EXHIBIT 10.(b)
GUARDIAN INTERNATIONAL, INC.
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "Agreement"), dated as of October
21, 1998, is made by and among Guardian International, Inc., a Nevada
corporation (the "Company"), Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx
and Xxxxxx Xxxxxxxx (individually, a "Xxxxxxxx" and collectively, the
"Ginsburgs") and Westar Security, Inc., a Kansas corporation ("Westar"). Each of
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
purchase the Preferred Shares pursuant to the Stock Subscription Agreement
between Westar and the Company of even date herewith (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 for, and the Company's sale of, the Preferred 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" shall have the meaning set forth in Rule 405 of the
Securities Act.
"BONA FIDE PUBLIC SALE" means any bona fide sale of Stockholder
Shares (i) to the public pursuant to an effective registration statement under
the Securities Act or (ii) to the public through a broker, dealer or market
maker pursuant to the provisions of Rule 144 promulgated under the Securities
Act.
"BOARD" has the meaning set forth in the preamble.
"BENEFICIAL OWNERSHIP" shall have the meaning given to it pursuant
to Rule 13d-3 promulgated pursuant to the Securities Exchange Act of 1934, as
amended.
"CERTIFICATES OF DESIGNATIONS" means the Convertible Certificate of
Designations and the Redeemable Certificate of Designations collectively.
"COMMITTEE" has the meaning set forth in Section 5(b).
"COMMON STOCK" means the Company's Class A Voting Common Stock, par
value $.001 per share.
"CONVERTIBLE PREFERRED STOCK" means the Company's Series D 6.00%
Convertible Cumulative Preferred Stock, $.001 par value per share, having the
rights and preferences set forth in the Convertible Certificate of Designations.
"CONVERTIBLE CERTIFICATE OF DESIGNATIONS" means the Certificate of
Designations to the Articles of Incorporation of the Company dated as of October
21, 1998 defining the rights and preferences of the Convertible Preferred Stock.
"DEFAULT EVENT" has the meaning set forth in either of the
Certificates of Designation, or if the context references a particular
Certificate of Designations, "Default Event" shall have the meaning set forth in
the Certificate of Designations so referenced.
"FAMILY GROUP" has the meaning set forth in Section 5(c).
"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).
"OFFER NOTICE" has the meaning set forth in Section 5(b).
"OTHER STOCKHOLDERS" means the Stockholders other than the
Transferring Stockholder.
"PERMITTED TRANSFEREES" has the meaning forth in Section 5(c).
"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 shares of Convertible Preferred Stock
and the shares of Redeemable Preferred Stock of the Company to be sold to Westar
pursuant to the terms of the Subscription Agreement.
"PREFERRED STOCK" means any shares of any series of the class of
Preferred Stock, par value $.001 per share, of the Company as such term is
defined in the Certificate of Amendment to the Articles of Incorporation of the
Company filed with the Secretary of the State of Nevada on November 24, 1997.
"REDEEMABLE PREFERRED STOCK" means the Company's Series C 7.00%
Redeemable Cumulative Preferred Stock, $.001 par value per share, having the
rights and preferences set forth in the Redeemable Certificate of Designations.
"REDEEMABLE CERTIFICATE OF DESIGNATIONS" means the Certificate of
Designations to the Articles of Incorporation of the Company dated as of October
21, 1998 defining the rights and preferences of the Redeemable Preferred Stock.
"SALE OF THE COMPANY" has the meaning set forth in Section 7(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 at any time, or from
time to time, during the term of this Agreement, (ii) any Common Stock issued or
issuable directly or indirectly upon conversion of Preferred Stock, and (iii)
any Common Stock or Preferred Stock issued or issuable as a dividend or
distribution on, or otherwise with respect to, the securities referred to in
clauses (i) or (ii) above. For purposes of this Agreement, any Person who holds
Convertible 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" means a sale, transfer, assignment, pledge,
hypothecation, gift, placement in trust (voting or otherwise) or transfer by
operation of law of, creation of a security interest in or lien on, or any other
encumbering or disposal (directly or indirectly, whether with or without
consideration and whether voluntarily or involuntarily) of, Stockholder Shares
or any interest therein.
"TRANSFERRING STOCKHOLDER" has the meaning set forth in Section
5(b).
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"VOTING SECURITIES" means any securities of the Company, or
securities which are convertible into or exchangeable for securities of the
Company (whether or not such securities are then convertible or exchangeable),
which may be entitled to vote on any matter to be presented to the stockholders
of the Company, whether pursuant to the articles of incorporation of the Company
or any amendment or certificate of designations thereto, the bylaws of the
Company, or by state corporate statute or the rules and regulations promulgated
pursuant thereto.
