SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
August 28, 1996
GUARDIAN INTERNATIONAL, INC.
(Formerly Everest Security Systems Corporation,
formerly Everest Funding Corporation,
formerly Burningham Enterprises, Inc.)
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(Exact name of the registrant as specified in charter)
Nevada 58-2201633
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(State of Incorporation) (I.R.S. Employer ID No.)
3880 North 28th Terrace, Hollywood, Florida 33020-1118
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(Address of principal executive offices)
Telephone Number: (954) 926-5200
Everest Security Systems Corporation, 823 NW 57th Street,
Fort Lauderdale, Florida 33309
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(Former name or address, if changed since last report)
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Item I. Changes in Control of Registrant
On August 28, 1996, in connection with a merger of Guardian International,
Inc. ("Guardian") with and into Everest Security Systems Corporation (the"
Registrant"), three million two hundred twenty six thousand nine hundred two
(3,226,902) shares of common stock, par value $0.001, were issued to the
former shareholders of Guardian pursuant to Regulation D and Section 4(2) of
the Securities Act of 1933, as amended. Prior to the merger, the Registrant
had three million two hundred twenty six thousand nine hundred two (3,226,902)
shares of common stock outstanding and upon completion of the merger has six
million four hundred fifty three thousand eight hundred four (6,453,804)
shares of common stock outstanding.
Pursuant to the Agreement and Plan of Merger, Harold Ginsburg, of Guardian,
acquired nine hundred three thousand five hundred thirty three (903,533) shares
of common stock, Sheliah Ginsburg, of Guardian, acquired nine hundred three
thousand five hundred thirty three (903,533) shares, Rhonda Ginsburg acquired
six hundred twenty nine thousand two hundred forty five (629,245) shares,
Richard Ginsburg, president of Guardian, acquired six hundred twenty nine
thousand two hundred forty six (629,246) shares and Robert Kasky acquired one
hundred sixty one thousand three hundred forty five (161,345) shares. The
shares were issued in exchange for all issued and outstanding shares of the
common stock of Guardian. Therefore, immediately after the completion of the
transaction described herein, Harold Ginsburg owned 14% of the outstanding
common stock, Sheliah Ginsburg owned 14% of the outstanding common stock,
Rhonda Ginsburg owned 9.749% of the outstanding common stock, Richard
Ginsburg owned 9.75% and Robert Kasky owned 2.49% of the outstanding common
stock.
On August 14, 1996, the Registrant completed the sale of 1,000,000
shares of common stock, par value $0.001, to overseas investors pursuant to
Regulation S for a price of $3.50 per share, in accordance with the terms and
conditions of the Plan and Agreement of Merger (the "Merger Agreement").
Prior to the sale, the Registrant had 2,226,902 shares of common stock
outstanding and upon completion of the sale had 3,226,902.
On August 28, 1996, resignations were tendered by the directors and
officers of Everest to Guardian and designees of Guardian were elected to the
Board of Directors and as Officers of the Registrant in accordance with the
terms and conditions of the Merger Agreement.
Upon the Closing of the Merger Agreement the major shareholders of the
Registrant agreed to a lock-up of seventy percent (70%) of their shares for a
period of one year from August 28, 1996.
In accordance with the Merger Agreement, International Treasury &
Investments Ltd., a major shareholder of the Registrant, agreed to deliver an
irrevocable voting proxy to Harold Ginsburg (or his designee) for a period of
two years from August 28, 1996.
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Pursuant to the Merger Agreement, within sixty (60) days from August 28,
1996, an additional seven million dollars ($7,000,000) in equity capital will be
raised with a maximum dilution of two million (2,000,000) shares of common
stock.
Item 2. Acquisition or Disposition of Assets
On August 28, 1996, the Registrant entered into a Plan and Agreement of
Merger with Guardian International, Inc. ("Guardian"), a corporation organized
and existing under the laws of the State of Florida whereby the Registrant
would be the Surviving Corporation. In accordance with the terms of the
Merger Agreement the following events have or are to occur:
(a) The name of the Registrant was changed to Guardian International, Inc.
at the closing.
(b) Upon completion of the merger, the Registrant provided Guardian
funding in the amount of U.S. three million dollars ($3,000,000) in the form of
equity from institutional investors.
Upon the closing of the merger, the shareholders of Guardian received
fifty percent (50%) of the outstanding common stock of the Registrant computed
on a fully diluted basis, as of the date of the closing, in exchange for their
shares of Guardian.
(d) At the closing of the Merger Agreement International Treasury
Investments Ltd. delivered to Harold Ginsburg or his designee a irrevocable
proxy to vote its one million (1,000,000) shares of the Registrant. Such proxy
will remain effective for two (2) years from August 28, 1996.
Item 4. Changes in Registrant's Certifying Accountant
On August 29, 1996 Semple & Cooper, P.L.C. was dismissed as independent
auditors. The Board of Directors has approved McKean, Paul, Chryey, Floetcher
& Co. as independent auditors for the year ended December 31, 1996 at the Board
of Directors meeting on August 29, 1996.
The reports of Semple & Cooper, P.L.C. on the Registrant's financial
statements for either of the past two fiscal years did not contain an adverse
opinion nor a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
In connection with the audits of the Registrant's financial statements for
each of the two fiscal years ended December 31, 1995 and in the subsequent
interim period preceding Semple & Cooper, P.L.C.'s dismissal, there were no
disagreements on any matters of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which if not resolved
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to the satisfaction of Semple & Cooper, P.L.C., would have caused Semple &
Cooper, P.L.C. to make references to the matter in their report.
The Registrant has requested Semple & Cooper, P.L.C. furnish it a letter
addressed to the Commission stating whether it agrees with the statements set
forth above in this Item 4. A copy of that letter, dated September 6, 1996, is
filed herewith as Exhibit 16.1 to this Form 8-K.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired:
These will be provided within sixty (60) days after the filing of this
Form 8-K.
(b) Pro-forma Financial Information
These will be provided within sixty (60) days after the filing of
this Form 8-K
Exhibits:
2.1 Agreement and Plan of Merger between Everest Security Systems
Corporation ("Registrant") and Guardian International, Inc., dated August 28,
1996.
16.1 Letter Dated September 6, 1996 from Semple & Cooper, P.L.C.,
Registrant's certifying accountant.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Guardian International, Inc.
(formerly Everest Security Systems
Corporation)
September 10, 1996
By: /s/Richard Ginsburg/President
Richard Ginsburg, President
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (hereinafter referred to as the "Merger
Agreement") is made and entered into as of the 28 day of August, 1996 by and
between GUARDIAN INTERNATIONAL, INC., a Florida corporation ("Guardian"), and
EVEREST SECURITY SYSTEMS CORPORATION, a Nevada corporation ("Everest"), with
the joinder and consent of International Treasury and Investments, Ltd. ("ITI"),
G.M. Capital Partners, Ltd.("G.M. Capital"), Steven A. Sanders ("Sanders"),
Robert Knight ("Knight"), Frank Bauer ("Bauer") and Harold Ginsburg ("Harold").
Guardian and Everest are sometimes referred to herein as "Constituent
Corporations."
WITNESSETH:
WHEREAS, the Constituent Corporations desire to merge Guardian with and
into Everest upon the terms and conditions hereinafter set forth ("Merger");
NOW, THEREFORE, in consideration of the mutual promises herein exchanged,
and other good and valuable consideration, the receipt, adequacy and sufficiency
of which are hereby acknowledged, the parties hereto intending to be legally
bound agree as follows:
ARTICLE I
THE MERGER
1.1 Merger. Upon the terms and conditions hereinafter set forth, Guardian
shall be merged with and into Everest, and Everest shall be the surviving
corporation ("Surviving Corporation"). The Merger shall become effective upon
the filing of a certificate of merger ("Certificate of Merger") with the
Secretary of State of the State of Nevada and Secretary of State of the State of
Florida, or at such time thereafter as is provided in the Certificate of
Merger (the "Effective Time").
1.2 Closing. The closing of the transactions contemplated by this Merger
Agreement (the "Closing") shall take place at the offices of Navon, Kopelman &
O'Donnell, P.A. in Fort Lauderdale, Florida, commencing at 9:00 a.m. local time
on August 15, 1996 or such other date as the Constituent Corporations may
mutually agree to in writing (the "Closing Date").
1.3 Deliveries at Closing. At the Closing (I) Everest shall deliver to
Guardian the various certificates, instruments, and documents referred to in
Section 6.1 below, (ii) Guardian shall deliver to Everest the various
certificates, instruments, and documents referred to in Section 6.2 below,
and (iii) Guardian and Everest shall cause the Certificate of Merger to be
filed with the Secretary of State of the State of Nevada and the Secretary of
State of the State of Florida, in the form attached hereto as Schedule 1.3.
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1.4 Effects of the Merger.
(a) At the Effective Time (I) the separate existence of Guardian
shall cease, (ii) the Certificate of Incorporation of Everest shall be
amended so that Article First of such Certificate of Incorporation reads in
its entirety as follows: "FIRST: The name of the Corporation shall be
Guardian International, Inc.", and as so amended, such Certificate shall be
the Certificate of Incorporation of the Surviving Corporation and (iii) the
bylaws of the Surviving Corporation in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Corporation, except that
such bylaws shall be amended to the extent necessary to effectuate the
transactions contemplated by this Merger Agreement, including, without
limitation, an amendment reflecting the new name of the Surviving
Corporation as "Guardian International, Inc." and any amendments regarding
the number of directors and election of directors, as may be necessary.
(b) At and after the Effective Time (I) the Surviving Corporation
shall possess all the rights, privileges, powers and franchises of a public,
as well as of a private nature, and be subject to all the restrictions,
obligations and duties of each of the Constituent Corporations, (ii) all the
property, real, personal and mixed, and all debts due to either of the
Constituent Corporations of any nature whatsoever and all other things in
action or belonging to each of the Constituent Corporations, shall be vested
in the Surviving Corporation, and (iii) all property, rights, privileges,
powers and franchises, and all and every other interest, debt or obligation of
each of the Constituent Corporations shall be thereafter as effectually the
property of the Surviving Corporation as they were of the Constituent
Corporations. The title to any real estate vested by deed or otherwise, in
either of the Constituent Corporations, shall not revert, or be in any way
impaired. All rights of creditors and all liens upon any property of either of
the Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the Constituent Corporations shall, from the
Effective Time and thereafter, attach to the Surviving Corporation, and may
be enforced against it to the same extent as if said debts and liabilities had
been incurred by it.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of
Guardian or Everest:
(a) Exchange Ratio for Guardian Stock. All issued and outstanding
shares of Guardian common stock shall be converted into fifty percent (50%) of
the outstanding common stock of Everest, to be determined on a fully diluted
basis as of the Closing Date. All such shares of Guardian common stock shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any such
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shares ("Guardian Shareholder") shall cease to have any rights with respect
thereto, except the right to receive his pro-rata share (based on the percentage
of Guardian common stock owned by such shareholder prior to the Merger) of the
fifty percent (50%) of Everest common stock to be issued in consideration
therefor upon the surrender of such certificate in accordance with Section 2.2
hereof. Notwithstanding anything contained herein to the contrary, in the event
any warrant, stock option or other right to purchase, acquire or otherwise
obtain common stock of Everest (collectively "Stock Right") outstanding as of
the Closing Date is exercised prior to the date such Stock Right elapses, then
each Guardian Shareholder shall receive (based on the percentage of Guardian
common stock owned by such shareholder prior to the Merger) one share of the
common stock of the Surviving Corporation for each share issued pursuant to the
exercise of a Stock Right.
(b) Shares of Dissenting Shareholders. In the event any shares of
Guardian are held by a person who objects to the Merger and complies with all
provisions of the Florida Business Corporation Law ("FBCL") concerning the right
of such holders to dissent from the Merger and demand appraisal of their shares
("Dissenting Shareholder"), then such shares held by such Dissenting
Shareholder shall not be converted as set forth in Section 2.1(a), but shall
from and after the Effective Time, represent only the right to receive such
consideration as may be determined to be due to such Dissenting Shareholder
under the FBCL. In the event five percent (5%) of the shares of either
Constituent Corporation dissent with respect to the Merger (excluding the
shares owned by ITI, Sanders, Knight, Bauer and G.M. Capital as to Everest, and
Harold as to Guardian), then either Constituent Corporation shall have the right
to send written notice to the other terminating this Merger Agreement, whereupon
this Merger Agreement shall be deemed terminated as of the date of receipt of
such written notice and the parties shall be released with respect to their
respective obligations each to the other except with respect to those
obligations which survive the termination.
2.2 Exchange of Certificates.
(a) Exchange Agent. At least five (5) business days prior to the
Closing, Everest shall deposit with Interwest Transfer Company, Inc. (the
"Exchange Agent"), for the benefit of the holders of the shares of Guardian
common stock, for exchange in accordance with this Article II, through the
Exchange Agent, certificates representing the shares of Everest common stock
issuable pursuant to Section 2.1 in exchange for outstanding shares of Guardian
common stock. At least 10 business days prior to the Closing Date, to the
extent necessary or required by any law, rule or regulation, Everest shall
notify NASDAQ and Standard and Poor's of the Merger and obtain a new cusip
number and symbol. Within the time provided by statute, the Surviving
Corporation shall file a Form 10-C with the Securities and Exchange Commission
("SEC") and NASDAQ and a Form 8-K with the SEC.
(b) Exchange Procedures. At least five (5) business days prior to
the Closing, Guardian shall deliver to the Exchange Agent a list ("Guardian
Shareholder List") of the Guardian Shareholders, the number of shares of
Guardian common stock held by each, each holder's respective percent ownership
of Guardian, and each holder's respective address, fax telephone number and
social security number. Immediately upon receipt of the Guardian Shareholder
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List, the Exchange Agent shall fax to each holder listed thereon at the fax
telephone number set forth thereon, a letter containing instructions for use in
effecting the surrender of the Guardian common stock certificates in exchange
for certificates representing shares of Everest common stock. Upon surrender
of a certificate of Guardian common stock for cancellation to the Exchange
Agent, the holder of such certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Everest
common stock which such holder is entitled to receive pursuant to the provisions
of Section 2.1(a) hereof, and the Guardian certificate so surrendered shall
forthwith be cancelled. The Constituent Corporations hereby agree that no
fractional shares shall be issued. In the event there are any fractional
shares, such shares shall be converted to cash on the Closing Date based on the
average between the bid and asked price of the common stock of the Surviving
Corporation on the Closing Date. Additionally, the parties hereto hereby
acknowledge that Harold, as a Guardian Shareholder, will be assigning a certain
portion of his right to receive Everest common stock as contemplated in this
Article II to certain additional parties. In this regard, simultaneously with
Harold's surrender of his Guardian common stock certificates to the Exchange
Agent as contemplated above, Harold shall provide the Exchange Agent with a
written list ("Assignee List") of additional parties who shall have the right
to receive a specified number of Everest common shares in exchange for an
equal number of Harold's Guardian common shares. The Assignee List shall
contain such additional parties' names, addresses, social security numbers and
the specified number of shares of Everest common stock each additional party
is entitled to receive. Upon receipt of Harold's Guardian stock certificates
and the Assignee List, the Exchange Agent is hereby authorized and instructed
to deliver to such additional parties the specified number of Everest common
shares set forth in the Assignee List.
