company shall be permitted to delay the filing of any
registration statement requested pursuant to this Section 1(b) or to
delay its effectiveness for a reasonable period of time (in no event to
exceed 45 days) if, in the good faith and reasonable judgment of the
Board of Directors of the Company, such registration would have a
material adverse effect on pending financing transactions, corporate
reorganizations or other material events involving the Company, or if
the Company, in the good faith judgment of its Board of Directors,
reasonably believes that the filing thereof at the time requested would
require disclosure of material confidential information which would
materially and adversely affect the business or prospects of the
Company. Notwithstanding anything herein to the contrary, the Company
shall not exercise its right to delay the effectiveness of a
registration statement more than twice in any twelve (12) month period.
Once the cause of such delay is eliminated, the Company shall promptly
notify the Stockholder, and as soon as the Stockholder notifies the
Company to proceed, the Company shall file a registration statement and
use its best efforts to cause such sale to be registered under the
Securities Act and qualified under the securities laws of such states as
may be reasonably requested by the Stockholder, all as provided above.
Notwithstanding any other provision in this Section 1(b), if
the managing underwriter indicates its reasonable belief in writing that
the effect of including all or part of the securities requested to be
registered by the Stockholder, together with the number of shares to be
registered on behalf of Heller or the Company, if any, in the coverage
of such registration statement will materially and adversely affect the
sale of such Registrable Shares (which statement of the managing
underwriter shall also state the number of Maximum Shares, if any), then
the number of Registrable Shares shall be reduced to the Maximum Shares
and such Maximum Shares shall be allocated (i) first, to the Stockholder
and (ii) second, between the Company and Heller, in proportion, as
nearly as practicable, as such Person's Registrable Shares bears to the
aggregate number of Registrable Shares.
If the managing underwriter has not limited the number of
Shares to be underwritten, the Company and other holders of the
Company's securities, in addition to Heller, may include securities for
its (or their) own account in such registration if (A) the managing
underwriter so agrees and (B) the number of shares which would otherwise
have been included in such registration and underwriting will not
thereby be limited and (C) such other securities are then registrable on
Form S-3.
The Stockholder shall be entitled to request three
registrations pursuant to this Section 1(b). The Company shall be
obligated to maintain the effectiveness of each such registration
statement until the earlier of (A) the sale of all shares registered
pursuant thereto, or (B) the date that is two years after the date on
which the registration statement is declared effective. The Company
shall not
3
be required by this Section 1(b) to effect a registration of Shares
unless (A) Form S-3, or another equivalent short-form registration
statement, is then available to the Company for such registration, and
(B) the aggregate number of the Shares requested to be registered
exceeds 500,000 Shares as adjusted for any Adjustments.
The Stockholder may withdraw a request under this Section 1(b)
in circumstances where the Company is in material breach of its
obligations hereunder and has not cured such breach after notice thereof
and a reasonable opportunity to do so, or the withdrawal occurs in
connection with a delay by the Company or inability of Stockholder to
include all of its Shares requested by Stockholder to be so registered
or the failure of any requested registration to become or remain
effective as provided herein. Any request so withdrawn prior to such
registration statement being declared effective shall not constitute a
request for determining the number of requests to which Stockholder is
entitled.
(c) CERTAIN REGISTRATION CONDITIONS. The Company shall not be
required to effect a registration of any Shares of the Stockholder
pursuant to Section 1(a) or 1(b), or file any post-effective amendment
thereto:
(1) unless the Stockholder agrees (w) that it has a
present intention to sell (other than in connection with a Shelf
Registration) its Shares so requested (x) to sell and distribute a
portion or all of its Shares in accordance with the plan or plans of
distribution adopted by and through underwriters, if any, acting for the
Company with respect to any request under Section 1(a), and (y) to bear
a pro rata share of underwriter's discounts and commissions;
(2) if, in the case of a request for registration
under the provisions of Section 1(b), in the opinion of counsel for the
Company and counsel for the Stockholder, the Shares for which
registration has been requested may be disposed of within a comparable
time frame without registration under the Securities Act and upon such
disposition all legends on certificates representing such Shares which
restrict transfer under the Securities Act and applicable state
securities laws may be removed from such certificates and any such
restriction and legends are so removed;
(3) if, in the case of a request for registration of
an underwritten offering under the provisions of Section 1(b), (x) a
registration statement requested by the Stockholder with respect to an
underwritten offering covering Common Stock became effective in the same
calendar quarter in which such request was made, (y) the Company in good
faith anticipates filing a registration statement for an offering of
Common Stock for the Company's account within thirty (30) days after
such demand date and has not abandoned such proposed offering; or (z)
the Company has received a request for a demand registration from the
holders of other registration rights pursuant to which the Company is
effecting a registration of Common Stock within thirty (30) days of the
date of the Stockholder's request;
(4) unless the Company has received from the
Stockholder all such information the Company reasonably requests from
the Stockholder concerning the Stockholder and its intended method of
distribution of the Shares to enable the Company to include in the
registration statement all material facts required to be disclosed
therein; or
4
(5) if the particular Shares for which registration
has been requested have been distributed to the public pursuant to an
offering registered under the Securities Act, sold to the public through
a broker, dealer or market maker in compliance with Rule 144 under the
Securities Act (or any similar rule then in force), or repurchased by
the Company or any affiliate thereof.