2. BOARD OF DIRECTORS.
1. COMPOSITION OF THE BOARD.
1. From and after the date of conversion of the Convertible
Preferred Stock into Common Stock pursuant to the terms of the
Convertible Certificate of Designations (the "Conversion"), and prior
to the date of Conversion, if the holders of Series D Preferred Stock
may exercise a special voting right pursuant to Section V(b) of the
Convertible Certificate of Designations, each Stockholder shall vote
all of its Stockholder Shares which are Voting Securities 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 (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
no more than seven (7), and
(2) The following shall govern the composition of the Board:
(1) not less than three (3) representatives nominated by the
Ginsburgs, acting as a group, shall be elected to the
Board, who shall initially be Xxxxxxx Xxxxxxxx and two
additional representatives to be nominated by the
Ginsburgs; and
(2) not less than two (2) representatives who shall not be
officers or employees of the Company or its Affiliates or
of Westar or its Affiliates or related by blood or
marriage to or affiliated with any of the Ginsburgs (each
an "Independent Director") shall be nominated mutually by
the Stockholders and elected to the Board; and
(3) a number of directors, determined from time to time,
which shall be equal to the lesser of (i) the whole
number (in accordance with standard rounding conventions)
nearest to the product of (A) Westar's fully diluted
ownership
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percentage and (B) the number of authorized seats on the
Board of Directors; and (ii) two (2), shall be nominated
by Westar and elected to the Board;
PROVIDED, HOWEVER, that (i) in the event that the aggregate Stockholder Shares
owned by all of the Ginsburgs decreases to less than 2,000,000 shares of Common
Stock but more than or equal to 1,250,000 shares of Common Stock, then the
Ginsburgs shall have the right to nominate two (2) representatives; (ii) in the
event that the aggregate Stockholder Shares owned by all of the Ginsburgs
decreases to less than 1,250,000 but more than or equal to 500,000 shares of
Common Stock, then the Ginsburgs shall have the right to nominate one (1)
representative, and (iii) in the event that the aggregate Stockholder Shares
owned by all of the Ginsburgs decreases to less than 500,000 shares of Common
Stock, then the Ginsburgs shall have no nomination rights. In the event that
nomination rights are forfeited in accordance with the immediately preceding
proviso, such board seats shall be filled by Independent Directors nominated
mutually by the Stockholders.
2. Any committees of the Board shall be created and the
composition thereof determined only upon the approval of not less
than one Xxxxxxxx nominee and one Independent Director.
3. 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 and the Company's bylaws.
4. 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.
5. No transferee of Stockholder Shares (including Common Stock
issued upon Conversion), other than Permitted Transferees, shall,
after consummation of the Transfer of Stockholder Shares to such
transferee, have any of the nomination rights set forth in Section
2(a)(i)(2), but all transferees (other than a transferee pursuant to
a Bona Fide Public Sale) shall be subject to the voting agreement
contained in Section 2(a)(i).
6. 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
2. LIMITATIONS ON BOARD COMPOSITION. The provisions contained in
Section 2(a) are subject in their entirety to the terms of the Preferred Stock
contained in the Certificates
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of Designations, and the election of directors to the Board shall be subject at
all times to applicable law.
3. 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.
4. 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. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Stockholder
represents, warrants and agrees that (i) such Stockholder is the record owner of
the number of Stockholder Shares 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 limitations on the
availability of equitable remedies, (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,
and (iv) 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.
4. LIMITATION ON OWNERSHIP. For a period commencing on the date hereof
and ending on the earlier of (a) the fifth anniversary hereof, (b) the
occurrence of a Default Event, (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 Beneficial Ownership of Voting
Securities of the Company and agrees to cause its Affiliates and any Affiliates
of Western Resources, Inc., a Kansas corporation, or Protection One, Inc., a
Delaware corporation (collectively, Westar, Western Resources, Inc., Protection
One, Inc., and such Affiliates are hereinafter referred to in this Section 4 as
the "Restricted Group"), to limit their Beneficial Ownership of Voting
Securities of the Company so that at no time does any member of the Restricted
Group, or any combination of members of the Restricted Group, have direct or
indirect Beneficial Ownership of in excess of 45% of the Voting Securities of
the Company outstanding at any time on a Fully Diluted Basis, unless such member
or members of the Restricted Group receive the prior written consent of a
committee of the Board consisting of at least two Independent Directors to
exceed that limit. Solely for the purposes of this Section 4, the term
"Affiliate" shall not include Xxxxx X. Xxxxxx and Xxxxxxx X. Lake.
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5. RESTRICTIONS ON TRANSFER OF STOCKHOLDER SHARES.