Payment of Expenses to Exchange Agent. Everest shall be
responsible for payment of all charges and expenses of the Exchange Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EVEREST
Everest represents and warrants to Guardian that the statements contained
in this Article III are correct and complete as of the date of this Merger
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of
this Merger Agreement throughout this Article III).
3.1 Organization, Qualification, and Corporate Power. Everest is a
corporation duly organized, validly existing, and in good standing under the
laws of its state of its incorporation. In this regard, Everest shall deliver
to Guardian on the Closing Date a certificate of good standing from the
Secretary of State of Nevada and a certificate of good standing from the
Secretary of State of the State of Florida as to Everest's authority to transact
business in Florida. Everest is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required. Everest has full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it.
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3.2 Capitalization. The entire authorized capital stock of Everest
consists of 100,000,000 shares of $.001 par value common stock, of which
3,226,902 shares are issued and outstanding and zero shares are held in
treasury. All of the issued and outstanding shares have been duly authorized
and are validly issued, fully paid, and nonassessable. Except as set forth in
Schedule 3.2, there are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require Everest to issue, sell, or
otherwise cause to become outstanding any of its capital stock. Except as set
forth in Schedule 3.2, there are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to Everest.
3.3 Authorization of Transaction. Everest has full power and authority
(including full corporate power and authority) to execute and deliver this
Merger Agreement and to perform its obligations hereunder; provided, however,
that Everest cannot consummate the Merger unless and until it receives the
requisite stockholder approval under Nevada Corporation Law ("NCL"). This
Merger Agreement constitutes the valid and legally binding obligation of
Everest, enforceable in accordance with its terms and conditions, subject as to
the enforceability of remedies, to bankruptcy, insolvency, moratorium and other
laws affecting the rights of creditors generally.
3.4 Noncontravention. Neither the execution and the delivery of this
Merger Agreement, nor the consummation of the transactions contemplated
hereby, will (I) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which Everest is subject or any
provision of the charter or bylaws of Everest or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Everest is a party or by which it is bound or to which any
of its assets is subject (or result in the imposition of any security interest,
mortgage, pledge, lien, charge or other encumbrance upon any of its assets),
except as set forth on Schedule 3.4(a) attached hereto. Other than in
connection with the provisions of the NCL, the Securities Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder
(collectively, the "Securities Exchange Act"), the Securities Act of 1933, as
amended and the rules and regulations promulgated thereunder (collectively, the
"Securities Act"), the state securities laws, and except as otherwise set
forth in Schedule 3.4(b), Everest does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Constituent Corporations to
consummate the transactions contemplated by this Merger Agreement.
3.5 Filings with the SEC. Everest has made all filings with the SEC that
it has been required to make under the Securities Act and the Securities
Exchange Act (collectively the "Public Reports"). Each of the Public Reports has
complied with the Securities Act and the Securities Exchange Act in all
material respects. None of the Public Reports, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements made therein, in light of the
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circumstances under which they were made, not misleading. Everest has delivered
to Guardian a correct and complete copy of each Public Report (together with all
exhibits and schedules thereto and as amended to date) listed on Schedule 3.5.
3.6 Financial Statements. Everest has delivered to Guardian correct and
complete copies of the following financial statements (collectively the
"Financial Statements"): (I) audited balance sheets and statements of income,
changes in stockholders' equity, and cash flow as of and for the calendar years
ended December 31, 1989, December 31, 1990, and December 31, 1995 (the "Most
Recent Calendar Year End"); (ii) unaudited balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the
calendar years ended December 31, 1991, December 31, 1993 and December 31,
1994; (iii) unaudited interim balance sheets and statements of income,
changes in stockholders' equity, and cash flow as of and for the calendar
quarter ended March 31, 1996 (the "Most Recent Calendar Quarter End"); and
(iv) stub report balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the period from April 1,
1996 through May 31, 1996. The Financial Statements (including the notes
thereto) have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods covered
thereby, present fairly the financial condition of Everest as of such dates and
the results of operations of Everest for such periods, are correct and
complete, and are consistent with the books and records of Everest (which
books and records are correct and complete).
3.7 Events Subsequent to Most Recent Calendar Year End. Since the Most
Recent Calendar Year End, there has not been any adverse change in the business,
financial condition, operations, results of operations, or to the best knowledge
of management, future prospects of Everest.
3.8 Undisclosed Liabilities. Everest does not have any liabilities,
whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes
(collectively, the "Liabilities"), except for (I) liabilities set forth on the
face of the balance sheet dated as of the Most Recent Calendar Quarter End and
(ii) liabilities which have arisen after the Most Recent Calendar Quarter End in
the ordinary course of business consistent with past custom and practice
(none of which results from, arises out of, relates to, is in the nature of,
or was caused by any breach of contract, breach of warranty, tort, infringement,
or violation of law), and described with specificity on Schedule 3.8 attached
hereto.
3.9 Brokers' Fees. Except as set forth on Schedule 3.9, Everest does not
have any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement.
3.10 Disclosure. Any materials delivered to Everest's shareholders in
connection with obtaining the requisite shareholder approval under state law
will comply with all applicable state and federal laws in all material
respects. Such materials will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
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statements made therein, in the light of the circumstances under which they will
be made, not misleading; provided, however, that Everest makes no representation
or warranty with respect to any information that Guardian will supply
specifically for use of such materials.
3.11 Title to Assets. Except as set forth on Schedule 3.11, Everest has
good and marketable title to, or a valid leasehold interest in, the properties
and assets used by them, located on their premises, or shown on the Most
Recent Calendar Quarter End balance sheet or acquired after the date thereof,
free and clear of all security interests, mortgages, pledges, liens, charges or
other encumbrances, except for properties and assets disposed of in the ordinary
course of business consistent with past custom and practice and those subject to
purchase money obligations as set forth on Schedule 3.11.
3.12 Tax Matters.
(a) Everest has filed all federal, state, local, foreign and other
tax returns (collectively "Tax Returns") that it is required to file. All such
Tax Returns are correct and complete in all respects. All federal, state,
local and other taxes (collectively "Taxes") owed by Everest (whether or not
shown on any Tax Return) have been paid. Everest is not the beneficiary of
any extension of time within which to file any Tax Return. No claim has ever
been made by an authority in a jurisdiction where Everest files Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are no
security interests, mortgages, pledges, liens, charges or other encumbrances
on any of the assets of Everest that arose in connection with any failure (or
alleged failure) to pay any Taxes, except as set forth on Schedule 3.12(a).
(b) Everest has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party, except as
set forth on Schedule 3.12(b).
No director or officer (or employee responsible for tax matters) of
Everest expects any authority to assess any additional Taxes for any period for
which Tax Returns have been filed. Except as set forth on Schedule 3.12(c),
there is no dispute or claim concerning any tax liability of Everest either
(I) claimed or raised by any authority in writing or (ii) as to which any of the
directors and officers (or employees responsible for tax matters) of Everest
have actual knowledge, based upon a reasonable investigation. Schedule 3.12
lists all Tax Returns filed with respect to Everest for taxable periods ended
on or after October 30, 1986, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the subject of
audit. Everest has delivered to Guardian correct and complete copies of all
federal income tax returns, examination reports, and statements of deficiencies
assessed against or agreed to by Everest since October 30, 1986.
(d) Except as set forth on Schedule 3.12(d), Everest has not waived
any statute of limitations in respect of any Taxes or agreed to any extension of
time with respect to any tax assessment or deficiency.
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(e) The transactions contemplated by the Merger Agreement qualify as a
tax free reorganization under Section 368(a)(1)(A). Everest's counsel shall
deliver to Guardian at the Closing an opinion in a form reasonably acceptable to
Guardian, addressed to Guardian and dated as of the Closing Date, from tax
counsel, opining that the transactions contemplated by this Merger Agreement
qualify as a tax free reorganization.
3.13 Real Property.
(a) Schedule 3.13(a) attached hereto lists and briefly describes all
real property that Everest owns. With respect to each such parcel of owned real
property:
(I) the identified owner has good and marketable title to the parcel
of real property, free and clear of any security interests, mortgages, pledges,
liens, charges, encumbrances, easements, covenants, or other restrictions,
except as set forth on Schedule 3.13(a) attached hereto, which encumbrances,
easements, covenants or other restrictions do not impair the current use,
occupancy, or value, or the marketability of title, of the property subject
thereto;
(ii) there are no pending or threatened condemnation proceedings,
lawsuits, or administrative actions relating to any such property or other
matters adversely affecting the current use, occupancy, or value thereof;
(iii) the legal description for any such parcel contained in the deeds
thereof describes such parcel fully and adequately, that the buildings and
improvements are located within the boundary lines of the described parcels of
land, are not in violation of applicable setback requirements, zoning laws,
and ordinances (and none of the properties or buildings or improvements thereon
are subject to "permitted non-conforming use" or "permitted non-conforming
structure" easement which may burden the land, and the land does not serve any
adjoining property for any purpose inconsistent with the use of the land, and
the property is not located within any flood plain or subject to any similar
type restriction for which any permits or licenses necessary to the use thereof
have not been obtained;
(iv) all facilities have received all approvals of governmental
authorities (including licenses and permits) required in connection with the
ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;
(v) there are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of any parcel of such real property;
(vi) there are no outstanding options or rights of first refusal to
purchase any parcel of such real property, or any portion thereof or interest
therein;
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(vii) there are no parties (other than Everest) in possession of any
parcel of any such real property;
(viii) all facilities located on any parcel of such real property are
supplied with utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary sewer, and
storm sewer, all of which services are adequate in accordance with all
applicable laws, ordinances, rules, and regulations and are provided via
public roads or via permanent, irrevocable, appurtenant easements benefitting
the parcel of real property; and
(ix) any parcel of such real property abuts on and has direct
vehicular access to a public road, or has access to a public road via a
permanent, irrevocable, appurtenant easement benefitting the parcel of real
property, and access to the property is provided by paved public right-of-way
with adequate curb cuts available.
3.14 Tangible Assets. Except as set forth on Schedule 3.14, Everest owns or
leases all buildings, machinery, equipment, and other tangible assets
necessary for the conduct of their businesses as presently conducted (and as
presently proposed to be conducted). Each of such tangible assets is free from
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear), and is suitable for the purposes for which it presently is used
(and presently is proposed to be used).
3.15 Inventory. Except as set forth on Schedule 3.15, the inventory of
Everest consists of raw materials and supplies, manufactured and purchased
parts, goods in process, and finished goods, all of which is merchantable and
fit for the purpose for which it was procured or manufactured, and none of
which is slow-moving, obsolete, damaged, or defective, subject only to the
reserve for inventory writedown set forth on the face of the Most Recent
Calendar Quarter End balance sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of Everest.
3.16 Contracts. Schedule 3.16 attached hereto lists the following
contracts and other material agreements to which Everest is a party:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any person, partnership, corporation, association
or other entity (collectively "Person") providing for lease payments in excess
of $5,000 per annum;
(b) any agreement (or group of related agreements) for the purchase or
sale of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of which
will extend over a period of more than one year, result in a loss to Everest, or
involve consideration in excess of $5,000;
any agreement concerning a partnership or joint venture;
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(d) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
or any capitalized lease obligation, in excess of $10,000 or under which it has
imposed a security interest, mortgage, pledge, lien, charge or other encumbrance
on any of its assets, tangible or intangible;
(e) any agreement concerning confidentiality or noncompetition;
(f) any agreement with any officers, directors, or controlling
shareholders of Everest;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
(h) any collective bargaining agreement;
(I) any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in excess of
$20,000 or providing severance benefits;
(j) any agreement under which it has advanced or loaned any amount to
any of its directors, officers, and employees;
(k) any agreement under which the consequences of a default or
termination could have an adverse effect on the business, financial condition,
operations, results of operations, or future prospects of Everest; or
(l) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $5,000.
Everest has delivered to Guardian a correct and complete copy of each written
agreement listed in Schedule 3.16. With respect to each such agreement: (I) the
agreement is legal, valid, binding, enforceable, and in full force and effect;
(ii) the agreement will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (iii) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
agreement; and (iv) no party has repudiated any provision of the agreement.
3.17 Notes and Accounts Receivable. Except as s et forth on Schedule 3.17,
all notes and accounts receivable of Everest are reflected properly on their
books and records, are valid receivables subject to no setoffs or counterclaims,
are current and collectible, and will be collected in accordance with their
terms at their recorded amounts, subject only to the reserve for bad debts set
forth on the face of the Most Recent Calendar Quarter End balance sheet (rather
than in any notes thereto) as adjusted for the passage of time through the
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Closing Date in accordance with the past custom and practice of Everest.
3.18 Insurance. Schedule 3.18 attached hereto sets forth the following
information with respect to each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
surety arrangements) to which Everest has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past 10 years:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including a description
of how deductibles and ceilings are calculated and operate) of coverage; and
(e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Everest has delivered to Guardian a correct and complete copy of each insurance
policy listed on Schedule 3.18. With respect to each such insurance policy: (A)
the policy is legal, valid, binding, enforceable, and in full force and effect;
(B) the policy will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby; neither Everest nor any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no party
to the policy has repudiated any provision thereof. Everest has been covered
during the past 10 years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period.
3.19 Litigation. Schedule 3.19 attached hereto sets forth each instance in
which Everest (I) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. None of the
actions, suits, proceedings, hearings, and investigations set forth in Schedule
3.19 could result in any adverse change in the business, financial condition,
operations, results of operations, or future prospects of Everest. None of
the directors and officers (and employees with responsibility for litigation
matters) of Everest has any reason to believe that any such action, suit,
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proceeding, hearing, or investigation may be brought or threatened against
Everest.
3.20 Employees. Except as set forth on Schedule 3.20, no executive, key
employee, or group of employees has any plans to terminate employment with
Everest. Everest is not a party to or bound by any collective bargaining
agreement, nor has any of them experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. Everest has
not committed any unfair labor practice. Neither Everest nor its officers and
directors (and employees with responsibility for employment matters) have any
actual knowledge, after reasonable investigation, of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of Everest.
3.21 Guaranties. Except as set forth on Schedule 3.21 attached hereto,
Everest is not a guarantor, surety or otherwise is liable for any liability or
obligation (including indebtedness) of any other Person.
3.22 Environment, Health, and Safety.
(a) Except as set forth on Schedule 3.22(a), Everest, and its
respective predecessors and affiliates have complied with the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof) concerning pollution or protection of the environment,
public health and safety, or employee health and safety, including laws relating
to emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes (collectively, the "Environmental,
Health, and Safety Laws"), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply. Without
limiting the generality of the preceding sentence, Everest, and their respective
predecessors and affiliates have obtained and been in compliance with all of the
terms and conditions of all permits, licenses, and other authorizations
which are required under, and has complied with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables which are contained in, all Environmental, Health, and
Safety laws.