(d) COVENANTS AND PROCEDURES. If and whenever the Company is
required hereunder to effect the registration of Shares under the
Securities Act, the Company, at its expense as provided in Section 3
hereof and as expeditiously as possible, shall:
(1) In accordance with the Securities Act and all
applicable rules and regulations, promptly, and in any event within
forty-five (45) days of the request, prepare and file with the
Commission a registration statement covering the Shares requested to be
registered and use its best efforts to cause such registration statement
to become and remain effective. The Company will file such post-effective
amendments to such registration statement (and use its best
efforts to cause them to become effective) and such supplements as are
necessary so that current prospectuses are at all times available until
the earlier of the completion of the distribution of all shares under
the registration statement or two (2) years after the effective date of
the registration statement; PROVIDED that before filing a registration
statement or prospectus or any amendments or supplements thereto, the
Company will furnish to counsel selected by the Stockholder, and the
sales or placement agent or agents, if any, for the Shares and the
managing underwriter or underwriters, if any, draft copies of all such
documents proposed to be filed at least seven (7) days prior to such
filing, which documents will be subject to the reasonable review of the
Stockholder, the sales or placement agent or agents, if any, for the
Shares and the managing underwriter or underwriters, if any, and their
respective agents and representatives and (x) the Company will not
include in any registration statement information concerning or relating
to the Stockholder to which the Stockholder shall reasonably object in
writing (unless in the reasonable opinion of outside counsel the
inclusion of such information is required by applicable law or the
regulations of any securities exchange to which the Company may be
subject), and (y), the Company will not file any registration statement
pursuant to Section 1(b) or amendment thereto or any prospectus or any
supplement thereto to which the Stockholder and managing Underwriter
shall reasonably object in writing;
If the offering is to be underwritten, in whole or in
part, enter into a written underwriting agreement in form and substance
reasonably satisfactory to the managing underwriter of the public
offering, the Stockholder and the Company;
If the Shares to be covered by the registration
statement are not to be sold to or through underwriters acting for the
Company, the Company shall: (w) deliver to the Stockholder, the sales or
placement agent or agents, if any, and the managing underwriter or
underwriters, if any, ("Underwriter or Underwriters") as promptly as
practicable as many copies of preliminary prospectuses as the
Stockholder reasonably requests, and the Stockholder shall keep, or
cause to be kept, a written record of the distribution of such
preliminary prospectuses and shall refrain from delivery of such
preliminary prospectuses in any manner or under any circumstances which
would violate the Securities Act or the securities laws of any other
jurisdiction, including the various states of the United States, (x)
deliver to the Stockholder, and the Underwriters as soon as practicable
after the effective date of the registration statement, and from time to
time thereafter as many copies of
5
the prospectuses required to be delivered in connection with the sale of
Shares registered under the registration statement as the Stockholder or
Underwriter reasonably request, (y) in case of the happening, after the
effective date of such registration statement, of any event or
occurrence which is required or may be advisable, in the judgment of the
Company, the Stockholder, any Underwriter and their counsel to be set
forth in an amendment of or supplement to such prospectus to make any
statements therein not misleading, give the Stockholder and Underwriter
written notice thereof and prepare and furnish to the Stockholder, and
Underwriters in such quantities as it may reasonably request, copies of
such amended prospectus or of such supplement to be attached to the
prospectus in order that the prospectus, as so amended or supplemented,
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading and to comply with the Securities
Act, and (z) deliver to the Company and the Underwriters upon reasonable
request copies of any documents incorporated into any such registration
statement, prospectus, amendment or supplement.
(2) On or prior to the date on which the registration
statement is declared effective, the Company shall use its best efforts
to register or qualify, and cooperate with the Stockholder, the
Underwriter or Underwriters, if any, and their counsel, in connection
with the registration or qualification of the Shares covered by the
registration statement for offer and sale under the securities or blue
sky laws of each state and other jurisdiction of the United States as
the Stockholder or Underwriter reasonably requests, to use its best
efforts to keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the
period such registration statement is required to be kept effective and
to do any and all other acts or things necessary or advisable to enable
the disposition in all such jurisdictions of the Shares covered by the
applicable registration statement; provided that the Company will not be
required to qualify generally to do business in any jurisdiction where
it is not then so qualified.
(3) The Company shall use its best efforts to cause
all of the Stockholder's Shares included in such registration statement
to be listed, by the date of the first sale of such Common Stock
pursuant to such registration statement, on each securities exchange on
which the Common Stock of the Company is then listed or proposed to be
listed, if any.
(4) The Company shall make generally available to the
Stockholder and any underwriter participating in the offering conducted
pursuant to the registration statement an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act no later than
forty-five (45) days after the end of the 12-month period beginning with
the first day of the Company's first fiscal quarter commencing after the
effective date of the registration statement, which earnings statement
shall cover said 12-month period, which requirement will be deemed to be
satisfied if the Company timely files complete and accurate information
on Forms 10-QSB, 10-KSB, and (if needed) 8-K under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and otherwise
complies with Rule 158 under the Securities Act.
(5) The Company shall cooperate with the Stockholder
and the managing Underwriter or Underwriters, if any, to facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legends) representing the Shares to be sold under the
registration
6
statement, and enable such securities to be in such denominations and
registered in such names as the managing Underwriter or Underwriters, if
any, or the Stockholder requests, subject to the obligation to return
any certificates representing securities not sold.
(6) The Company shall use its best efforts to cause
the Stockholder's Shares covered by the registration statement to be
registered with or approved by such other governmental agencies or
authorities within the United States as may be necessary to enable the
Stockholder or the Underwriter or Underwriters, if any, to consummate
the disposition of such Shares.
(7) The Company shall make available for inspection by
the Stockholder and each Underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or
other agent retained by the Stockholder or any such Underwriter
(collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company, as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors, employees,
and independent public accountants to supply all information reasonably
requested by any such Inspector in connection with such registration
statement, in each case to the extent necessary to enable the
Stockholder and any Underwriter to conduct a "reasonable investigation"
for purposes of Section 11(a) of the Securities Act.
(8) The Company shall obtain a "cold comfort" letter
from the Company's independent public accountants, and an opinion of
counsel for the Company, each in customary form and covering such
matters of the type customarily covered by cold comfort letters and
opinions of counsel in connection with public offerings of securities,
as the Stockholder or Underwriters may reasonably request.