1. TRANSFER OF STOCKHOLDER SHARES. No Stockholder shall, directly or
indirectly, effect or facilitate a Transfer of any interest in its Stockholder
Shares, except in compliance with all of the provisions of this Section 5 or
pursuant to a Bona Fide Public Sale.
2. FIRST OFFER RIGHT.
1. FIRST OFFER RIGHT OF THE COMPANY.
(1) At least 45 days prior to making any Transfer of any
Stockholder Shares (other than pursuant to a Bona Fide Public Sale)
(the "Election Period"), the transferring Stockholder (the
"Transferring Stockholder") shall deliver a written notice (an
"Offer Notice") to a committee of the Board comprised of at least
two Independent Directors (the "Committee") and the Other
Stockholders. 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 (the
"Company Election Notice") to the Transferring Stockholder and the
Other Stockholders as soon as practical but in any event within 15
days after the delivery of the Offer Notice.
2. FIRST OFFER RIGHT OF THE OTHER STOCKHOLDERS.
(1) If the Company has not elected to purchase the Stockholder
Shares within such 15-day period, each of the Other Stockholders 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, contained in the Offer Notice by delivering written notice of
such election to the Transferring Stockholder (the "Stockholder
Election Notice") as soon as practical but in any event before the
expiration of the Election Period; 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
Stockholders unless all such offered Shares are elected to be
purchased in the Stockholder Election Notice.
(2) If the Company or any of the Other Stockholders have
elected to purchase the Stockholder Shares offered in the Offer
Notice from the
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Transferring Stockholder, the Transfer of such shares shall be
consummated as soon as practicable after the delivery of the Company
Election Notice or the Stockholder Election Notice, as the case may
be, to the Transferring Stockholder, but in any event within 30 days
after the expiration of the Election Period.
3. TRANSFER TO THIRD PARTIES.
(1) If the Company and the Other Stockholders 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, Transfer all such Stockholder Shares to one
or more third parties at a price not less than 110% of the price set
forth in the Offer Notice and on other terms no more favorable to
the transferees thereof than offered to the Company and the Other
Stockholders 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 Stockholders
under this Section 5(b) prior to any subsequent Transfer.
4. 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.
3. PERMITTED TRANSFERS. The transfer restrictions set forth in this
Section 5 shall not apply with respect to any Transfer of Stockholder Shares by
any Stockholder (i) in the case of the Ginsburgs, pursuant to applicable laws of
descent and distribution or among the Ginsburgs' Family Group, or (ii) in the
case of Westar, to an Affiliate as defined in this Section 5(c) (collectively
referred to herein as "Permitted Transferees"). Except as expressly provided in
this Agreement to the contrary, all rights and restrictions contained in this
Agreement shall continue to be applicable to the Stockholder Shares after any
Transfer to a Permitted Transferee. Any Permitted Transferee of such Stockholder
Shares shall agree in writing to be bound by all of the provisions of this
Agreement and shall have submitted to the Company such evidence as the Company
may reasonably request to demonstrate that such Person is a Permitted
Transferee. "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 Xxxxxx X. Xxxxx for so long as he is an employee of the Company. For
purposes of this Section 5(c), "Affiliate" 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.
6. PREEMPTIVE RIGHTS.
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1. If after Conversion, the Company authorizes the issuance or sale
of any equity securities (other than (i) as a dividend on the outstanding Common
Stock or Preferred Stock, or (ii) upon conversion of outstanding Preferred
Stock) to any Person and if, and only if, such issuance or sale (individually or
in the aggregate) would, after giving effect to any anti-dilution adjustments
with respect to, and as contained in the terms of, any such options, warrants or
convertible securities, reduce Westar's ownership percentage of Common Stock of
the Company to less than 25% 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 by giving 30 days' prior written notice to
Westar (the "Offering Period"). 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.
2. To exercise its purchase rights hereunder, Westar must within 15
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.
3. Upon the expiration of the Offering Period described in Section
6(a), 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 Section 6(c).
7. SALE OF THE COMPANY.
1. 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 all of its
Voting Securities for, consent to and raise no objections against, such Sale of
the Company or (ii) purchase, or cause an Affiliate to purchase, the shares of
outstanding Common Stock it does not then own on substantially the same terms
and conditions as approved by the Committee in connection with the Sale of the
Company. Westar shall have 30 days from the date of notice from the Committee of
approval of any such Sale of the Company 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.
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2. The obligations of the Stockholders with respect to the Sale of
the Company are subject to the satisfaction of the following conditions:
1. 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
2. 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
(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.
3. The Stockholders 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, if applicable; and
3. A Stockholder shall not be required to provide any
indemnification in connection with such sale except indemnification for breach
of the representations and warranties made by it pursuant to Section 7(b)(iii).
