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EXHIBIT 2.6
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 0000 X. 00xx Xxxxxxx, Xxxxxxxxx, Xxxxxxx, 00000, 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
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$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 0000 X.
00xx Xxxxxxx, Xxxxxxxxx, Xxxxxxx, 00000 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 Xxxxxx & Xxxxx LLP, counsel to the Company, dated
the Common Closing Date and substantially in the form of Exhibit B, and an
opinion from Xxxxxx Xxxxxx & Xxxxxxx, 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 Xxxxxx 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
Xxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxx and the Company.
(d) The Employment Agreement attached hereto as Exhibit G (the
"Xxxxxx Xxxxxxxx Employment Agreement") shall have been executed and delivered
by Xxxxxx Xxxxxxxx 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 Xxxx X. Xxxxxxxxx, 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 Xxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxx and the Company.
(d) The Xxxxxx Xxxxxxxx Employment Agreement shall have been
executed and delivered by Xxxxxx Xxxxxxxx and the Company.
4.7 FAIRNESS OPINION. The Company shall have received an opinion of
Xxxxxxx Xxxxx & 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 Xxxxxx & Xxxxx LLP, counsel to the Company, dated
the Preferred Closing Date and substantially in the form of Exhibit B, and an
opinion from Xxxxxx Xxxxxx & Xxxxxxx, 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 Xxxxxx 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
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of a material fact and did 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
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Company of, capital stock, other than as set forth in such Schedule A, which
correctly describes 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:
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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 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
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all other applicable securities laws, or unless the request for
transfer is accompanied by a favorable opinion of counsel, reasonably
satisfactory to the 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.
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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 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
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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.
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
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this Agreement) and the Purchaser has not waived such condition on or before the
Common Closing Date;
(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 Xxxxxxx 0, 00 xxx 00 xxx (x) 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.
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To the Purchaser:
Westar Capital, Inc.
000 Xxxxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxx 00000
Attention: President
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxx X. Xxxxxxxxx, Esq.
000 Xxxxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxx 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
Phone: 000-000-0000
Fax: 000-000-0000
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 Xxxxxx
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00
Xxxxxx xx Xxxxxxx 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 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.
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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 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:
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(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;
(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/ XXXXXXX XXXXXXXX
---------------------------------------
Xxxxxxx Xxxxxxxx,
President and Chief Executive Officer
WESTAR CAPITAL, INC.
By: /s/ XXXX X. XXXXXX
---------------------------------------
Xxxx X. Xxxxxx
President
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