(b) Except as set forth on Schedule 3.22(b), Everest does not have any
liability (and Everest and its respective predecessors and affiliates have not
handled or disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could form the basis for any present or future action, suit, proceeding,
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hearing, investigation, charge, complaint, claim, or demand against Everest
giving rise to any liability) for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental, Health, and
Safety Law.
Except as set forth on Schedule 3.22(c), all properties and
equipment used in Everest's business, and their respective predecessors and
affiliates have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-trans-dichloroethylene, dioxins, dibenzofurans,
and extremely hazardous substances.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GUARDIAN
Guardian represents and warrants to Everest that the statements contained
in this Article IV are correct and complete as of the date of this Merger
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article IV).
4.1 Organization, Qualification, and Corporate Power. Guardian is a
corporation duly organized, validly existing, and in good standing under the
laws of its state of its incorporation. In this regard, Guardian shall deliver
to Everest on the Closing Date a certificate of good standing from the
Secretary of State of Florida. Guardian is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required. Guardian has full corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it.
4.2 Capitalization. The entire authorized capital stock of Guardian
consists of 1,000 shares of $1.00 par value common stock, of which 100 shares
are issued and outstanding and zero shares are held in treasury. All of the
issued and outstanding shares have been duly authorized and are validly issued,
fully paid, and nonassessable. Except as set forth on Schedule 4.2, there are
no outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Guardian to issue, sell, or otherwise cause to become
outstanding any of its capital stock. Except as set forth on Schedule 4.2, there
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Guardian.
4.3 Authorization of Transaction. Guardian has full power and authority
(including full corporate power and authority) to execute and deliver this
Merger Agreement and to perform its obligations hereunder; provided, however,
that Guardian cannot consummate the Merger unless and until it receives the
requisite stockholder approval under FBCL, if required thereby. This Merger
Agreement constitutes the valid and legally binding obligation of Guardian,
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enforceable in accordance with its terms and conditions, subject as to
enforceability of remedies, to bankruptcy, insolvency, moratorium and other laws
affecting the rights of creditors generally.
4.4 Noncontravention. Neither the execution and the delivery of this
Merger Agreement, nor the consummation of the transactions contemplated hereby,
will (I) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Guardian is subject or any
provision of the charter or bylaws of Guardian or (ii) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Guardian is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any security
interest, mortgage, pledge, lien, encumbrance or other security interest upon
any of its assets), except as otherwise set forth in Schedule 4.4(a) attached
hereto. Other than in connection with the provisions of the FBCL, and except
as otherwise set forth in Schedule 4.4(b) attached hereto, Guardian does not
need to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Constituent Corporations to consummate the transactions contemplated by this
Merger Agreement.
4.5 Financial Statements. Guardian has delivered to Everest correct and
complete copies of the following financial statements (collectively the
"Financial Statements"): (I) audited balance sheets and statements of income,
changes in stockholders' equity, and cash flow as of and for the calendar years
ended December 31, 1993, December 31, 1994, and December 31, 1995 ("Guardian's
Most Recent Calendar Year End"); (ii) unaudited, internally prepared interim
balance sheets and statements of income as of and for the fiscal quarter ended
March 31, 1996 ("Guardian's Most Recent Calendar Quarter End"); and (iii)
unaudited, internally prepared stub report balance sheets and statements of
income as of and for the period from April 1, 1996 through May 31, 1996.
Except with respect to Guardian's Most Recent Calendar Quarter End, the
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of Guardian as of such
dates and the results of operations of Guardian for such periods, are correct
and complete, and are consistent with the books and records of Guardian (which
books and records are correct and complete).
4.6 Events Subsequent to Guardian's Most Recent Calendar Year End. Since
Guardian's Most Recent Calendar Year End, there has not been any material
adverse change in the business, financial condition, operations, results of
operations, or to the best knowledge of management, future prospects of
Guardian.
4.7 Undisclosed Liabilities. Guardian does not have any Liabilities,
except for (I) liabilities set forth on the face of the balance sheet dated as
of the Most Recent Fiscal Quarter End and (ii) liabilities which have arisen
after Guardian's Most Recent Calendar Quarter End in the ordinary course of
business consistent with past practice (none of which results from, arises
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out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law), and
described with specificity on Schedule 4.7 attached hereto.
4.8 Brokers' Fees. Except as set forth on Schedule 4.8, Guardian does not
have any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement.
4.9 Title to Assets. Except as set forth on Schedule 4.9, Guardian has
good and marketable title to, or a valid leasehold interest in, the properties
and assets used by them, located on their premises, or shown on Guardian's
Most Recent Calendar Quarter End balance sheet or acquired after the date
thereof, free and clear of all security interests, liens, pledges, mortgages,
encumbrances or other charges, except for properties and assets disposed of in
the ordinary course of business consistent with past custom and practice.
4.10 Tax Matters.
(a) Guardian has filed all Tax Returns that it is required to file.
All such Tax Returns are correct and complete in all respects. All Taxes owed
by Guardian (whether or not shown on any Tax Return) have been paid. Guardian
is not the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction where
Guardian files Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no security interests, liens, pledges, mortgages,
charges or other encumbrances on any of the assets of Guardian that arose in
connection with any failure (or alleged failure) to pay any Taxes, except as
set forth on Schedule 4.10(a).
(b) Guardian has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party, except as
set forth on Schedule 4.10(b).
No director or officer (or employee responsible for tax matters) of
Guardian expects any authority to assess any additional Taxes for any period for
which Tax Returns have been filed. Except as set forth on Schedule 4.10(c),
there is no dispute or claim concerning any tax liability of Guardian either (I)
claimed or raised by any authority in writing or (ii) as to which any of the
directors and officers (and employees responsible for tax matters) of Guardian
have actual knowledge, based upon a reasonable investigation. Schedule 4.10
lists all Tax Returns filed with respect to Guardian for taxable periods ended
on or after December 31, 1993, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the subject of
audit. Guardian has delivered to Everest correct and complete copies of all
federal income tax returns, examination reports, and statements of deficiencies
assessed against or agreed to by Guardian since December 31, 1993.
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(d) Except as set forth on Schedule 4.10(d), Guardian has not waived
any statute of limitations in respect of any Taxes or agreed to any extension of
time with respect to any tax assessment or deficiency.
4.11 Real Property.
(a) Schedule 4.11(a) attached hereto lists and describes briefly all
real property that Guardian owns. With respect to each such parcel of owned real
property:
(I) the identified owner has good and marketable title to the parcel
of real property, free and clear of any security interests, mortgages, pledges,
liens, charges, encumbrances, easements, covenants, or other restrictions,
except as set forth on Schedule 4.11(a) attached hereto, which encumbrances,
easements, covenants or other restrictions do not impair the current use,
occupancy, or value, or the marketability of title, of the property subject
thereto;
(ii) there are no pending or threatened condemnation proceedings,
lawsuits, or administrative actions relating to any such property or other
matters adversely affecting the current use, occupancy, or value thereof;
(iii) the legal description for any such parcel contained in the deeds
thereof describes such parcel fully and adequately, that the buildings and
improvements are located within the boundary lines of the described parcels of
land, are not in violation of applicable setback requirements, zoning laws, and
ordinances (and none of the properties or buildings or improvements thereon are
subject to "permitted non-conforming use" or "permitted non-conforming
structure" easement which may burden the land, and the land does not serve any
adjoining property for any purpose inconsistent with the use of the land, and
the property is not located within any flood plain or subject to any similar
type restriction for which any permits or licenses necessary to the use thereof
have not been obtained;
(iv) all facilities have received all approvals of governmental
authorities (including licenses and permits) required in connection with the
ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;
(v) there are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of any parcel of such real property;
(vi) there are no outstanding options or rights of first refusal to
purchase any parcel of such real property, or any portion thereof or interest
therein;
(vii) there are no parties (other than Guardian) in possession of any
parcel of any such real property;
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(viii) all facilities located on any parcel of such real property are
supplied with utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary sewer, and
storm sewer, all of which services are adequate in accordance with all
applicable laws, ordinances, rules, and regulations and are provided via
public roads or via permanent, irrevocable, appurtenant easements benefitting
the parcel of real property; and
(ix) any parcel of such real property abuts on and has direct
vehicular access to a public road, or has access to a public road via a
permanent, irrevocable, appurtenant easement benefitting the parcel of real
property, and access to the property is provided by paved public right-of-way
with adequate curb cuts available.
4.12 Tangible Assets. Except as set forth on Schedule 4.12, Guardian owns
or leases all buildings, machinery, equipment, and other tangible assets
necessary for the conduct of their businesses as presently conducted (and as
presently proposed to be conducted). Each such tangible asset is free from
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear), and is suitable for the purposes for which it presently is used
(and presently is proposed to be used).
4.13 Inventory. Except as set forth on Schedule 4.13, the inventory of
Guardian consists of raw materials and supplies, manufactured and purchased
parts, goods in process, and finished goods, all of which is merchantable and
fit for the purpose for which it was procured or manufactured, and none of
which is slow-moving, obsolete, damaged, or defective, subject only to the
reserve for inventory writedown set forth on the face of Guardian's Most Recent
Calendar Quarter End balance sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of Guardian.
4.14 Contracts. Schedule 4.14 attached hereto lists the following
contracts and other material agreements to which Guardian is a party:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of $5,000 per annum;
(b) any agreement (or group of related agreements) for the purchase or
sale of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of which
will extend over a period of more than one year, result in a loss to Guardian,
or involve consideration in excess of $5,000;
any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
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any capitalized lease obligation, in excess of $10,000 or under which it has
imposed a security interest, lien, mortgage, pledge, charge or other
encumbrance on any of its assets, tangible or intangible;
(e) any agreement concerning confidentiality or noncompetition;
(f) any agreement with any officers, directors, or controlling
shareholders of Guardian;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(h) any collective bargaining agreement;
(I) any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in excess of
$20,000 or providing severance benefits;
(j) any agreement under which it has advanced or loaned any amount to
any of its directors, officers, and employees;
(k) any agreement under which the consequences of a default or
termination could have an adverse effect on the business, financial condition,
operations, results of operations, or future prospects of Guardian; or
(l) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $5,000.
Guardian has delivered to Everest a correct and complete copy of each written
agreement listed in Schedule 4.14. With respect to each such agreement: (I) the
agreement is legal, valid, binding, enforceable, and in full force and effect;
(ii) the agreement will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (iii) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
agreement; and (iv) no party has repudiated any provision of the agreement.
4.15 Notes and Accounts Receivable. Except as set forth on Schedule 4.15,
all notes and accounts receivable of Guardian are reflected properly on their
books and records, are valid receivables subject to no setoffs or counterclaims,
are current and collectible, and will be collected in accordance with their
terms at their recorded amounts, subject only to the reserve for bad debts set
forth on the face of Guardian's Most Recent Calendar Quarter End balance sheet
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(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of Guardian.
4.16 Insurance. Schedule 4.16 sets forth the following information with
respect to each insurance policy (including policies providing property,
casualty, liability, and workers' compensation coverage and bond and surety
arrangements) to which Guardian has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past 10 years:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including a description
of how deductibles and ceilings are calculated and operate) of coverage; and
(e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Guardian has delivered to Everest a correct and complete copy of each insurance
policy listed on Schedule 4.16. With respect to each such insurance policy:
(A) the policy is legal, valid, binding, enforceable, and in full force and
effect; (B) the policy will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the consummation
of the transactions contemplated hereby; neither Guardian nor any other party
to the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. Guardian has been
covered during the past 10 years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period.
4.17 Litigation. Schedule 4.17 attached hereto sets forth each instance in
which Guardian (I) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or, to the best of its knowledge,
is threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Schedule 4.17 could result in any adverse change in
the business, financial condition, operations, results of operations, or
future prospects of Guardian. None of the directors and officers (and employees
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with responsibility for litigation matters) of Guardian has any reason to
believe that any such action, suit, proceeding, hearing, or investigation may be
brought or threatened against Guardian.
4.18 Employees. Except as set forth Schedule 4.18, no executive, key
employee, or group of employees has any plans to terminate employment with
Guardian. Guardian is not a party to or bound by any collective bargaining
agreement, nor has any of them experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. Guardian has
not committed any unfair labor practice. Neither Guardian nor its officers and
directors (and employees with responsibility for employment matters) have any
actual knowledge, after reasonable investigation, of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of Guardian.
4.19 Guaranties. Except as set forth in Schedule 4.19 attached hereto,
Guardian is not a guarantor or otherwise is liable for any liability or
obligation (including indebtedness) of any other Person.
4.20 Environment, Health, and Safety.
(a) Except as set forth on Schedule 4.20(a), Guardian has complied
with the Environmental, Health, and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding sentence, Guardian,
and their respective predecessors and affiliates have obtained and been in
compliance with all of the terms and conditions of all permits, licenses, and
other authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all
Environmental, Health, and Safety Laws.
(b) Except as set forth on Schedule 4.20(b), Guardian does not have
any liability (and Guardian has not handled or disposed of any substance,
arranged for the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated any property or
facility in any manner that could form the basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against Guardian giving rise to any liability) for damage to any site,
location, or body of water (surface or subsurface), for any illness of or
personal injury to any employee or other individual, or for any reason under
any Environmental, Health, and Safety Law.
Except as set forth on Schedule 4.20(c), all properties and
equipment used in Guardian's business have been free of asbestos, PCB's,
methylene chloride, trichloroethylene, 1,2-trans-dichloroethylene, dioxins,
dibenzofurans, and extremely hazardous substances.
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ARTICLE V
COVENANTS
The Constituent Corporations agree as follows with respect to the period
from and after the execution of this Merger Agreement.
5.1 General. Each of the Constituent Corporations will use its best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Merger Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in Article VI below).
5.2 Notices and Consents. The Constituent Corporations will give any
notices to third parties, and will use their best efforts to obtain any
third-party consents that either Constituent Corporation may reasonably request
in connection with the matters referred to in Sections 3.4 and 4.4 above.
5.3 Regulatory Matters and Approvals. Each of the Constituent
Corporations will give any notices to, make any filings with, and use its best
efforts to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Sections 3.4
and 4.4 above. Without limiting the generality of the foregoing:
(a) Securities Act, Securities Exchange Act, and State Securities
Laws. Everest will take all actions that may be necessary, proper, or advisable
under the Securities Act, the Securities Exchange Act and state securities laws
in connection with the offering and issuance of the shares of Everest common
stock to be issued pursuant to the terms and provisions of this Merger
Agreement.