(9) If requested by the Stockholder, the Company shall
promptly incorporate in a prospectus, prospectus supplement or post-effective
amendment such information as the Stockholder reasonably
specifies should be included therein, including, without limitation,
information relating to the planned distribution of Shares, the number
of Shares being sold by the Stockholder, the name and description of the
Stockholder, the offering price of such Shares and any discount,
commission or other compensation payable in respect of the Shares being
sold, the purchase price being paid therefor to the Stockholder and
information with respect to any other terms of the offering of the
Shares to be sold in such offering, except to the extent that the
Company is advised in a written opinion of outside counsel that the
inclusion of such information is reasonably likely to violate applicable
securities laws; and make all required filings of such prospectus,
prospectus supplement or post-effective amendment promptly after
notification of the matters to be incorporated in such prospectus,
prospectus supplement or post-effective amendment.
(10) If requested by the Stockholder the Company shall
use reasonable efforts to participate in and assist with a "road show"
any other customary marketing efforts in connection with the sale of
Shares pursuant to such registration statement, at such times and in
such manner as the Company and the Stockholder mutually may determine.
7
(11) The Company shall promptly notify the Stockholder
and Underwriters, after becoming aware thereof, when the registration
statement or any related prospectus or any amendment or supplement has
been filed, and, with respect to the registration statement or any
post-effective amendment, when the same has become effective, (A) of any
request by the Commission for amendments or supplements to the
registration statement or the related prospectus or for additional
information, (B) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose, (C) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the
initiation of any proceeding for such purpose or (D) of the happening of
any event which makes any statement in the registration statement or any
post-effective amendment thereto, prospectus or any amendment or
supplement thereto, or any document incorporated therein by reference
untrue in any material respect or which requires the making of any
changes in the registration statement or post-effective amendment
thereto or any prospectus or amendment or supplement thereto so that
they will not contain any untrue statement or a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein (in light of the circumstances under which
they were made) not misleading.
(12) In the case of a Block Trade (defined below), the
Company shall: (1) obtain an opinion of counsel addressed to the
Stockholder and the other party to the "block trade" covering matters
that are no more extensive in scope than would be customarily covered in
opinions obtained in secondary underwritten offerings by issuers with
similar market capitalization and reporting and financial histories; (2)
obtain a "cold comfort" letter from the independent public accountants
of the Company and covering matters that are no more extensive in scope
than would be customarily covered in "cold comfort" letters and updates
obtained in secondary underwritten offerings by issuers with similar
market capitalization and reporting and financial histories, provided
that the letter described in this clause (2) shall only be required to
the extent such letters are being issued in respect of non-underwritten
secondary offerings under then prevailing accounting practices; and (3)
deliver a certificate of a senior executive officer of the Company to
cover matters no more extensive in scope than those matters customarily
underwritten offerings by issuers with similar market capitalization and
reporting and financial histories. "Block Trade" shall mean the
disposition, in connection with a Shelf Registration, at a single time
in a single transaction, including through one or more placement agents,
by the Stockholder, of any or all of the Registrable Shares to one or
more Institutional Investors. "Institutional Investor" shall mean any
insurance company, pension fund, mutual fund, investment company,
commercial bank, savings bank, savings and loan association, investment
banking company, trust company or any finance or credit company, or any
portfolio or investment fund managed by any of the foregoing.
(13) If any person becomes a holder of shares that
were included in a Shelf Registration statement subsequent to the time
that the Shelf Registration statement became effective, the Company
shall add such holder to the Shelf Registration statement, on a timely
basis, through a post-effective amendment or a supplement to the
Prospectus, as shall be necessary in accordance with the rules of the
Commission under the Securities Act to include such holder as a selling
stockholder in a distribution under the Shelf Registration statement.
8
(e) HELLER REGISTRATION RIGHTS. The Stockholder acknowledges
that Heller has certain incidental registration rights with respect to
equity securities of the Company owned by it pursuant to that certain
Agreement dated August 15, 1996 between Heller and the Company (the
"Heller Registration Rights"). Accordingly, the Stockholder acknowledges
that pursuant to the Heller Registration Rights, Heller has the right to
participate in any registration effected pursuant to Section 1.
(f) COMPANY COVENANTS.
(1) The Company covenants to and with the Stockholder that to
the extent it shall be required to do so under the Exchange Act, the
Company shall timely file the reports required to be filed by it under
the Exchange Act or the Securities Act (including, but not limited to,
the reports under Sections 13 and 15(d) of the Exchange Act referred to
in subparagraph (c)(1) of Rule 144 adopted by the Commission under the
Securities Act and the rules and regulations adopted by the Commission
thereunder) and shall take such further action as the Stockholder may
reasonably request, all to the extent required from time to time to
enable the Stockholder to sell Shares without registration under the
Securities Act within the limitations of the exemption provided by Rule
144 under the Securities Act, as such rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission and for the Company to qualify for use of Form S-3. Upon the
request of the Stockholder, the Company shall deliver to the Stockholder
a written statement as to whether it has complied with such
requirements.
(2) If at any time the Company is not subject to Section 13 or
15(d) of the Exchange Act and is exempt from reporting pursuant to Rule
12g3-2(b) under the Exchange Act, the Company agrees, upon the request
of the Stockholder seeking to transfer Shares in conformity with Rule
144A under the Securities Act, to furnish to the Stockholder or
prospective purchasers of the Shares from the Stockholder the
information required by Rule 144A(d)(4)(i) under the Securities Act in
the manner and at the times contemplated by such Rule.
(3) The Company covenants to make available "adequate current
public information" concerning the Company within the meaning of Rule
144(c) under the Securities Act.
