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"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and between the
Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (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 ▇▇▇▇ 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
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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.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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To the Company: Guardian International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
President
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Steel ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
GUARDIAN INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President and Chief
Executive Officer
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
WESTAR CAPITAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
19
SCHEDULE A
SCHEDULE OF STOCKHOLDERS
NAME NUMBER OF SHARES AND CLASS OF CAPITAL STOCK
---- -------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,403,533 shares
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 903,533 shares
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 629,246 shares
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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