(b) State Corporation Law. Everest and Guardian will each call a
special meeting of its stockholders (the "Special Meeting") as soon as
practicable in order that the stockholders may consider and vote upon the
adoption of this Merger Agreement and the approval of the Merger (if required)
in accordance with the NCL or the FBCL, as the case may be. Everest will
deliver to its shareholders any materials required in connection with obtaining
shareholder approval under state law to its shareholders as soon as practicable.
Such materials will contain the affirmative recommendation of the board of
directors of Everest in favor of the adoption of this Merger Agreement and the
approval of the Merger; provided, however, that no director or officer of
Everest shall be required to violate any fiduciary duty or other requirement
imposed by law in connection therewith.
Operation of Business. Each Constituent Corporation will not engage
in any practice, take any action, or enter into any transaction outside the
ordinary course of business consistent with past custom and practice. Without
limiting the generality of the foregoing, except as contemplated by this Merger
Agreement:
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(I) Neither Constituent Corporation will authorize or effect any
change in its charter or bylaws;
(ii) Neither Constituent Corporation will grant any options, warrants,
or other rights to purchase or obtain any of its capital stock or issue, sell,
or otherwise dispose of any of its capital stock (except upon the conversion or
exercise of options, warrants, and other rights currently outstanding);
(iii) Neither Constituent Corporation will declare, set aside, or pay
any dividend or distribution with respect to its capital stock (whether in cash
or in kind), or redeem, repurchase, or otherwise acquire any of its capital
stock;
(iv) Neither Constituent Corporation will issue any note, bond, or
other debt security or create, incur, assume, or guarantee any indebtedness for
borrowed money or capitalized lease obligation outside the ordinary course of
business consistent with past custom and practice;
(v) Neither Constituent Corporation will impose any security interest,
mortgage, lien, pledge, charge or other encumbrance upon any of its assets,
except as otherwise specifically set forth herein or outside the ordinary course
of business consistent with past custom and practice;
(vi) Neither Constituent Corporation will make any capital investment
in, make any loan to, or acquire the securities or assets of any other Person
outside the ordinary course of business consistent with past custom and
practice;
(vii) Neither Constituent Corporation will make any change in
employment terms for any of its directors, officers, and employees outside the
ordinary course of business consistent with past custom and practice;
(viii) Each Constituent Corporation shall use its best efforts to
preserve intact the goodwill of its customers, suppliers, and others having
business relations with each respective Constituent Corporation; and
(ix) Neither Constituent Corporation will commit to any of the
foregoing.
(d) Full Access. Each Constituent Corporation will permit
representatives of the other to have full access to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to each respective Constituent Corporation. Each Constituent
Corporation will treat and hold any information it gathers during this due
diligence period as confidential information and will not use any of such
confidential information, and will cause its respective employees, consultants,
professional representatives and agents not to use such confidential
information, except in connection with this Merger Agreement, and, if this
Merger Agreement is terminated for any reason whatsoever, each Constituent
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Corporation agrees to return, and to cause its respective employees,
consultants, professional representatives and agents to return, all tangible
embodiments (and all copies) thereof of such confidential information which is
in its or their possession within forty-eight (48) hours of the termination of
this Merger Agreement.
(e) Notice of Developments. Each Constituent Corporation will give
written notice to the other within twenty-four (24) hours of the determination
of any material adverse development first occurring subsequent to the date of
the execution of the Merger Agreement causing a breach of any of its own
representations and warranties in Articles III and IV above. Additionally,
Everest agrees that any press releases or public disclosure regarding the
transactions contemplated herein shall be in accordance with the Securities Act
and the Securities Exchange Act, shall not disclose Guardian's name without
Guardian's prior written consent.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions to Obligation of Guardian. The obligation of Guardian to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) This Merger Agreement and the Merger shall have received the
requisite stockholder approval;
(b) Everest shall have procured all of the third party consents and
approvals specified in Sections 5.2 and 5.3 above;
the representations and warranties set forth in Article III above
shall be true and correct in all material respects at and as of the Closing
Date;
(d) Everest shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(e) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (I)
prevent consummation of any of the transactions contemplated by this Merger
Agreement, (ii) cause any of the transactions contemplated by this Merger
Agreement to be rescinded following consummation, (iii) affect adversely the
right of Guardian to own the capital stock of the Surviving Corporation and to
control the Surviving Corporation, or (iv) affect adversely the right of any of
the Surviving Corporation to own its assets and to operate its businesses (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
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(f) Everest shall have delivered to Guardian a certificate to the
effect that each of the conditions specified above in Section 6.1(a)-(e) is
satisfied in all respects;
(g) Guardian shall have received from counsel to Everest an opinion in
form and substance as set forth in Schedule 6.1(g) attached hereto, addressed to
Guardian and its general counsel, and dated as of the Closing Date;
(h) Guardian shall have received the resignations, effective as of the
Closing, of all of those directors and officers of Everest requested by
Guardian. At Closing, designees of Guardian shall comprise the Board of
Directors and officers of the Surviving Corporation;
(I) Guardian shall have obtained the prior written consent of Heller
Financial, Inc. ("Lender") to consummate the transactions contemplated hereby;
(j) Everest shall have obtained or cause to be obtained, all of the
financing the Surviving Corporation will require as set forth in Section 9.2
hereof, in order to consummate the Merger and fund the working capital needs of
the Surviving Corporation after the Closing; and
(k) all actions to be taken by Everest in connection with consummation
of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to be delivered to effect the
transactions contemplated hereby will be satisfactory in form and substance to
Guardian and delivered to Guardian on or prior to the Closing.
Guardian shall, however, have the right to waive, in whole or in part, such
conditions set forth in this Section 6.1. If such conditions have not been
satisfied or waived, on or before the Closing Date, Guardian shall have the
right to: (I) terminate this Merger Agreement pursuant to Section 8.1(b); or
(ii) proceed to Closing whereby the conditions not otherwise satisfied shall be
deemed waived.
6.2 Conditions to Obligation of Everest. The obligation of Everest to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) This Merger Agreement and the Merger shall have received the
requisite stockholder approval of Guardian, if required;
(b) Guardian shall have procured all of the third party consents and
approvals specified in Sections 5.2 and 5.3 above;
the representations and warranties set forth in Article IV above
shall be true and correct in all material respects at and as of the Closing
Date;
(d) Guardian shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
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(e) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (I)
prevent consummation of any of the transactions contemplated by this Merger
Agreement, (ii) cause any of the transactions contemplated by this Merger
Agreement to be rescinded following consummation, (iii) affect adversely the
right of Everest to issue its capital stock to the stockholders of Guardian, or
(iv) materially affect adversely the right of any of the Surviving Corporation
to own its assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(f) Everest shall have received from counsel to Guardian an opinion in
form and substance as set forth in Schedule 6.2(f) attached hereto, addressed to
Everest, and dated as of the Closing Date; and
(g) all actions to be taken by Guardian in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to be delivered to effect
the transactions contemplated hereby will be satisfactory in form and
substance to Everest and delivered to Everest on or prior to the Closing.
Everest shall, however, have the right to waive, in whole or in part, such
conditions set forth in this Section 6.2. If such conditions have not been
satisfied or waived, on or before the Closing Date, Everest shall have the
right to: (I) terminate this Merger Agreement pursuant to Section 8.1(c); or
(ii) proceed to Closing whereby the conditions not otherwise satisfied shall be
deemed waived.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by G.M. Capital. Notwithstanding anything contained
herein to the contrary, or the consummation of the Closing, and regardless of
any investigation at any time made by or on behalf of Guardian, or of any
knowledge or information that Guardian may have, G.M. Capital hereby
indemnifies and shall hold the shareholders of Guardian and the Surviving
Corporation harmless if any of the foregoing parties shall suffer any damage,
liability, loss, cost, expense, claim or threats of claim, including
reasonable attorneys' fees, paralegals' fees and court costs through all
trial and appellate levels, arising, directly or indirectly, out of or resulting
from, or shall pay, or become obligated to pay, any sum on account of, any
breach of the representations set forth in Paragraph 3.8 hereof, subject to a
limitation of Two Hundred Thousand Dollars ($200,000), in the aggregate,
payable in good U.S. funds. This indemnification shall survive for a period of
twenty-four (24) months from the Closing Date.
7.2 Indemnification by Harold. Notwithstanding anything contained herein
to the contrary, or the consummation of the Closing, and regardless of any
investigation at any time made by or on behalf of Everest, or of any knowledge
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or information that Everest may have, Harold hereby indemnifies and shall hold
Everest harmless if any of the foregoing parties shall suffer any damage,
liability, loss, cost, expense, claim or threats of claim, including reasonable
attorneys' fees, paralegals' fees and court costs through all trial and
appellate levels, arising, directly or indirectly, out of or resulting from, or
shall pay, or become obligated to pay, any sum on account of, any breach of the
representations set forth in Paragraph 4.7 hereof, subject to a limitation of
Two Hundred Thousand Dollars ($200,000), in the aggregate, payable in good U.S.
funds. This indemnification shall survive for a period of twenty-four (24)
months from the Closing Date.
7.3 Offset for Undisclosed Liabilities. In the event at any time
following the Closing, the Surviving Corporation is required to pay any amount,
either in cash or in stock, resulting from a liability not disclosed in this
Merger Agreement, and the Board of Directors of the Surviving Corporation
determine that such undisclosed liability was valid as of the Effective Time,
then the Guardian Shareholders shall receive, on a pro-rata basis, and the
Surviving Corporation shall deliver, a like-kind distribution in either stock of
the Surviving Corporation or cash, in the shareholders' sole discretion, of
equal value to the undisclosed liability paid. If the like-kind distribution
will be made in stock of the Surviving Corporation, the value of such stock
shall be determined by reference to the bid price per share on the date the
undisclosed liability is paid.
ARTICLE VIII
TERMINATION
8.1 Termination of Merger Agreement. Either of the Constituent
Corporations may terminate this Agreement with the prior authorization of its
board of directors (whether before or after stockholder approval) as provided
below:
(a) the Constituent Corporations may terminate this Agreement by
mutual written consent at any time prior to the Effective Time;
(b) Guardian may terminate this Merger Agreement by giving written
notice to Everest at any time to the Closing Date (I) in the event Everest has
breached any material representation, warranty, or covenant contained in this
Merger Agreement in any material respect, Guardian has notified Everest of the
breach, and the breach has continued without cure for a period of thirty (30)
days after the notice of breach or (ii) if the Closing shall not have o
ccurred on August 15, 1996, by reason of the failure of any condition precedent
under Section 6.1 hereof;
Everest may terminate this Agreement by giving written notice to
Guardian at any time prior to the Closing Date (I) in the event Guardian has
breached any material representation, warranty, or covenant contained in this
Agreement in any material respect, Everest has notified Guardian of the breach,
and the breach has continued without cure for a period of thirty (30) days
after the notice of breach or (ii) if the Closing shall not have occurred
on August 15, 1996 , by reason of the failure of any condition precedent under
Section 6.2 hereof;
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(d) Either Constituent Corporation may terminate this Agreement by
giving written notice to the other Constituent Corporations at any time after
the Special Meeting in the event this Merger Agreement and the Merger fail to
receive the requisite stockholder approval.
(e) Guardian may terminate this Merger Agreement in the event it is
unable to obtain the prior written consent of its Lender to this Merger.
8.2 Effect of Termination. If either Constituent Corporation terminates
this Merger Agreement pursuant to Section 7.1 above, all rights and obligations
of the Constituent Corporations hereunder shall terminate without any liability
of either Constituent Corporation to the other Constituent Corporation;
provided, however, that the confidentiality provisions contained in Section
5.3(d) above shall survive any such termination.
ARTICLE IX
ADDITIONAL AGREEMENTS
9.1 Post-Merger Corporate Headquarters. As of the Effective Time, the
Surviving Corporation shall operate its business and be headquartered in the
facilities leased by Guardian in Hollywood, Florida prior to the Merger. In
this regard, at the Closing, the Surviving Corporation shall assume the lease
by and between Harold and Guardian and shall file with the Secretary of State
of the State of Florida any and all required documents to authorize the
Surviving Corporation to engage in business in Florida under the name Guardian
International, Inc., in accordance with the FBCL.
9.2 Financing.
(a) At the Closing, G.M. Capital shall cause the Surviving
Corporation to have in good U.S. funds equity capital obtained from equity
investors in the amount of Three Million Dollars ($3,000,000), net of any and
all commissions, costs, charges and expenses of any nature whatsoever, for which
Everest shall have issued no more than one million shares of its common stock
calculated prior to the exchange of Guardian common stock as contemplated in
Article II hereof, which equity capital shall be used by the Surviving
Corporation as follows:
(I) One Million Seven Hundred Fifty Thousand Dollars ($1,750,000)
shall be paid to Harold by the Surviving Corporation in repayment of loans
previously made by Harold to Guardian and otherwise in consideration of
consummating this transaction as a return of capital; and
(ii) The remaining One Million Two Hundred Fifty Thousand Dollars
($1,250,000) shall be used by the Surviving Corporation for working
capital, all as the directors of the Surviving Corporation deem is in the best
interest of the Surviving Corporation.
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(b) Within sixty (60) days of the Closing ("Outside Date"), G.M.
Capital shall deliver or cause to be delivered additional equity capital in the
amount of Seven Million Dollars ($7,000,000) ("Additional Capital"), net of any
and all commissions, costs, charges and expenses of any nature whatsoever, with
a maximum dilution of two million shares of common stock of the Surviving
Corporation. The Additional Capital shall be used by the Surviving
Corporation as the directors thereof deem is in the best interest of the
Surviving Corporation. If and when the Surviving Corporation receives the
Additional Capital, the Surviving Corporation shall enter into a standard
agreement with G.M. Capital in the form of Schedule 9.2(b), whereby G.M.
Capital will agree to provide investment banking and merchant banking services
to the Surviving Corporation upon the terms negotiated between G.M. Capital and
the Surviving Corporation. In this connection, the Constituent Corporations
agree that any similar type agreements existing between G.M. Capital and Everest
shall be deemed terminated as of the Closing Date.
(I) As a material inducement to Guardian to execute and deliver this
Merger Agreement and for Ten Dollars ($10) and other good and valuable
consideration, at the Closing, and in order to secure G.M. Capital's
obligation to raise the Additional Capital, ITI shall pledge One Million
shares of the Surviving Corporation ("Pledged Shares") owned by it to the
Guardian Shareholders set forth on the Guardian Shareholder List, based on their
respective ownership percentage listed thereon, which shares are to be held in
escrow by Navon, Kopelman & O'Donnell, P.A. ("Escrow Agent") pursuant to the
terms and provisions of the "Stock Pledge Agreement" in the form attached hereto
as Schedule 9.2(b)(I). In the event the Additional Capital is not deposited in
good United States federal funds with the Surviving Corporation on or prior to
12:00 P.M. on the Outside Date, then Escrow Agent is hereby authorized and
directed to immediately deliver the Pledged Shares to the Guardian Shareholders
set forth on the Guardian Shareholder List, based on their respective ownership
percentage listed thereon, as more specifically set forth in the Stock Pledge
Agreement.