(4) The Company represents and covenants that it will qualify
for use of Form S-3 on November 1, 1998 for transactions involving
secondary offerings and that it will preserve such eligibility for so
long as the Company is obligated to file and maintain the effectiveness
of registration statements hereunder.
(5) The Company will avoid taking any action which would cause
the Common Stock to cease to be eligible for inclusion on the OTC
Bulletin Board Service.
2. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. If Shares are registered
under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the Stockholder and each underwriter of such
Shares and their respective officers and directors and each other
person,
9
if any, who controls the Stockholder or such underwriter within the
meaning of the Securities Act, against any losses, claims, damages,
actions (actual or threatened), liabilities, costs and expenses
(including legal fees and costs of court), joint or several, to which
the Stockholder or such underwriter, director, officer, or controlling
person may become subject under the Securities Act or otherwise, if and
to the extent that such losses, claims, damages, costs, expenses or
liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained, in any
registration statement under which such Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse the Stockholder, each such
underwriter, and each such controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage or liability; provided, however,
that the Company shall not be liable to the Stockholder or its
underwriters or controlling persons in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, preliminary prospectus or
final prospectus or such amendment or supplement in reliance upon and in
conformity with information furnished to the Company through a written
instrument duly executed by the Stockholder or such underwriter
specifically for use in the preparation thereof.
(b) INDEMNIFICATION BY THE STOCKHOLDER. In connection with any
registration statement in which the Stockholder is participating,
Stockholder shall indemnify and hold harmless (in the same manner and to
the same extent as set forth in Section 2(a)) the Company, each director
of the Company, each officer of the Company who signs such registration
statement and all persons who control the Company within the meaning of
the Securities Act, with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, to the
extent, but only to the extent, such statement or omission was made in
reliance upon and in conformity with information furnished to the
Company through a written instrument duly executed by the Stockholder
specifically for use in the preparation of such registration statement,
preliminary prospectus or final prospectus or such amendment or
supplement thereto, and provided that the liability of the Stockholder
shall be limited to the amount of proceeds received by Stockholder in
the offering giving rise to the indemnification claim.
(c) INDEMNIFICATION PROCEDURES. Promptly after receipt by an
indemnified party of notice of the commencement of any action involving
a claim referred to in the preceding paragraphs of this Section 2, such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the indemnifying
party of the commencement of such action; but the omission so to notify
the indemnifying party will not relieve it from any liability which it
may have to the indemnified party unless such indemnifying party is
prejudiced by such omission. If any such action is brought against an
indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to
such
10
indemnified party for any legal or other expenses incurred by the latter
in connection with the defense thereof unless (i) in the reasonable
opinion of counsel for the indemnification party a conflict of interest
exists between the indemnified party and indemnifying party, (ii) the
indemnified party reasonably objects to such assumption on the basis
that there may be defenses available to it which are different from or
in addition to the defenses available to the indemnifying party, (iii)
the indemnifying party has failed to timely assume the defense of any
such action or proceeding or (iv) the indemnifying party and its counsel
do not actively and vigorously pursue the defense of such action .
Whether or not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any
settlement made without its consent. No indemnifying party will consent
to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect of such claim or litigation. An indemnifying party who elects
not to assume the defense of an action or where a potential conflict of
interest or other defenses may be available, shall not be obligated to
pay the fees and expenses of more than one counsel and local counsel
where appropriate for all parties indemnified by such indemnifying party
with respect to such action, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect
to such action. Cost and expenses incurred by the indemnified party
shall be reimbursed, from time to time, by the Company as and when bills
are received or expenses are incurred.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 2 from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified
parties in connection with the actions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities, and expenses referred to above shall be deemed to include
all legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2(d) were determined
by pro rata allocation or by any other method of allocation which does
not take into account the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
3. EXPENSES. All expenses incurred by the Company and the
Stockholder in connection with any registration statement covering
Shares offered by the Stockholder, including, without
11
limitation, all registration and filing fees (including all expenses
incident to filing with the National Association of Securities Dealers,
Inc.), printing expenses, fees and disbursements of counsel (including
the reasonable fees and disbursements of one counsel for the
Stockholder) and of the independent certified public accountants, and
the expense of qualifying such Shares under state blue sky laws
(including reasonable fees and disbursements of counsel in connection
with such qualification), messenger, telephone and delivery expenses,
fees and expenses of counsel for the underwriters, costs of preparation,
printing, distribution and reproduction of the registration statement,
each prospectus, and each amendment and supplement thereto, the cost and
charges of any transfer agent and registrar, and the premiums and other
costs of insurance against liability arising out of such offering, if
any, shall be borne by the Company; provided, however, that the
Stockholder shall bear its pro rata share of (A) underwriter's discounts
and commissions and (B) any transfer taxes related to the sale of
Shares. To the extent any such expenses are incurred or paid by the
Stockholder, any sales or placement agent or underwriter, if any,
thereof, the Company shall reimburse such person for the full amount
thereof promptly after a request therefor.
4. DISPOSITIONS DURING REGISTRATION. (a) The Stockholder shall
not effect any public sale or distribution (including sales pursuant to
Rule 144) of equity securities of the Company, or any securities
convertible or exchangeable or exercisable for such securities, during
the fifteen days prior to and the 90-day period beginning on the
effective date of any underwritten demand registration or underwritten
incidental registration (or such longer period as the Stockholder may
agree with the underwriter). The Stockholder agrees to comply with the
foregoing requirements even if its Shares are not being included in such
registration.