8. 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 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 other provisions set forth in
a Stockholders Agreement dated as of October 21, 1998, among the
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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.
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 Stockholder Shares upon termination of this Agreement in
accordance with Section 10.
9. TRANSFERS IN VIOLATION OF AGREEMENT; EFFECT OF TRANSFER. A
Stockholder shall not Transfer any Stockholder Shares to any Person unless and
until the prospective transferee has agreed to be bound by this Agreement and to
execute and deliver to the Company and the Other Stockholders a counterpart of
this 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. Except as
otherwise expressly provided herein, any transferee of Stockholder Shares (other
than a transferee pursuant to a Bona Fide Public Sale) shall take such
Stockholder Shares subject to the terms and provisions of this Agreement, and
such Stockholder Shares shall remain Stockholder Shares in the hands of such
transferee. Notwithstanding any provision contained herein to the contrary,
Stockholder Shares transferred by any of the Ginsburgs to either Xxxxx X. Xxxxxx
or Xxxxxxx X. Lake shall not be subject to this Agreement.
10. TERMINATION. Notwithstanding anything to the contrary contained
herein,
1. 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.
2. This Agreement shall terminate and be of no further force or
effect (i) upon a Sale of the Company, or (ii) upon the consummation of a Bona
Fide Public Sale with respect to the Stockholder Shares sold in such Bona Fide
Public Sale.
3. This Agreement shall terminate and be of no further force and
effect upon the earlier to occur of the following events: (i) the date upon
which Westar ceases to have Beneficial Ownership of 10% or more of the
outstanding equity securities of the Company on a Fully Diluted Basis; and (ii)
the date upon which the Ginsburgs, as a group, cease to have Beneficial
Ownership of 500,000 or more shares of Common Stock.
11. 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
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Westar, the Company will not, so long as Westar or its Affiliates own or control
at least 10% of the outstanding equity securities of the Company, issue any
equity security senior to the Common Stock.
12. SPECIAL VOTING RIGHT. A holder of Convertible Preferred Stock
exercising the special voting rights set forth in Section V(b) of the
Convertible Certificate of Designations is subject to all of the terms and
conditions of this Agreement except Section 7 hereof.
13. MISCELLANEOUS.
1. 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.
2. 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.
3. 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.
4. 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 Section 6 (Preemptive
Rights) shall not be assignable or Transferable (whether in connection with the
Transfer of Westar's Stockholder Shares or otherwise) other than to an Affiliate
of Westar in connection with the Transfer of Westar's Stockholder Shares, and
any assignment of such rights other than pursuant to the terms of this section
shall be null and void.
12
5. 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.
6. 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 Security, Inc.
0000 X. Xxxxx Xxx 000, Xxx. 000
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Protection One, Inc.
0000 X. Xxxxx Xxx 000, Xxx. 000
Xxxxxx, Xxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
To the Company: Guardian International, Inc.
0000 Xxxxx 00xx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxx, President
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxxxx Xxxxxxx, Esq.
Steel Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxxxx, XX 00000-0000
13
Phone: 000-000-0000
Fax: 000-000-0000
7. 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.
8. 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.
9. 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
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.
10. 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.
11. 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).
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12. 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, Texas, Nevada or New York the time period
shall automatically be extended to the business day immediately following such
Saturday, Sunday or legal holiday.
13. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
14. 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.
15. TERMINATION OF STOCKHOLDERS AGREEMENT. The parties hereto agree
that the Stockholders Agreement dated as of October 21, 1997 by and among the
parties hereto is hereby terminated and of no further force and effect as of the
date first written above and that no party thereto shall have any rights or
obligations thereunder.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
GUARDIAN INTERNATIONAL, INC.
By:/s/ Xxxxxxx Xxxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxxx, President and Chief
Executive Officer
/s/ Xxxxxx Xxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
------------------------------------------
15
Xxxxxx Xxxxxxxx
WESTAR SECURITY, INC.
By:/s/ Xxxx X. Xxxxx
------------------------------------------
Name: Xxxx X. Xxxxx
Title:____________________________________
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SCHEDULE A
SCHEDULE OF STOCKHOLDER SHARES
--------------------------------------------------------------------------------
NAME NUMBER OF SHARES AND CLASS OF CAPITAL STOCK
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 1,003,533 shares
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxx 903,533 shares
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxx 629,246 shares
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 629,245 shares
--------------------------------------------------------------------------------
Westar Security, Inc. Preferred Stock Series C: 16,397 shares
Preferred Stock Series D: 10,000 shares
--------------------------------------------------------------------------------