9.3 Proxies. At the Closing, ITI shall execute and deliver to Harold (or
his designee) a proxy to vote the Pledged Shares for and on behalf of ITI which
proxy is irrevocable and coupled with an interest in the form attached hereto as
Schedule 9.3. Such proxy shall remain in effect for two (2) years following the
Closing Date, at which time the proxy shall become null and void and of no
further force or effect.
9.4 Lock-up. At the Closing, ITI, Sanders, Knight and Bauer shall deliver
to Guardian a "Lock-Up Agreement" in the form of Schedule 9.4 attached hereto.
In this regard, at the Closing, ITI, Sanders, Knight and Bauer shall deliver to
the Surviving Corporation the certificates representing the shares that are
subject to this section and such certificates shall be endorsed by the
Surviving Corporation with a restrictive legend that such certificates are
subject to the Lock-Up Agreement. Additionally, the Exchange Agent shall be
notified to make a note of the foregoing transfer restriction.
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9.5 Post-Merger Employment.
(a) At the Closing, the Surviving Corporation shall execute and
deliver an employment agreement to Richard Ginsburg for a period of five (5)
years in the form of Schedule 9.5(a) attached hereto.
(b) At the Closing, the Surviving Corporation shall execute and
deliver a consultant agreement to Harold Ginsburg in the form of Schedule 9.5(b)
attached hereto.
After the Merger, Frank Bauer shall continue in his current
position with Everest, as the manager of the installation division of the
Surviving Corporation.
9.6 NASDAQ Listing. As soon as practicable following the Effective Time,
the Surviving Corporation shall use its best efforts to have the securities of
the Surviving Corporation listed on the NASDAQ Small-Cap Market.
9.7 No-Shop. In consideration for the time, effort and expense undertaken
by both Constituent Corporations in connection with the preparation and
execution of this Merger Agreement, each Constituent Corporation hereby agrees
that from the date of execution by Guardian of the Letter of Intent between
Everest and Guardian, June 17, 1996, until the Closing Date, each Constituent
Corporation shall be prohibited from entering into or conducting discussions
with any other prospective merging corporation or entity, except that each
Constituent Corporation may engage in discussions with other corporations or
entities with respect to the acquisition of accounts. Notwithstanding anything
contained in this Section 9.7 to the contrary, in the event the Merger
Agreement is terminated in accordance with the provisions of Article VIII
hereof, the foregoing prohibition shall be null and void and each Constituent
Corporation shall be free to discuss, negotiate or deal with any other Person
with respect to a potential merger, acquisition or otherwise.
ARTICLE X
MISCELLANEOUS
10.1 Survival. The representations, warranties, and covenants of the
Constituent Corporations set forth in Articles III and IV hereof shall survive
Closing for a period of twenty-four (24) months.
10.2 Entire Agreement. This Merger Agreement (including the documents
referred to herein) constitutes the entire agreement among the Constituent
Corporations and supersedes any prior understandings, agreements, or
representations by or among the Constituent Corporations, written or oral, to
the extent they related in any way to the subject matter hereof.
10.3 Succession and Assignment. This Merger Agreement shall be binding upon
and inure to the benefit of the Constituent Corporations named herein and their
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respecetive successors and permitted assigns. No Constituent Corporation may
assign either this Merger Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other
Constituent Corporations.
10.4 Counterparts. This Merger Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
10.5 Headings. The section headings contained in this Merger Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Merger Agreement.
10.6 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Guardian: Guardian International, Inc.
3880 N. 28th Terrace
Hollywood, FL 33020
Attn: Mr. Harold Ginsburg
Telephone: (954) 926-1800
Telecopier: (954) 926-1822
With a copy to: Navon, Kopelman & O'Donnell, P.A.
2699 Stirling Road, Suite B-303
Fort Lauderdale, FL 33312
Attn: Samuel D. Navon, Esq.
Telephone: (954) 967-2788
Telecopier: (954) 983-7021
If to Everest: Everest Security Systems Corporation
823 N.W. 57th Street
Fort Lauderdale, Florida 33309
Attn: Mr Robert Knight
Telephone: (305) 772-0330
Telecopier: (305) 772-1381
With a copy to: Steven A. Sanders, Esq.
50 Broad Street, Suite 437
New York, NY 10004
Telephone: (212) 344-0500
Telecopier: (212) 344-3035
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Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Constituent Corporations notice in the manner herein set forth.
10.7 Governing Law. This Merger Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Florida without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Florida and
any proceeding arising between the parties in any way related to this Merger
Agreement shall, to the extent permitted by law, be held in Broward County,
Florida.
10.8 Amendments and Waivers. The Constituent Corporations may mutually
amend any provision of this Merger Agreement at any time prior to the Effective
Time with the prior authorization of their respective boards of directors;
provided, however, that any amendment effected subsequent to stockholder
approval will be subject to the restrictions contained in the Florida Business
Corporation Act. No amendment of any provision of this Merger Agreement shall
be valid unless the same shall be in writing and signed by all of the
Constituent Corporations. No waiver by any Constituent Corporation of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
10.9 Severability. Any term or provision of this Merger Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
10.10 Expenses. Each of the Constituent Corporations will bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Merger Agreement and the transactions contemplated hereby.
10.11 Construction. The Constituent Corporations have participated
jointly in the negotiation and drafting of this Merger Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Merger
Agreement shall be construed as if drafted jointly by the Constituent
Corporations and no presumption or burden of proof shall arise favoring or
disfavoring any Constituent Corporation by virtue of the authorship of any of
the provisions of this Merger Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
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10.12 Incorporation of Exhibits and Schedules. The Schedules identified
in this Merger Agreement are incorporated herein by reference and made a part
hereof.
10.13 Litigation. If any party hereto is required to engage in
litigation or arbitration against any other party hereto, either as plaintiff or
as defendant, in order to enforce or defend any of its or his rights under this
Merger Agreement, and such litigation results in a final judgment in favor of
such party ("Prevailing Party"), then the party or parties against whom said
final judgment is obtained shall reimburse the Prevailing Party for all direct,
indirect or incidental expenses incurred by the Prevailing Party in so
enforcing or defending its or his rights hereunder,including, but not limited
to, all attorneys' fees, paralegals' fees and all sales tax thereon, and all
court costs and other expenses incurred throughout all negotiations, trials or
appeals undertaken in order to enforce the Prevailing Party's rights hereunder.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have duly executed this Merger Agreement as
of the date first written above.
Signed, sealed and delivered
in the presence of: EVEREST SECURITY SYSTEMS
CORPORATION, a Nevada corporation
________________________ By:_/s/Robert Knight/______________
Name:__Robert Knight_____________
________________________ Title:__President__________________
GUARDIAN INTERNATIONAL, INC., a
Florida corporation
____________________________ By:_/s/Richard Ginsburg/_____________
Name: Richard Ginsburg_ ____________
____________________________ Title:_President _____ ____________
The undersigned hereby join, consent and agree to be bound by the provisions of
this Merger Agreement specifically applicable to them.
INTERNATIONAL TREASURY AND
INVESTMENTS, LTD., a British Virgin
Islands corporation
_____________________________ By:_/s/Michael Macey/_______________
Name:_Michael Macey______________
____________________________ Title:_Authorized Signatory__________
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G.M. CAPITAL PARTNERS, LTD., a
British Virgin Islands corporation
________________________________ By:_/s/Michael Macey/_______________
Name:_Michael Macey _______________
________________________________ Title:_Authorized Signatory___________
________________________________ ___/s/Steven A. Sanders/_____________
STEVEN A. SANDERS, individually
________________________________
______________________________ __/s/Robert Knight________________
ROBERT KNIGHT, individually
______________________________
________________________________ __/s/Frank Bauer/__________________
FRANK BAUER, individually
________________________________
________________________________ __/s/Harold Ginsburg/_______________
HAROLD GINSBURG, individually
________________________________
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SCHEDULE 1.3
CERTIFICATE OF MERGER
PLAN OF MERGER
THIS PLAN OF MERGER ("Plan") is made and entered into as of the 15 day of
August, 1996, by and among GUARDIAN INTERNATIONAL, INC., a Florida corporation
("Guardian"), and EVEREST SECURITY SYSTEMS CORPORATION, a Nevada
corporation ("Everest"). Guardian and Everest are sometimes referred to herein
as "Constituent Corporations".
WITNESSETH:
WHEREAS, simultaneously herewith, the Shareholders and Constituent
Corporations have executed and delivered that certain Agreement and Plan of
Merger ("Agreement");
WHEREAS, the Constituent Corporations desire to merge Guardian with and
into Everest upon the terms and conditions set forth in the Agreement and
hereinafter set forth ("Merger");
NOW, THEREFORE, in consideration of the mutual promises herein exchanged, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Recitals. The foregoing recitals are true and correct and are hereby
incorporated herein by this reference.
2. Merger. Guardian shall be merged with and into Everest , and Everest
shall be the surviving corporation, effective on August 15, 1996 ("Effective
Date").
3. Name. The name of Everest, as the surviving corporation, shall be
changed to "Guardian International, Inc., a Nevada corporation".
4. Assets, Liabilities. On the Effective Date, the separate corporate
existence of Guardian shall cease and Everest shall succeed to the assets and
liabilities of Guardian in the manner and as more fully set forth in the
Agreement.
5. Conversion of Securities. It is intended that following the Merger
the Guardian shareholders will collectively own fifty percent (50%) of the
issued and outstanding shares of the capital stock of Everest in the same
respective amounts as they currently own such stock. To accomplish the
foregoing, upon the Effective Date all of the outstanding certificates
representing the shares of the capital stock of Guardian shall be deemed to have
been surrendered to Everest for cancellation, and the corresponding capital
stock of Everest shall be issued in exchange therefore.
6. Articles of Incorporation and Bylaws. From and after the Effective
Date, the Articles of Incorporation and Bylaws of Everest as in effect on the
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Effective Date shall continue to be the Articles of Incorporation and Bylaws of
Everest without change or amendment until further amendment in accordance with
the provisions thereof and applicable laws are made.
7. Directors. The directors of Guardian immediately preceding the
Effective Date shall continue to be the directors of Everest on and after the
Effective Date, to serve until the expiration of their terms and until their
successors are elected and qualified.
8. Officers. The officers of Everest on the Effective Date, to serve at
the pleasure of the Board of Directors of Everest, shall be as follows:
President - Richard Ginsburg
Vice-President: - Rhonda Ginsburg
Secretary - Sheilah Ginsburg
Treasurer - Sheilah Ginsburg
IN WITNESS WHEREOF, the parties have duly executed this Plan as of the date
first written above.
Signed, sealed and delivered GUARDIAN INTERNATIONAL, INC., a
in the presence of: Florida corporation
By: /s/Harold Ginsburg/
Harold Ginsburg, President
EVEREST SECURITY SYSTEMS
CORPORATION, a Nevada corporation
By: /s/Robert Knight/
Robert Knight, President
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SCHEDULE 3.2
Outstanding Options:
1. Frank Bauer - 100,000 shares at $2.00 per share expires December 21, 2000
Gary Liscio- 5,000 shares at $3.00 per share expires December 31, 2000
Harvey Doischen 5,000 shares at $3.00 per share expires December 31, 2000
G.M. Capital Partners Ltd. - 74,720 shares at $2.00 per share expires
December 31, 2000
<PAGE>
SCHEDULE 3.4(a)
None
<PAGE>
SCHEDULE 3.4(b)
None
<PAGE>
SCHEDULE 3.5
Form 10-SB filed March 8, 1996
Form 10-SB/A filed July 5, 1996
Press Releases dated June 15, 1995 through June 24, 1996
<PAGE>
SCHEDULE 3.8
Accounts payable and accrued liabilities as per Financial Statements
Revolving Line of Credit - Bank One, as per Financial Statements
Capital Lease Agreements a per Financial Statements
Taxes payable as per Financial Statements
<PAGE>
SCHEDULE 3.9
None
<PAGE>
SCHEDULE 3.11
None
<PAGE>
SCHEDULE 3.12(a)
None
<PAGE>
SCHEDULE 3.12(b)
Current taxes payable - $47,633
<PAGE>
SCHEDULE 3.12(c)
TAX RETURNS-EVEREST
Tax returns for the fiscal years ended December 31, 1990, 1991, 1992, 1993,
1994, 1995
<PAGE>
SCHEDULE 3.12(d)
None
<PAGE>
SCHEDULE 3.13(a)
REAL PROPERTY - EVEREST
None
<PAGE>
SCHEDULE 3.14
None
<PAGE>
SCHEDULE 3.15
Material Agreements:
Bank One Revolving Line of Credit
Guardian Confidentiality Agreement
The M. Sauer Company - Security Unlimited Agreement
Frank and Marjorie Bauer Indemnification Agreement
Frank Bauer Employment Agreement
Robert Knight Employment Agreement
G.M. Capital Partners, Ltd. Agreement
Gary Liscio Employment Agreement
Harvey Doischen Employment Agreement
Fort Lauderdale Building Lease
Orlando Building Lease
Capital Lease as per the Financial Statements
<PAGE>
SCHEDULE 3.16
CONTRACTS - EVEREST
None
<PAGE>
SCHEDULE 3.17
None
<PAGE>
SCHEDULE 3.18
INSURANCE POLICIES - EVEREST
Ashley insurance & Marine Services Inc. General Liability
11440 Okeechobee Road #101
Royal Palm Beach, FL. 33411
Blue Cross and Blue Shield Health Insurance
American Dental Plan Dental Insurance
<PAGE>
SCHEDULE 3.19
LITIGATION - EVEREST
None
<PAGE>
SCHEDULE 3.20
None
<PAGE>
SCHEDULE 3.21
GUARANTIES - EVEREST
Barnet Bank - Revolving Line of Credit
Indemnification of Marjorie and Frank Bauer on Barnet Bank revolving line of
credit
<PAGE>
SCHEDULE 3.22(a)
None
<PAGE>
SCHEDULE 3.22(b)
None
<PAGE>
SCHEDULE 3.22(c)
None
<PAGE>
SCHEDULE 4.2
Capitalization
As of this writing (8/9/96) Heller Financial has a 25% capital appreciation
rights in the company and certain Guardian shareholders have pledged the stock
in Guardian to Heller Financial. However, Guardian has received preliminary
consent from Heller for this merger and feels confident will get final approval
and the release of Guardian's stock.
Please see attached letter from Heller Financial.
<PAGE>
SCHEDULE 4.4 (a)
Noncontravention
Heller Financial in accordance with loan documents (a copy of which has
previously been provided).
<PAGE>
SCHEDULE 4.4 (b)
Noncontravention
Please see Heller Financial loan agreement (specifically section 8.1 (f)
thereof).
<PAGE>
SCHEDULE 4.7
Undisclosed Liabilities
NONE.
<PAGE>
SCHEDULE 4.8
Brokers' Fees
NONE.