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. The
Company shall not effect any public or non-public sale or distribution
of any securities similar to those being registered, or any securities
convertible into or exchangeable or exercisable for any such securities
or similar securities, during the fifteen (15) day period prior to, and
during the 90-day period beginning on, the effective date of any
registration statement in which the Stockholder is participating or the
commencement of a public distribution of Shares pursuant to any such
registration statement (except (i) as part of such registration or
pursuant to registrations on Commission Forms S-4 or S-8 or any similar
or successor form, or on any form filed in connection with an exchange
offer or an offering of securities solely to the existing stockholders
or employees of the Company or (ii) for sales or other issuances of
securities pursuant to outstanding options, warrants, rights or similar
obligations).
5. TRANSFER OF RIGHTS. No registration rights and benefits set
forth in this Agreement, including indemnification by the Company, shall
be transferable by the Stockholder in connection with the transfer of
Shares except to an "affiliate" as defined in Regulation D of the
Securities Act, including but not limited to, Protection One., Inc.
following acquisition by Western Resources, Inc., Westar's parent, of
not less than 50% of the outstanding equity of Protection One, Inc., or
to any party pursuant to a Block Trade. In case of any partial
assignment to more than one affiliate or Block Trade party, the
affiliates or Block Trade parties who have the rights and benefits of
the "Stockholder" under this Agreement shall not, as a group, have the
right to any greater number of registrations than provided herein as if
no such assignment occurred.
12
6. TERM. The obligations of the Company to register Shares
hereunder shall terminate on the fifth anniversary of the date of this
Agreement with respect to the registration of Shares not otherwise
demanded or effected by such date provided that at the end of such
period all Shares held by the Stockholder or any of its assigns
hereunder, shall be freely and publicly tradable without an effective
registration statement. Section 2 shall survive the termination of this
Agreement.
7. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have
been duly given if hand delivered or sent by first class registered or
certified mail (return receipt requested), postage prepaid, to the
respective addresses of the Company and the Stockholders set forth
below, unless subsequently changed by written notice. Any notice shall
be deemed to be effective when it is received.
To the Stockholder:
Westar Capital, Inc.
818 South Kansas Avenue
P.O. Box 889
Topeka, Kansas 66601
Attention: President
Phone: 785-575-6322
Fax: 785-224-1788
With a copy to:
John K. Rosenberg, Esq.
818 South Kansas Avenue
P.O. Box 889
Topeka, Kansas 66601
Phone: 785-575-6322
Fax: 785-224-1788
To the Company:
Guardian International, Inc.
3880 North 28th Terrace
Hollywood, Florida 33020-1118
Attention: Richard Ginsburg, President
Phone: 954-926-5200
Fax: 954-926-1822
With a copy to:
Harvey Goldman, Esq.
Steel Hector & Davis LLP
13
200 South Biscayne Boulevard
41st Floor
Miami, FL 33131-2398
Phone: 305-577-7011
Fax: 305-577-7001
8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
FLORIDA WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREUNDER.
9. AMENDMENTS. This Agreement may be amended only by an
instrument in writing executed by all the parties hereto.
10. COUNTERPARTS. This Agreement may be executed in multiple
original counterparts, each of which shall be deemed an original, but
all of which together shall constitute the same instrument.
11. SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the
other provisions of this Agreement will remain in full force and effect.
Any provision of this Agreement held invalid or unenforceable only in
part or degree will remain in full force and effect to the extent not
held invalid or unenforceable. In the event any provision of this
Agreement shall be held invalid, the parties agree to enter into such
further agreements as may be necessary in order to carry out the intent
and purposes of the parties herein.
14
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
GUARDIAN INTERNATIONAL, INC.
By: /s/ RICHARD GINSBURG
-------------------------------------
Richard Ginsburg
President and Chief Executive
Officer
WESTAR CAPITAL, INC.
By: /s/ RITA A. SHARPE
-------------------------------------
Rita A. Sharpe
President
ACKNOWLEDGED AND AGREED:
HELLER FINANCIAL, INC.
By: /s/ JOAN HEGGEN
-------------------
Joan Heggen
Vice President
Date: Oct. 21, 1997
15
EXHIBIT 99.E
CERTIFICATE OF THE DESIGNATIONS, VOTING POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF PREFERRED STOCK OF
GUARDIAN INTERNATIONAL, INC.
The undersigned hereby certify that they are the duly elected and
acting President and Secretary of Guardian International, Inc., a Nevada
corporation, (the "Company"), and pursuant to Nev. Rev. Stat. Section 78.1955,
DO HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of Directors
of the Company (the "Board") by Article FOURTH of the Company's Articles of
Incorporation (the "Articles"), the Board by unanimous written consent dated
October __, 1997 adopted the following resolutions:
RESOLVED, that the amendments to Article FOURTH of the Articles to be
filed with the Nevada Secretary of State on November __, 1997 to (a)
authorize the Company to issue 30,000,000 shares of blank-check preferred
stock, par value $.001 per share (the "Preferred Stock"), and (b) increase
the number of authorized shares of Class B Nonvoting Common Stock of the
Company, par value $.001 per share, from 484,035 shares to 1,000,000 shares
are hereby approved; and further
RESOLVED, that the Board hereby establishes and authorizes the issuance
of a first series of the Preferred Stock and hereby fixes the number of
shares to constitute the first series, the annual rate of dividends payable on
such shares and the date from which dividends shall commence to accrue, the
terms and conditions on which the shares may or shall be converted, as the
case may be, and the voting rights and liquidation preferences of such shares,
as follows:
I. DESIGNATION AND RANK.
The first series of Preferred Stock of the Company is
designated "Series A 9 3/4% Convertible Cumulative Preferred
Stock, par value $.001 per share" (the "Series A Preferred
Stock"), and the number of shares which shall constitute such
Series shall be 1,875,000 shares. All shares of Series A
Preferred Stock shall rank equally and be identical in all
respects. So long as the Series A Preferred Stock is
outstanding, unless consented to by the affirmative vote of
2/3 of the holders of the outstanding Series A Preferred
Stock, the Company shall not issue additional securities of
any kind, including shares of preferred stock of any class,
(including without limitation additional shares of Series A
Preferred Stock other than Dividend Preferred Shares) series
or designation ranking in priority or in parity as to rights
and preferences with the Series A Preferred Stock now or
hereafter authorized.
II. DIVIDENDS.
The holders of the Series A Preferred Stock, in
preference to the holders of Common Stock and any other class
or classes of stock of the Company ranking junior in rights
and preferences to the Series A Preferred Stock as to payment
of dividends and other distributions, shall be entitled to
receive, but only out of any funds legally available for the
declaration of dividends, cumulative, preferential dividends
at the annual rate of 9 3/4%, payable as follows:
(a) Series A Preferred Stock dividends (the
"Dividends") shall commence to accrue on the shares of
Preferred Stock and be cumulative from and after the date of
issuance of such shares of Series A Preferred Stock and shall
be deemed to accumulate and accrue from day to day thereafter.
(b) The Dividends shall be payable to the holders of
the Series A Preferred Stock quarterly on the 1st day of
January, April, July and November at the Company's option in
cash or in additional shares of Series A Preferred Stock
("Dividend Preferred Shares") during the first two years after
the date of issuance of such shares of Series A Preferred
Stock. Thereafter, Dividends shall be paid quarterly on the
1st day of January, April, July and November in cash. Once
issued, any Dividend Preferred Shares shall rank PARI PASSU
and have all of the rights and privileges associated with all
other shares of the Series A Preferred Stock.
III. REDEMPTION.
The Series A Preferred Stock shall not be redeemable
by the Company.
IV. VOTING RIGHTS.
The holders of Series A Preferred Stock shall be
entitled to vote with the Common Stock on all matters required
or permitted to be submitted to the stockholders of the
Company for their approval, but not as a separate class,
except to the extent required by Nevada law, and shall have
such other voting rights as specifically provided under Nevada
law.
V. SPECIAL VOTING RIGHTS.
(a) ELECTION OF DIRECTORS. Notwithstanding the other
provisions of this Section V, upon the occurrence of a Default
Event
2
(hereafter defined) and for the duration of the Default Period
(hereafter defined) the holders of the Series A Preferred
Stock, in addition to any other voting rights they may have
herein or by law, shall be entitled to vote (voting as a class
by a majority of the outstanding shares thereof) for the
election to the Board of Directors of the smallest number of
directors necessary to constitute at any given time a majority
of the number of members of the Board of Directors, and should
such percentage when applied to the number of the members of
the Board of Directors result in a number that includes a
fraction, then such number shall be increased to the next
whole number. In addition, during the Default Period the
holders of the Series A Preferred Stock shall be entitled to
designate (voting as a class as aforesaid) the number of
positions on the Board of Directors, which shall be the
smallest number of directors necessary for the nominees of the
holders of Series A Preferred Stock to constitute a majority
of the full Board. In case the holders of the Series A
Preferred Stock become entitled to exercise such special
voting rights, they may call a special meeting of stockholders
during the Default Period, in the manner provided herein or in
the bylaws or otherwise as provided by law, for the purpose of
increasing or decreasing the number of positions on the Board
of Directors and electing such members to the Board of
Directors. In addition, the holders of the Series A Preferred
Stock shall have such special voting rights at any annual or
regular meeting of stockholders (or any other special meeting
not called by the holders of the Series A Preferred Stock)
held during the Default Period. In lieu of the foregoing, the
holders of the Series A Preferred Stock may take any of such
actions by a written consent signed by the holders of at least
a majority of the shares of the Series A Preferred Stock
outstanding and entitled to vote thereon.
(b) REMOVAL; VACANCIES. During the Default Period,
each director elected by the holders of the Series A Preferred
Stock may be removed only by the vote of the holders of the
majority of the outstanding shares of the Series A Preferred
Stock, voting separately as a class, at a meeting of the
stockholders, or of the holders of shares of the Series A
Preferred Stock, called for that purpose. During the Default
Period, any vacancy in the office of a director elected by the
holders of the Series A Preferred Stock may be filled by a
vote of the remaining directors then in office elected by the
holders of the Series A Preferred Stock, or, if not so filled,
by the holders of the Series A Preferred Stock at any meeting,
annual or special, for the election of directors held
thereafter. A special meeting of stockholders, or of the
holders of shares of the Series A Preferred Stock, may be
called for the purpose of filling any such vacancy. In the
case of removal of any
3
such director, the vacancy may be filled at the same meeting
at which such removal shall be voted. Holders of the Series A
Preferred Stock shall be entitled to notice of each meeting of
stockholders at which they shall have any right to vote or
notice of which is otherwise required by law. In lieu of the
foregoing, the holders of the Series A Preferred Stock may
take any of such action by a written consent signed by the
holders of at least a majority of the shares of the Series A
Preferred Stock outstanding and entitled to vote thereon.
(c) EXPIRATION OF RIGHT. Upon termination of the
Default Period, the special voting rights of the holders of
the Series A Preferred Stock provided hereunder shall be
immediately divested, but always subject to the revesting of
such right in the holders of the Series A Preferred Stock upon
the occurrence of any subsequent Default Event. In the event
that such rights of the holders of the Series A Preferred
Stock shall cease as provided above, then the directors
elected to the Board of Directors by the holders of the Series
A Preferred Stock under this Section V shall be automatically
removed from office, and their respective positions terminated
and the number of positions on the Board of Directors reduced
in accordance with such termination, without further action on
the part of the holders of the Series A Preferred Stock, the
holders of the Common Stock or the Board of Directors.
(d) DEFAULT EVENT. For purposes hereof, a "Default
Event" occurs on the date that (i) the Company has failed to
pay any four quarterly Dividends when due whether consecutive
or not and (ii) such Dividends remain unpaid.