<PAGE>
SCHEDULE 4.9
Title to Assets
Please see lease agreements (previously given to Everest)for the following
equipment;
Mitel SX-200 Digital Phone System
Data General Aviion Mainframe System
Please see loan agreements for the following;
Ford Aerostar Van
Ford Ranger Pickup Truck
Other equipment which is leased by company;
Sharp Copy Machine
Friden Postage Meter
<PAGE>
SCHEDULE 4.10a
Tax Matters
NONE.
<PAGE>
SCHEDULE 4.10b
Tax Matters
NONE.
<PAGE>
SCHEDULE 4.10c
Tax Matters
FORM 1120 S FOR PERIOD ENDED DECEMBER 31, 1993
FORM 1120 S FOR PERIOD ENDED DECEMBER 31, 1994
FORM 1120 S FOR PERIOD ENDED DECEMBER 31, 1995
[Copies previously delivered]
<PAGE>
SCHEDULE 4.10d
Tax Matters
NONE.
<PAGE>
SCHEDULE 4.11 (a)
Real Property - Guardian
NONE.
<PAGE>
SCHEDULE 4.12
Tangible Assets
See schedule 4.9
Leased equipment
Mitel SX-200 Digital Phone System
Data General Aviion Mainframe System
Sharp Copy Machine
Friden Postage Meter
Financed Equipment
1996 Ford Aerostar Van
1996 Ford Ranger Pickup Truck
(please see VIN numbers on Insurance documents previously delivered)
<PAGE>
SCHEDULE 4.13
Inventory
None.
<PAGE>
SCHEDULE 4.14
Contracts
(a)
Lease for facilities at 3880 N 28 terrace Hollywood, FL 33020.
(b)
All dealer purchasing arrangements involve consideration in excess of $5,000
annually
Diamond Security Services
North Star Security Systems
International Security Systems Inc.
MJD Security Systems Inc.
Super Electronics Inc.
Alarm Telecom Inc.
Circle Funding Corp.
Security Services Inc.
Burglar Busters / Security Response Team
Universal Security Systems
T.P.T. Control Systems Inc.
Guardian All American Security Systems Inc.
Alert Security Systems Inc.
Alarm Tech Inc.
Castle Security Inc.
Zimmy Electronics Inc.
Aarow Security Inc.
Custom Security Systems Inc.
R.A. Security Inc.
Protek Technologies Inc.
Monitoring Automation Systems Support Contract (MIS) - c. $40,000 annually
1. Blue Cross Health Options - Health Insurance - c. $24,000 annually
2. P&C Insurance - $24,000 annually
(c )
None.
Please see Heller Financial Loan Agreement
(e)
Simplex Time Recorder - Confidentiality
Confidentiality / Non Disclosure Agreements
G.M. Capital Partners
Everest Security Systems & Directors
Precision Security Systems Inc.
David Weston
Richard Clark
Circle Security Systems Inc.
Ira Ehrenkrantz
Lee Ehrenkrantz
Tom Deflisese
Larry Fletcher
Albert Cohen
Darius Nevin
Alarm Control Inc.
Interactive Technologies Inc.
Alarm Trac Inc.
Kurt Martin
Williams
American Guardian
Guard Technologies Inc.
All American Security Inc.
Dennis Fabec
Rick Petit
Norman Rubin
Raymond Adams
Joe Belch
Strategic Technologies Inc.
Home and Business Security / Steven Dale
Robert Rubin
(f)
Building lease (3880 N 28 Terrace Hollywood, FL) with Guardian Investments.
(g)
Oral agreement with Harold and Sheilah Ginsburg regarding deferred compensation.
(h)
None.
(i)
None.
(j)
(k)
No one termination of agreement could have these consequences.
(l)
None.
See B1 above.
Note: All above agreements have been delivered to Everest in the Duel Diligence
questionnaires
(short and long form)
<PAGE>
SCHEDULE 4.15
Notes and Accounts Receivable
None.
<PAGE>
SCHEDULE 4.16
Insurance
- - - Agent
P&C Insurance
305-493-5390
Mr. Tom Cundy
PO Box 11699
Fort Lauderdale, FL 33339
Sections b through e
Please see schedule of insurance - attached
<PAGE>
SCHEDULE 4.17
Litigation
None.
<PAGE>
SCHEDULE 4.18
Employees
None.
<PAGE>
SCHEDULE 4.19
Guaranties
None.
<PAGE>
SCHEDULE 4.20 (a)
Health and Safety
None.
<PAGE>
SCHEDULE 4.20 (b)
Health and Safety
None.
<PAGE>
SCHEDULE 4.20
Health and Safety
None.
<PAGE>
SCHEDULE 6.1(g)
OPINION OF STEVEN A. SANDERS, ESQ.
(Letterhead of The Law Office of Steven A. Sanders, P.C.)
Guardian International, Inc.
3880 North 28th Terrace
Hollywood, Florida 33020
Attention: Harold Ginsburg, President
Shareholders of Guardian
c/o Navon, Kopelman & O'Donnell, P.A.
2699 Stirling Road
Suite B-303
Fort Lauderdale, Florida 33312
Attention: Samuel D. Navon, Esq.
Navon, Kopelman & O'Donnell, P.A.
2699 Stirling Road
Suite B-303
Fort Lauderdale, Florida 33312
Attention: Samuel D. Navon, Esq.
August 15, 1996
Re: Everest Security Systems Corporation, a Nevada corporation ("Everest")
Gentlemen and Ladies:
We have acted as counsel to Everest in connection with that certain Agreement
and Plan of Merger ("Merger Agreement") dated August 15, 1996, by and between
Everest, as the surviving corporation and Guardian International, Inc., a
Florida corporation ("Guardian"), as the merging corporation. Guardian, its
shareholders and its counsel have requested the opinion of this firm, as
counsel to Everest, regarding certain matters pertaining to the transactions
contemplated by the Merger Agreement.
We have examined the following documents which have been or are anticipated to
be executed at or in connection with the closing of the transactions
contemplated by the Merger Agreement.
1. Certified copy of the Articles of Incorporation of Everest and all
amendments thereto.
2. Bylaws of Everest in effect as of the date of this opinion.
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3. Certificate of Good Standing for Everest, dated July 16, 1996, from the
Secretary of State of the State of Nevada ("Everest Certificate of Good
Standing").
4. Certificate of the Secretary of State of the State of Florida, dated August
14, 1996, certifying the qualification of Everest to do business in the State of
Florida ("Everest Certificate of Qualification").
5. Resolutions from a Meeting of the Board of Directors of Everest held on
June 17, 1996 relating to, among other things, the approval, execution and
delivery of the Merger Agreement.
6. Resolutions from a Meeting of the Stockholders of Everest held on July 5,
1996 relating to, among other things, the approval, execution and delivery of
the Merger Agreement.
7. An Incumbency Certificate from Everest, a copy of which is attached hereto
as Exhibit "A" ("Everest Certificate").
8. The Merger Agreement.
9. Specimen certificates representing the common stock of Everest to be issued
pursuant to the Merger Agreement.
10. The registration statement on Form 10-SB filed with the Securities and
Exchange Commission (the "Commission") on May 8, 1996 under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Exchange Act") and an amendment thereto on Form
10-SB/A filed with the Commission on July 5, 1996 (collectively, the
"Registration Statement").
11. The opinion from Semple & Cooper, P.L.C., dated August 14, 1996, executed
by Brian F. Semple, CPA regarding the tax free reorganization contemplated by
the Merger Agreement, a copy of which is attached hereto on Exhibit "B" ("Semple
Opinion").
The foregoing documents numbered 1 through 11 are collectively referred to as
the "Documents".
For purposes of rendering this opinion, we have (i) relied without
investigation on the factual matters (a) contained in the documents or
certificates obtained from the officers of Everest, and (b) contained in the
letters or certificates of public officials; (ii) assumed that the signatures
on documents and instruments examined by us as originals are genuine; (iii)
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<PAGE>
assumed that all documents submitted to us as copies conform with the originals;
and (iv) assumed that all documents and instruments or copies thereof examined
by us have been or will be duly, validly and properly executed, acknowledged and
delivered by all parties thereto. None of the factual matters or assumptions
on which our opinion is based are, to our actual knowledge, false in any
material respect as they relate to the opinions below.
Based on our review of the Documents and on such investigation as we have
deemed necessary (other than where it is stated that none has been made) and
subject to the foregoing and the qualifications and limitations set forth below,
we are of the opinion as follows:
1. Everest has been duly organized and is validly existing and in good
standing under the laws of the State of Nevada. Everest is duly qualified and
licensed and in good standing as a foreign corporation in each jurisdiction in
which its ownership or leasing of any properties or the character of its
operations requires such qualification or licensing. Everest has all
requisite corporate power and authority to enter into, execute, deliver and
perform the transactions contemplated by the Merger Agreement.
2. The authorized capital stock of Everest consists of One Hundred Million
(100,000,000) shares of common stock, $.001 par value per share, Three Million
Two Hundred Twenty Six Thousand Nine Hundred Two (3,226,902) shares of which are
issued and outstanding (excluding the stock to be issued to the shareholders of
Guardian pursuant to the Merger Agreement, but including the 1,000,000 shares
to be issued to the purchasers under the Regulation S offering). All the
issued and outstanding shares of capital stock of Everest are duly authorized,
validly issued, fully paid and nonassessable and the holders thereof are not
subject to personal liability solely by reason of being such holders. Upon the
issuance of the Everest common stock to the Guardian shareholders in accordance
with the terms of the Merger Agreement, such shares of common stock shall
constitute fifty percent (50%) of all the issued and outstanding shares of
common stock of Everest. Upon the issuance of the common stock of Everest to
the shareholders of Guardian pursuant to Section 2.2 of the Merger Agreement,
legal and beneficial ownership of said common stock shall be transferred to and
vested in the Guardian shareholders free and clear of all claims, liens, or
encumbrances (other than restrictions under the Securities Act of 1933), and
such shares of common stock shall be duly authorized, validly issued, fully
paid and nonassessable. The certificates representing the Everest common stock
issued pursuant to the Merger Agreement are in due and proper form other than
such certificates requiring the signature of the President and Secretary of
Everest.
3
<PAGE>
3. Except as otherwise disclosed in the Merger Agreement, there are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Everest to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There have been no violations of the
preemptive rights, if any, of any shareholders of Everest.
4. The execution and delivery of the Merger Agreement by Everest and the
performance of all of Everest's obligations thereunder have been duly authorized
and approved by all requisite corporate action on the part of Everest pursuant
to applicable law.
5. The Merger Agreement, and the other documents, instruments and agreements
executed by Everest in connection therewith have been duly authorized, executed
and delivered by Everest and are the legally valid and binding agreements of
Everest enforceable against Everest, in accordance with their respective terms,
except that: (I) enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and (ii) the availability of equitable remedies mat be limited by
equitable principles. Neither the execution, delivery nor performance of the
Merger Agreement or any other documents, instruments or agreements executed by
Everest in connection therewith, nor the consummation of the transactions
contemplated thereby: (I) constitutes a violation of or default under (either
immediately, upon notice or upon lapse of time) the Articles of Incorporation or
Bylaws of Everest, any provision of any written or oral contract, agreement,
order or commitment of any nature whatsoever to which Everest or its assets may
be bound; any order, writ, injunction, fine, citation, award, decree, or any
other judgment of any nature whatsoever of any foreign, federal, state or
local court, any governmental, administrative or regulatory authority, or any
arbitration tribunal; or any law, statute, ordinance, constitution, charter,
treaty, rule or regulation of any governmental or quasi-governmental authority;
or (ii) will or could result in the creation or imposition of any lien, security
interest, pledge, mortgage, easement, leasehold, assessment, covenant,
restriction, reservation, conditional sale, prior assignment, or any other
encumbrance, claim, burden or charge of any nature whatsoever upon, or give to
any third person any interest in or right to, the common stock of Everest or any
of the assets of Everest; or (iii) will or could result in the loss or adverse
modification of, or the imposition of any fine or penalty with respect to, any
license, permit or franchise granted or issued to, or otherwise held by or for
the use of Everest.
7. There is no action, proceeding or investigation pending or threatened
against Everest or any of Everest's assets, at law or in equity, or before any
4
<PAGE>
court or other daministrative or other governmental agency or body, nor, to the
best of such counsel's knowledge, is there any basis for any of same.
8. To the best of our knowledge and belief after due inquiry, all the
representations and warranties made by Everest in the Merger Agreement or in any
Schedule thereto made or given by Everest, their agents or representatives are
complete and accurate, and do not omit any information required to make the
statements and information provided, in light of the transaction contemplated
therein, non-misleading, accurate and meaningful.
9. We have participated in conferences with officers and other
representatives of Everest, representatives of the independent public
accountants for Everest at which the contents of the Registration Statement and
related matters were discussed, and in connection therewith, no facts have
come to our attention which lead us to believe that either the Registration
Statement or any amendment or supplement thereto, as of the date hereof contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it
being understood that, with your permission, we express no opinion with respect
to the financial statements and schedules and other financial and statistical
data included in the Registration Statement).
10. All unregistered securities issued by Everest since its inception were
exempt from registration under applicable exemptions from the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Act") and applicable state securities laws and the shares
of Everest common stock issued pursuant to the Merger Agreement are exempt from
registration under applicable exemptions from the Act and applicable state
securities laws.
11. Any shares of Everest common stock issued under the exemption from
registration under Regulation S of the Act were issued in compliance with all
the technical requirements thereof and were not part of a plan or scheme to
resell such shares in the United States or to evade the registration
requirements under the Act.
12. Based solely on the Semple Opinion, the transactions contemplated by the
Merger Agreement qualify as a tax free reorganization under Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended.
13. International Treasury and Investments, Ltd., a British Virgin Island
corporation ("ITI") has been duly organized and is validly existing and in good
5
<PAGE>
standing under the law of the British Virgin Islands. ITI has all the requisite
corporate power and authority to enter into, execute and deliver and perform
the transactions contemplated by the Merger Agreement and all other documents
and instruments ancillary thereto.
14. G.M. Capital Partners, Ltd., a British Virgin Island corporation ("GM
Capital") has been duly organized and is validly existing and in good standing
under the law of the British Virgin Islands. GM Capital has all the requisite
corporate power and authority to enter into, execute and deliver and perform
the transactions contemplated by the Merger Agreement and all other documents
and instruments ancillary thereto.
Our opinion expressed above is qualified as follows:
We are members of the Bar of the State of New York and no opinion is expressed
herein as to any laws other than the laws of the State of Nevada, the State of
New York, the federal securities laws of the United States, the state securities
laws of any state in which securities of Everest have been offered or sold, the
laws of the United States of America, and the laws of the British Virgin
Islands. We specifically express no opinion (and our opinion is modified to
exclude any opinion) with respect to any matters relating to the documents to be
executed and delivered in connection with the Merger Agreement to the extent
they are governed or subject to the laws of any jurisdiction other than the ones
set forth above.