(e) DEFAULT PERIOD. For purposes hereof, "Default
Period" means a period commencing on the date a Default Event
occurs and ending upon the payment of the next quarterly
Dividend in full and such cumulative Dividends in arrears in
full, such that not more than three quarterly Dividends shall
be in arrears.
VI. LIQUIDATION.
(a) The Series A Preferred Stock shall be preferred
upon liquidation over the Common Stock and any other class or
classes of stock of the Company ranking junior in rights and
preferences to the Series A Preferred Stock upon liquidation.
Holders of shares of Series A Preferred Stock shall be
entitled to be paid, after full payment is made on any stock
ranking prior to the Series A Preferred Stock as to rights and
preferences (but before any distribution is made to the
holders of the Common Stock and such junior stock) upon the
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voluntary or involuntary dissolution, liquidation or winding
up of the Company (a "Liquidation").
(b) The amount payable on each share of Series A
Preferred Stock in the event of Liquidation shall be $2.00 per
share.
(c) Upon Liquidation, if the net assets of the
Company are insufficient to permit the payment in full of the
amounts to which the holders of all outstanding shares of
Series A Preferred Stock are entitled as provided above, the
entire net assets of the Company remaining (after full payment
is made on any stock ranking prior to the Series A Preferred
Stock as to rights and preferences) shall be distributed among
the holders of Series A Preferred Stock in amounts
proportionate to the full preferential amounts and holders of
shares of preferred stock ranking in parity with the Series A
Preferred Stock as to rights and preferences to which they are
respectively entitled.
(d) For the purpose of this Section VI, the voluntary
sale, lease, exchange or transfer, for cash, shares of stock,
securities or other consideration, of all or substantially all
the Company's property or assets to, or its consolidation or
merger with, one or more corporations shall not be deemed to
be a Liquidation.
(e) Notwithstanding the foregoing, in the event that
any holder of Series A Preferred Stock converts its Series A
Preferred Stock to Common Stock pursuant to Section VII
hereof, the right to preferential liquidation rights pursuant
to this Section with respect to such converted Shares shall be
immediately terminated.
VII. CONVERSION.
(a) Subject to the provisions for adjustment
hereinafter set forth, each share of Series A Preferred Stock
shall be convertible at any time at the option of the holder
thereof, upon surrender to the transfer agent for the Series A
Preferred Stock or the Company of the certificate or
certificates evidencing the shares so to be converted, into
one fully paid and nonassessable share of Class A Common Stock
of the Company, par value $.001 per share ("Class A Common
Stock").
(b) Subject to the provisions for adjustment
hereinafter set forth, the Series A Preferred Stock must be
converted to Class A Common Stock:
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(i) upon a secondary public offering by the
Company of at least 2,500,000 shares of Class A Common Stock
at not less than $2.00 per share; or
(ii) if, at any time after two years from
the date of issuance of the Series A Preferred Stock, the
Class A Common Stock trades above $3.00 per share for 20
consecutive trading days.
(c) The number of shares of Class A Common Stock into
which an issued and outstanding share of Series A Preferred
Stock is convertible shall be subject to adjustment from time
to time only as follows:
(i) In the event that the Company shall at any
time (A) declare a dividend on the Class A Common Stock in
shares of its Class A Common Stock, (B) split or subdivide the
outstanding Class A Common Stock or (C) combine the
outstanding Class A Common Stock into a smaller number of
shares, each share of Series A Preferred Stock outstanding at
the time of the record date for such dividend or of the
effective date of such split, subdivision or combination shall
thereafter be convertible into the aggregate number of shares
of Class A Common Stock which, if such share of Series A
Preferred Stock had been converted immediately prior to such
time, the holder of such share would have owned or have been
entitled to receive by virtue of such dividend, subdivision or
combination. Such adjustment shall be made successively
whenever any event listed above shall occur.
(ii) No adjustment in the number of shares of
Class A Common Stock issuable upon conversion of a share of
Series A Preferred Stock shall be required unless such
adjustment would require an increase or decrease in the
aggregate number of shares of Class A Common Stock so issuable
of at least 100 shares; PROVIDED that any adjustments which by
reason of this subsection VII(c)(ii) are not required to be
made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section
VII(c) shall be made to the nearest cent, or to the nearest
hundredth of a share, as the case may be.
(iii) In the event of any capital reorganization
of the Company, or of any reclassification of the Common Stock
(other than a subdivision or combination of outstanding shares
of Class A Common Stock), or in case of the consolidation of
the Company with or the merger of the Company with or into any
other corporation or of the sale of the properties and assets
of the Company as, or
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substantially as, an entirety to any other corporation, each
share of Series A Preferred Stock shall after such capital
reorganization, reclassification of Common Stock,
consolidation, merger or sale be convertible upon the terms
and conditions specified in this Section VII, for the number
of shares of stock or other securities or assets to which a
holder of the number of shares of Class A Common Stock into
which a share of Series A Preferred Stock is then convertible
(at the time of such capital reorganization, reclassification
of Class A Common Stock, consolidation, merger or sale) would
have been entitled upon such capital reorganization,
reclassification of Common Stock, consolidation, merger or
sale; and in any such case, if necessary, the provisions set
forth in this Section VII with respect to the rights of
conversion thereafter of the Series A Preferred Stock shall be
appropriately adjusted so as to be applicable, as nearly as
may reasonably be, to any shares of stock or other securities
or assets thereafter deliverable on the conversion of the
Series A Preferred Stock. The Company shall not effect any
such consolidation, merger or sale, unless prior to or
simultaneously with the consummation thereof, the successor
corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such
assets or the appropriate corporation or entity shall assume
by written instrument, the obligation to deliver to the holder
of each share of Series A Preferred Stock the shares of stock,
securities or assets to which, in accordance with the
foregoing provisions, such holder may be entitled upon
conversion of such Series A Preferred Stock and all other
obligations of the Company under this Section VII, and
effective provisions are made in the Articles or Certificate
of Incorporation of such successor or transferee corporation
providing for conversion privileges relating to the Series A
Preferred Stock equivalent to those set forth in this Section
VII.
(iv) If any question at any time arises with
respect to the number of shares of Class A Common Stock into
which a share of Series A Preferred Stock is convertible
following any adjustment pursuant to this Section VII, such
question shall be determined by agreement between the holders
of a majority of the outstanding shares of Series A Preferred
Stock and the Company or, in the absence of such an agreement
by an independent investment banking firm or an independent
appraiser (in either case the cost of which engagement will be
borne by the Company) reasonably acceptable to the Company and
the holders of a majority of outstanding shares of Series A
Preferred Stock and such determination shall be binding upon
the Company and the holders of the Series A Preferred Stock.
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(v) Anything in this Section VII to the
contrary notwithstanding, the Company shall be entitled to
make such increases in the number of shares of Class A Common
Stock issuable upon conversion of shares of Series A Preferred
Stock, in addition to those adjustments required by this
Section VII, as it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of
the Class A Common Stock, or any issuance wholly for cash of
any shares of Class A Common Stock at less than the current
market price, or any issuance wholly for cash of shares of
Class A Common Stock or securities which by their terms are
convertible into or exchangeable for shares of Class A Common
Stock, or any issuance of rights, options or warrants referred
to hereinabove in this Section VII, hereinafter made by the
Company to the holders of its Class A Common Stock shall not
be taxable to them.
(vi) Upon any adjustment of the number of the
shares of Class A Common Stock issuable upon conversion of
shares of Series A Preferred Stock pursuant to this Section
VII, the Company shall promptly but in any event within 20
days thereafter, cause to be given to each of the registered
holders of the Series A Preferred Stock, at its address
appearing on the Register for the Series A Preferred Stock by
registered mail, postage prepaid, return receipt requested a
certificate signed by its chairman, president or chief
financial officer setting forth the number of shares of Class
A Common Stock issuable upon conversion of shares of Series A
Preferred Stock as so adjusted and describing in reasonable
detail the facts accounting for such adjustment and the method
of calculation used. Where appropriate, such certificate may
be given in advance and included as a part of the notice
required to be mailed under the other provisions of this
resolution.
(vii) The Company will at all times have
authorized, and reserve and keep available, free from
preemptive rights, for the purpose of enabling it to satisfy
any obligation to issue shares of Class A Common Stock upon
the conversion of the Series A Preferred Stock, the number of
shares of Class A Common Stock deliverable upon conversion of
the Series A Preferred Stock.
(viii) The Company shall not be required to issue
fractional shares of Class A Common Stock upon conversion of
the Series A Preferred Stock but shall pay for any such
fraction of a share an amount in cash equal to the current
market price per share of Class A Common Stock of such share
multiplied by such fraction.
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(ix) The Company will pay all taxes
attributable to the issuance of shares of Class A Common Stock
upon conversion of shares of Series A Preferred Stock;
PROVIDED that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in
the issue of any shares of Class A Common Stock in a name
other than that of the registered holder of the Series A
Preferred Stock surrendered for conversion, and the Company
shall not be required to issue or deliver such certificate
unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax
or shall have established to the satisfaction of the Company
that such tax has been paid.
VIII. NOTICES TO HOLDERS OF SERIES A PREFERRED
STOCK.
In the event:
(a) of any consolidation or merger to which the
Company is a party and for which approval of any stockholders
of the Company is required, or of the conveyance or transfer
of the properties and assets of the Company substantially as
an entirety, or of any capital reorganization or
reclassification or change of the Common Stock (other than a
change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a
subdivision or combination); or
(b) of Liquidation; or
(c) that the Company proposes to take any other
action which would require an adjustment in the number of
shares of Class A Common Stock or other securities or assets
issuable upon conversion of shares of Series A Preferred Stock
pursuant to Section VII;
then the Company shall cause to be given to each of the
registered holders of the Series A Preferred Stock at its
address appearing on the Register for the Series A Preferred
Stock, at least 20 calendar days prior to the applicable
record date hereinafter specified, by registered mail, postage
prepaid, return receipt requested, a written notice stating
(i) the date as of which the holders of record of Common Stock
entitled to participate in the event contemplated by clause
(c) above are to be determined, or (ii) the date on which any
such consolidation, merger, conveyance, transfer or
Liquidation is expected to become effective, and the date as
of which it is expected that holders of record of Common Stock
shall be entitled to exchange
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their shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger,
conveyance, transfer or Liquidation. The failure to give the
notice required by this Section VIII or any defect therein
shall not affect the legality or validity of any distribution,
right, warrant, consolidation, merger, conveyance, transfer or
Liquidation, or the vote upon any action.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
duly executed in its corporate name on this ___ day of October, 1997.
GUARDIAN INTERNATIONAL, INC.
By:_________________________________
Richard Ginsburg, President
and
Chief Executive Officer
By:_________________________________
Sheilah Ginsburg, Secretary
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STATE OF FLORIDA )
)
COUNTY OF BROWARD )
BEFORE ME, the undersigned authority, personally appeared RICHARD
GINSBURG and SHEILAH GINSBURG, to me known to be the President and Chief
Executive Officer and Secretary, respectively, of GUARDIAN INTERNATIONAL,
INC., a Nevada corporation, who acknowledged before me that they have executed
the foregoing Certificate in their respective capacity as officers of the said
corporation for the reasons and purpose therein expressed, and that the
statements contained in the said Certificate are true and correct.
Sworn to and subscribed before me at_________, Florida this __day of
October, 1997.
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