The opinion expressed herein is furnished to Guardian, its shareholders and
Navon, Kopelman & O'Donnell, P.A. in connection with the closing of the
transactions contemplated by the Merger Agreement as counsel to Everest. This
opinion shall not be relied upon by any person other than Guardian, its
shareholders and Navon, Kopelman & O'Donnell, P.A. without the express prior
written consent of this law firm.
Very truly yours,
THE LAW OFFICES OF STEVEN A. SANDERS,
P.C.
By: /s/Steven A. Sanders/
Steven A. Sanders
6
<PAGE>
EXHIBIT A
CERTIFICATE OF INCUMBENCY
I, ROBERT KNIGHT, President of Everest Security Systems Corporation (the
"Corporation"), a corporation organized and existing under the laws of the
State of Nevada, DO HEREBY CERTIFY the following:
1. The following named persons were duly elected to the offices of the
Corporation set forth after their respective names and are acting as such
officers on the date hereof, and the respective signatures appearing opposite
their names and their authentic signatures:
NAME OFFICE SIGNATURE
Robert Knight President/Treasurer _/s/Robert Knight/__________
Steven Sanders Secretary _/s/Steven A. Sanders/_______
Frank Bauer Vice-President _/s/Frank Bauer/____________
2. The following are all of the directors of the Corporation until his
or her successor is elected and qualified:
DIRECTORS
Frank Bauer
Steven A. Sanders
Robert Knight
Karl Gelbard
3. The resolutions adopted by the Board of Directors of the Corporation
as of June 5, 1996, the resolutions adopted by the Board of Directors of the
Corporation at a meeting held on June 17, 1996, and the resolutions adopted at a
meeting of the shareholders of the Corporation held on July 5, 1996, all of
which resolutions are attached hereto as Exhibit "A", are true and correct
copies of such resolutions; such resolutions have not been amended, modified, or
rescinded in any manner, and are in full force and effect as of the date hereof.
1
<PAGE>
4. The true and correct copy of the Corporation's Articles of
Incorporation, and all amendments thereto, are attached hereto as Exhibit "B",
and said Articles have not been amended, modified or rescinded, except as
attached, and remain in full force and effect.
5. A true and correct copy of the Corporation's Bylaws, and all
amendments thereto, are attached hereto as Exhibit "C", and said Bylaws have not
been amended, modified or rescinded, except as attached, and remain in full
force and effect.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal for the
purposes herein expressed.
Dated as of August 15, 1996.
/s/Robert Knight/
Robert Knight
2
<PAGE>
EXHIBIT "A"
RESOLUTIONS
<PAGE>
EXHIBIT "B"
ARTICLES OF INCORPORATION
<PAGE>
EXHIBIT "C"
BYLAWS
<PAGE>
EXHIBIT B
OPINION OF SEMPLE AND COOPER, PLC
(Letterhead of Semple & Cooper, PLC)
Mr. Steven A. Sanders
Steven A. Sanders, P.C.
50 Broad Street
New York, New York 10004
RE: Everest Securities Systems Corporation
Plan of Merger
Dear Mr. Sanders:
As requested, we have reviewed the Agreement and Plan of Merger by and between
Guardian International, Inc., and Everest Securities Systems Corporation
effective August 15, 1996. Our review focuses primarily on Article One, The
Merger, and Article Two, Effect of the Merger on the Capital Stock of the
Constituent Corporation, Exchange of Certificates.
The Plan of the Merger proposes a statutory merger to be effected under the
corporation laws of the State of Nevada and the State of Florida (IRC Regulation
1.368-2 (b) (1) ). There must be compliance with the statutory rules. A
mere indication on the corporate minutes that the stockholders and boards of
directors have decided to merge corporations, with no evidence that the
detailed state procedures for merging had been followed, is not a statutory
merger.
Neither the courts nor the parties to a reorganization always draw a clear-cut
distinction between merger and consolidation. The terms are frequently used
interchangeably. But tax consequences may conceivably vary depending upon the
nature of a transaction as a merger or as a consolidation. In the merger, one
corporation generally absorbs another by taking over its assets in exchange for
stock of the absorbing corporation which as a rule goes to the stockholders of
the absorbed corporation, the latter corporation passes out of existence. Where
only two corporations are concerned, the result is the expansion of one and,
ordinarily, the disappearance of the other.
The Code does not specifically prescribe the kind of consideration that can be
paid by the acquiring corporation in a statutory merger or consolidation as it
<PAGE>
Mr. Steven A. Sanders
August 14, 1996
Page -2-
does for other specific reorganizations. For example, It doesn't say that an
exchange in a statutory merger must be solely for stock of the acquiring
corporation or it's parent. This indicates that cash and securities can be
used, and this imparts greater flexibility in the use of a Type A
reorganization. It may that where a tax-free reorganization is desired but
there are dissenting shareholders of the acquired corporation who must be paid
in cash, a statutory merger or consolidation is the only feasible
alternative. However, the judicially imposed requirement of the continuity of
interest will impose limitations on too much nonstock consideration.
There is no definite or fixed formula for the amount of interest which the old
owners must have in the new enterprise, although IRS has established guidelines
for advance rulings. Continuity of interest has two important aspects. First,
the nature of the acquired corporation must be in the form of a continued
proprietary interest in the enterprise. Moreover, the interest must be definite
and material, It must represent a substantial part of the value of the assets
transferred. Second, those stockholders must retain their continued interest.
If they receive and dispose of their interest as part of a step transaction,
there will not be the required continuity of interest on their part.
Continuity of interest isn't a measure of the acquired corporation shareholders'
percentage of ownership in the acquiring corporation. It is a measure of the
value of the acquiring corporation stock received by the shareholders of the
acquired corporation compared to the value of the assets they've transferred to
the acquiring corporation.
For advantage ruling purposes, IRS says that a 50 % continuity of interest must
appear. That is, the continuity of interest requirement is satisfied if one or
more shareholders of the acquired corporation have an aggregate continuing stock
interest in the acquiring corporation equal to at least 50 % of the value of
the acquires corporation's outstanding stock. However, this administrative
rule of thumb does not, as a matter of law, set a lower limit on the continuity
of interest requirement (Rev. Proc. 77-37, 1977-2 CB 568).
Courts have ruled that the continuity of interest requirement was not met where
the stock receives represented only 1 % of the total consideration pain. On the
<PAGE>
Mr. Steven A. Sanders
August 14, 1996
Page -3-
other hand where the stock represented 55 %, 45 % and even only 36 % of the
consideration, the requisite continuity existed. IRS has ruled that the
continuity of interest requirement is satisfied if 50 % of the consideration
is in stock (Rev. Rul 66-224, 1966-2 CB 114).
To qualify as a tax-free merger or consolidation, the transaction must also meet
the following additional nonstatutory requirements:
1. Continuity of business enterprises under the reorganized form.
2. Business purpose. The merger or consolidation must be "required by
business exigencies".
3. Step transaction. In appropriate situations, a series of transactions
may be collapsed into one having a different tax consequence.
Thus, a tax-free merger or consolidation in form might be viewed
as a taxable sale upon the happening of a second transaction.
A given transaction may involve more than one of these nonstatutory rules. Each
of the nonstatutory rules is itself based on the paramount rule that substance
governs over form. While IRS may be successful in changing the consequences of
the form used by taxpayers by applying one of these doctrines, it appears that
taxpayers will be held to the form they have chosen, and cannot change the
consequences of that form by saying that there was no business purpose, etc.
Based on the foregoing, we would concur that the present structure as outlined
in the Agreement and Plan of Merger should qualify a tax-free merger within the
meaning of IRC Section 368(a).
Should you have any questions, or require additional information, do not
hesitate to contact me.
Sincerely,
/s/Brian F. Semple, CPA/
Brian F. Semple, CPA
BFS:dja
<PAGE>
SCHEDULE 6.2(f)
OPINION OF NAVON, KOPELMAN & O'DONNELL, P.A.
(Letterhead of Navon, Kopelman & O'Donnell, P.A.)
September 9, 1996
Everest Security Systems Corporation
823 N.W. 57th Street
Fort Lauderdale, FL 33309
Attention: Mr. Robert Knight
Re: Guardian International, Inc., a Florida corporation ("Guardian")
Our File No. 290.012
Gentlemen:
We have acted as counsel to Guardian in connection with that certain
Agreement and Plan of Merger ("Merger Agreement") dated August 15, 1996, by and
between Guardian as the merging corporation, and Everest Security Systems
Corporation, a Nevada corporation ("Everest"), as the surviving corporation.
Everest has requested the opinion of this firm, as counsel to Guardian
regarding certain matters pertaining to the transactions contemplated by the
Merger Agreement.
We have examined the following documents which have been or are anticipated
to be executed at or in connection with the closing of the transactions
contemplated by the Merger Agreement.
1. Certified copy of the Articles of Incorporation of Guardian dated
August __, 1996.
2. Bylaws of Guardian.
3. Certificate of Good Standing for Guardian, dated August __, 1996, from
the Secretary of State of the State of Florida ("Good Standing Certificate").
4. Joint Corporate Action of all the directors and all the shareholders
of Guardian relating to, among other things, the approval, execution and
delivery of the Merger Agreement.
5. An Incumbency Certificate from Guardian, a copy of which is attached
hereto as Exhibit "A" ("Guardian Certificate").
6. The Merger Agreement.
The foregoing documents numbered 1 through 6 are collectively referred to
as the "Documents".
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For purposes of rendering this opinion, we have (i) relied without
investigation on the factual matters (a) contained in the documents or
certificates obtained from the officers of Guardian, and (b) contained in the
letters or certificates of public officials; (ii) assumed that the signatures on
documents and instruments examined by us as originals are genuine; (iii) assumed
that all documents submitted to us as copies conform with the originals; (iv)
assumed that all documents and instruments or copies thereof examined by us have
been or will be duly, validly and properly executed, acknowledged and
delivered by all parties thereto; and (v) assumed, without independent
investigation, that the representations and warranties set forth in the Merger
Agreement are true and correct as to factual matters. None of the factual
matters or assumptions on which our opinion is based are, to our actual
knowledge, false in any material respect as they relate to the opinions below.
Based on our review of the Documents and on such investigation as we have
deemed necessary (other than where it is stated that none has been made) and
subject to the foregoing and the qualifications and limitations set forth below,
we are of the opinion as follows:
1. Guardian is duly organized, validly existing and in good standing
under the laws of the State of Florida, and has all requisite corporate power
and authority to enter into and perform the transactions contemplated by the
Merger Agreement.
2. Based upon the Guardian Certificate, as to factual matters, and the
Good Standing Certificate: (i) Guardian has the full corporate right, power and
authority to execute and deliver the Merger Agreement; and (ii) the execution
and delivery of the Merger Agreement by the President, or any other officer of
Guardian will not violate or contravene the Articles of Incorporation or Bylaws
of Guardian.
3. The Merger Agreement constitutes the legal, valid and binding
obligation of Guardian enforceable in accordance with its terms.
Our opinion expressed above is qualified as follows:
(a) We are members of the Bar of the State of Florida and no opinion is
expressed herein as to any laws other than the laws of the State of Florida and
the laws of the United States of America. We express no opinion as to
compliance with the laws of any other state other than Florida. We
specifically express no opinion (and our opinion is modified to exclude any
opinion) with respect to any matters relating to the documents to be executed
and delivered in connection with the Merger Agreement to the extent they are
governed or subject to the laws of any state other than Florida.
(b) Although this firm represents Guardian in the transaction contemplated
by the Merger Agreement, we do not represent Guardian in all legal matters and,
therefore, there may be matters of a legal nature affecting Guardian of which we
are not aware unless such matters are disclosed to us by Guardian.
(c) The terms "to our knowledge" or "to the best of our knowledge" mean
that we have no actual knowledge to the contrary, have relied solely on the
Guardian Certificate of Good Standing and Guardian Certificate, as to factual
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<PAGE>
matters, and have made no investigation other than review of the Guardian
Certificate of Good Standing and Guardian Certificate. Any opinion in this
letter with respect to the existence or absence of facts or circumstances, or
conclusions based on any fact or circumstances is made to the best of our
knowledge or awareness and is intended to signify that during the course of our
representation of Guardian no information has come to our attention which
would give us actual knowledge of the existence or absence of any such fact or
circumstances and no inference as to the existence or absence of any such fact
or circumstances should be drawn. "Reliance" on another writing means that
this opinion is conditioned upon the accuracy and validity of that writing.
Every assumption means that this opinion is conditioned upon the assumption
being true in fact.
The opinion expressed herein is furnished to Everest in connection with the
closing of the transactions contemplated by the Merger Agreement as counsel to
Guardian. This opinion shall not be relied upon by any person other than
Everest without the express prior written consent of this law firm.
Very truly yours,
NAVON, KOPELMAN & O'DONNELL, P.A.
/s/Navon, Kopelman & O'Donnell, P.A./
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<PAGE>
EXHIBIT LIST
Exhibit "A" - Guardian Certificate
INCUMBENCY CERTIFICATE
GUARDIAN INTERNATIONAL, INC.
The undersigned hereby certifies to the following:
1. She is the duly elected Secretary of Guardian International, Inc., a
Florida corporation ("Corporation"), and, as such, she is authorized, among
other things, to execute and deliver this Certificate on behalf of this
Corporation.
2. The following are all of the directors of the Corporation until his or
her successor is elected and qualified:
DIRECTORS
Harold Ginsburg
Richard Ginsburg
Sheilah Ginsburg
3. The following are all of the officers of the Corporation, that they
hold the offices opposite their respective names, and that each shall hold his
office until his successor is elected and qualified:
President - Harold Ginsburg
Vice President - Richard Ginsburg
Vice President - Rhonda Ginsburg
Secretary - Sheilah Ginsburg
Treasurer - Sheilah Ginsburg
4. The resolution attached hereto as Exhibit "A", adopted as of August
15, 1996, by all the Directors and all the shareholders of the Corporation, is a
true and correct copy of such resolution; such resolution has not been amended,
modified or rescinded in any manner, is in full force and effect as of the date
hereof.
5. a true and correct copy of the Corporation's Articles of Incorporation
and all amendments thereto are attached hereto as Exhibit "B", and said Articles
have not been amended, modified or rescinded, except as attached, and remain in
full force and effect.
6. a true and correct copy of the Corporation's Bylaws and all amendments
thereto are attached hereto as Exhibit "C", and said Bylaws have not been
amended or modified, except as attached, and remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set her hand and seal for
the purposes herein expressed.
Dated as of August 15, 1996.
__/s/Sheilah Ginsburg/________
Sheilah Ginsburg, Secretary
<PAGE>
EXHIBIT "A"
JOINT CORPORATE ACTION
<PAGE>
EXHIBIT "B"
ARTICLES OF INCORPORATION
<PAGE>
EXHIBIT "C"
BYLAWS
Guardian Certificate
<PAGE>
SCHEDULE 9.2(b)
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into as of the
15 day of August, 1996, by and among INTERNATIONAL TREASURY AND INVESTMENTS,
LTD., a British Virgin Islands corporation ("ITI"), G.M. CAPITAL PARTNERS, LTD.,
a British Virgin Islands corporation ("GM Capital"), the persons listed on
Exhibit "a" attached hereto and made a part hereof (individually referred to as
"Secured Party" and collectively referred to as "Secured Parties"), which
Secured Parties each own the percentage of Guardian International, Inc., a
Florida corporation ("Guardian") common stock set forth opposite his name
("Ownership Percentage") and NAVON, KOPELMAN & O'DONNELL, P.A. ("Escrow Agent").
RECITALS
WHEREAS, Everest Security Systems Corporation, a Nevada corporation
("Everest"), and Guardian entered into that certain Agreement and Plan of Merger
dated August 15, 1996 ("Merger Agreement"), essentially providing that Guardian
will merge into Everest but the name of the entity shall be changed to "Guardian
International, Inc." (such surviving entity is hereinafter referred to as the
"Surviving Corporation"); and
WHEREAS, ITI is a shareholder of the Surviving Corporation; and
WHEREAS, pursuant to the Merger Agreement, GM Capital is obligated to deliver
or cause to be delivered to the account of the Surviving Corporation, on or
prior to 12:00 P.M. on ___________ [within sixty (60) days of Closing (as
defined in the Merger Agreement)], equity capital in the amount of Seven Million
Dollars ($7,000,000), net of all commissions, costs, charges and expenses of
any nature whatsoever, with a maximum dilution of two million shares of the
common stock of the Surviving Corporation (the "Obligation"); and
WHEREAS, to secure the Obligation, the Secured Parties require, and ITI and GM
Capital are amenable to executing and delivering this Agreement.
NOW, THEREFORE, in consideration of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Pledge.
ITI hereby pledges to Secured Parties, in their respective Ownership
Percentage, One Million (1,000,000) shares of the common stock of the Surviving
Corporation and all distributions thereon and proceeds thereof including, but
not limited to, all stock dividends and distributions of all types and kinds,
including, without limitation, distributions of capital stock of the
Surviving Corporation to ITI in connection with stock splits, recapitalization,
merger, conversions, exchanges of securities or otherwise ("Pledged Shares"), as
collateral security for the timely performance of the Obligation.
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2. Delivery of the Pledged Shares.
Simultaneous with the execution hereof, ITI shall assign, transfer and
deliver to Escrow Agent the Pledged Shares, all certificates evidencing the
Pledged Shares, and stock powers therefor duly executed in blank. Certificates
representing the Pledged Shares hereafter acquired by ITI, together with stock
powers thereto duly executed in blank shall be promptly delivered by ITI to
Escrow Agent upon ITI's receipt thereof.
3. ITI's Rights to Pledged Shares.
ITI hereby grants and delivers to Harold Ginsburg (or its designee) a proxy
to vote the Pledged Shares for and on behalf of ITI which proxy is irrevocable
and coupled with an interest and which proxy shall remain in effect for two (2)
years following the date of the execution of this Agreement.
4. Representations and Warranties of Pledgor and Borrower.
ITI and GM Capital represent and warrant that:
1. ITI is the owner and holder of the Pledged Shares, free and clear of any
liens, claims, charges or encumbrances other than as created by this Agreement,
subject, however, to the terms and provisions of that certain "Lock-Up
Agreement" dated of even date herewith executed by, inter alia, ITI, the
beneficiaries of which are the Secured Parties;
2. Each certificate or document of title constituting the Pledged Shares is
genuine and in all respects what it purports to be; and
3. ITI and GM Capital are authorized to enter into this Agreement.
5. Covenants of ITI and GM Capital.
ITI and GM Capital covenant, that for so long as this Agreement is in
effect, ITI and GM Capital will defend the Pledged Shares against the claims and
demands of all persons at any time claiming the same or any interest therein.
In this connection, ITI and G.M. Capital hereby indemnify and hold Secured
Parties harmless from and against any and all damage, liability, loss, cost,
expense, claims or threats of claims, including reasonable attorneys' fees,
paralegals' fees and court costs through all trial and appellate levels,
arising, directly or indirectly, out of or resulting from any claim or demand
made by any person at any time against the Pledged Shares.
6. Taxes, etc. on Pledged Shares.
At their option, Secured Parties may pay, for ITI's account, any taxes,
liens, security interests, or other encumbrances at any time levied or placed on
the Pledged Shares. ITI agrees to reimburse Secured Parties on demand for any
payment made or expense incurred by Secured Parties pursuant to the foregoing
authorization, plus interest thereon at the highest non-usurious rate
permitted by law. Any such amount, if not paid, shall constitute an additional
Obligation secured hereby.
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<PAGE>
7. Default.
The following shall constitute a "Default" under this Agreement: (I) a
failure to timely perform the Obligation; and (ii) a breach by ITI or GM Capital
of any representation, warranty or covenant contained in this Agreement. If any
Default shall occur, upon Escrow Agent's receipt of written notice from any
Secured Party stating that a Default has occurred, Escrow Agent is hereby
authorized and directed to immediately deliver to Secured Parties, allocated on
a basis of their respective Ownership Percentage, the Pledged Shares.
8. Continuing Obligation of ITI.
The obligations, covenants, agreements and duties of ITI under this
Agreement shall in no way be affected or impaired by: (I) the modification or
amendment (whether material or otherwise) of any of the obligations of GM
Capital; or (ii) the voluntary or involuntary bankruptcy, assignment for the
benefit of creditors, reorganization, or other similar proceedings affecting
GM Capital.
ITI further agrees that Secured Parties may take other guaranties or
collateral or security to further secure the performance of the Obligation, and
consents that any of the terms, covenants and conditions affecting or in any way
relating to the Obligation may be, with GM Capital's consent, renewed, altered,
extended, changed or modified by the Secured Parties, without in any manner
affecting this Agreement or releasing ITI herefrom, and without further consent
of or notice to ITI, and ITI shall continue liable hereunder to pay and perform
pursuant hereto, notwithstanding any such alteration, modification or renewal or
the taking of such other guaranties, collateral or security.
No delay on the part of Secured Parties in exercising any rights hereunder
or failure to exercise the same shall operate as a waiver of such rights. ITI
hereby waives any and all legal requirements, statutory or otherwise, that
Secured Parties shall institute any action or proceeding at law or in equity or
exhaust its rights, remedies and recourse against GM Capital or anyone else
with respect to the Merger Agreement or the Obligation, as a condition precedent
to bringing an action against ITI upon this Agreement. ITI agrees that Secured
Parties may simultaneously maintain an action upon this Agreement and an
action or proceeding upon the Obligation. All remedies afforded by reason of
this Agreement are separate and cumulative remedies and may be exercised
serially, simultaneously and in any order, and the exercise of any of such
remedies shall not be deemed an exclusion of the other remedies and shall in no
way limit or prejudice any other contractual, legal, equitable or statutory
remedies which Secured Parties may have in the Pledged Shares or any other
collateral. ITI further waives any requirement that Secured Party seek
performance of the Obligation by GM Capital, or any other party, as a condition
precedent to bringing any action against ITI upon this Agreement, it being
agreed that a failure by GM Capital to pay or perform the Obligation shall,
without further act, make ITI liable as herein set forth.
Until the Obligation, and all extensions, renewals and modifications
thereof, is performed and satisfied in full, and until each and all of the
terms, covenants and conditions of this Agreement are fully performed, ITI
shall not be released by any act or thing which might, but for this provision
of this Agreement, be deemed a legal or equitable discharge of a surety, or by
reason of any waiver, extension, modification, forbearance or delay of Secured
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Party, and ITI hereby expressly waives and surrenders any defence to liability
hereunder based upon any of the foregoing acts, things, agreements or waivers,
or any of them.
9. Satisfaction.
When the Obligation has been performed and discharged in full or otherwise
satisfied, cancelled or released, Escrow Agent is authorized and directed to
deliver to ITI the Pledged Shares, and upon disbursement, this Agreement shall
terminate.
10. Escrow Agent.
Escrow Agent shall hold the Pledged Shares in accordance with the terms of
the Escrow Agreement executed by each of the parties hereto, which Escrow
Agreement is attached as Exhibit "B" hereto ("Escrow Agreement"). In the event
of any conflict between the provisions of this Agreement and the Escrow
Agreement the provisions of the Escrow Agreement shall control. Escrow Agent
shall release the Pledged Shares as follows:
(a) To Secured Parties, allocated based on their Ownership Percentage, upon
receipt by Escrow Agent from any Secured Party written notice that a Default
exists; or
(b) To ITI, upon receipt by Escrow Agent from any party hereto (but in any
event confirmed by the Secured Parties) of written notice that the Obligation
has been performed and discharged in full or otherwise satisfied, cancelled or
released; or
To any party, upon the unanimous written direction of ITI and Secured
Parties.
11. Binding Effect; No Assignment.
This Agreement shall be binding upon the parties hereto, their successors,
assigns, beneficiaries, heirs and administrators. No party may assign or
transfer its interests herein, or delegate its duties hereunder, without the
written consent of the other parties.
12. Further Assurances.
ITI and GM Capital hereby agree to execute and deliver from time to time any
and all further or other instruments and to perform such acts as Secured Parties
may reasonably request, including, but not limited to the execution and filing
of UCC-1 Financing Statements, to effect the purposes of this Agreement.
13. Notices.
All notices, demands and communications given or made hereunder or pursuant
hereto shall be in writing and shall be mailed by registered or certified mail,
with postage prepaid, addressed in each case as follows, or shall be sent via
facsimile at the facsimile telephone numbers for each party listed below and
shall be deemed to have been given in either case when received by the addressee
at:
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<PAGE>
To Secured Parties: At the address or facsimile telephone number for each
respective Secured Party set forth on Exhibit "a" attached hereto.
To ITI: International Treasury and Investments, Ltd.
Hirzel House, Smith Street
St. Peter Port, Guernsey GY1 2NG
Attention: Michael Macey, President
With copy to: Mr. J. a. Michie
2755 Lougheed Highway
Suite 620
Port Coquitlam, B.C. Canada V3B 5Y9
To GM Capital: G.M. Capital Partners, Ltd.
Hirzel House, Smith Street
St. Peter Port, Guernsey GY1 2NG
Attention: Michael Macey, President
With copy to: Mr. J. a. Michie
2755 Lougheed Highway
Suite 620
Port Coquitlam, B.C. Canada V3B 5Y9
or to such other address or to such other person as any party shall designate to
the others for such purpose in the manner hereinabove set forth.
14. Nonexclusivity of Remedies.
No remedy herein conferred upon Lender is intended to be exclusive of any
other remedy and each and every such remedy shall be cumulative and shall be in
addition to every other such remedy now or hereafter existing at law or in
equity or by statute or otherwise.
15. Specific Performance.
The parties hereto agree that the remedies at law for damages under this
Agreement in the event of any actual or threatened breach or default hereunder
are not and will not be adequate, and that the obligations may therefore be
specifically enforced.
16. Invalidity.
Any provision or provisions of this Agreement found to be prohibited under
law will be ineffective only to the extent of such prohibition and will not
invalidate any other provision of this Agreement.
5
<PAGE>
17. Amendment.
The parties hereby irrevocably agree that no attempted amendment,
modification, termination, discharge or change (collectively, "Amendment") of
this Agreement shall be valid and effective unless the parties shall
unanimously agree in writing to such Amendment.
18. No Waiver.
No waiver of any provision of this Agreement shall be effective, unless it
is in writing and signed by the party against whom it is asserted, and any such
written waiver shall only be applicable to the specific instance to which it
relates and shall not be deemed to be a continuing or future waiver.
19. Counterparts.
This Agreement and any amendments may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
20. Governing Law.
This Agreement shall be construed and interpreted in accordance with the
laws of the State of Florida and any proceeding arising between the parties in
any manner pertaining or related to this Agreement shall, to the extent
permitted by law, be held in Broward County, Florida.
21. Costs of Litigation.
If any party hereto is required to engage in litigation against another
party, as applicable, either as a plaintiff or as a defendant, in order to
enforce or defend any of their rights under this Agreement, and such
litigation results in a final judgment in favor of such party ("Prevailing
Party"), then the parties against whom said final judgment is obtained shall
reimburse the Prevailing Party for all direct or indirect or incidental expenses
incurred by the Prevailing Party in so enforcing or defending its rights
hereunder including, but not limited to, all attorney's fees and court costs
and other expenses incurred throughout all negotiations, trials or appeals
undertaken in order to enforce the Prevailing Party's rights hereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties
hereto have duly executed this Agreement as of the day and year first above
written.
Signed, sealed and delivered
in the presence of:
ITI:
INTERNATIONAL TREASURY AND
INVESTMENTS, LTD., a British Virgin Islands
corporation
_____________________________ By:__/s/Michael Macey/_________________
Name:__Michael Macey_________________
____________________________ Title:_Authorized Signature____________
Borrower:
G.M. CAPITAL PARTNERS, LTD., a British
Virgin Islands corporation
______________ _____________ By:__/s/Michael Macey/_______________
Name:_Michael Macey________________
___________________________ Title:_Authorized Signatory_____________
Secured Parties:
__________________________ __/s/Harold Ginsburg___________________
Harold Ginsburg
__________________________
__________________________ __/s/Richard Ginsburg/__________________
Richard Ginsburg
__________________________
__________________________ __/s/Sheilah Ginsburg___________________
Sheilah Ginsburg
__________________________
__________________________ _/s/Rhonda Ginsburg/____________________
Rhonda Ginsburg
__________________________
__________________________ _/s/Robert Kasky/________________________
Robert Kasky
__________________________
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<PAGE>
Escrow Agent:
NAVON, KOPELMAN & O'DONNELL, P.A.
__________________________ By:_/s/Sam Navon/______________________
Name:__Sam Navon_______________________
_________________________ Title:__Authorized Signature ____________
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<PAGE>
EXHIBIT "a"
NAME ADDRESS and FAX NUMBER OWNERSHIP %
<PAGE>
EXHIBIT "B"
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Escrow Agreement") is made and entered into
between INTERNATIONAL TREASURY AND INVESTMENTS, LTD., a British Virgin Islands
corporation and the persons listed on Exhibit "a" attached hereto and made a
part hereof (hereinafter referred to as "Principal(s)"), and NAVON, KOPELMAN &
O'DONNELL, P.A. (hereinafter referred to as "Escrow Agent").
WHEREAS, Principal(s) desire that Escrow Agent hold certain property as
described on Exhibit "B" hereto ("Escrowed Property") pursuant to certain
documents described on Exhibit "C" hereto, if any ("Documents"); and
WHEREAS, Escrow Agent has agreed to act as escrow agent for the Escrowed
Property on the terms and conditions now about to be set forth.
NOW, THEREFORE, in consideration of the covenants and agreements herein set
forth and other good and lawful consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
I. Escrow
a. Escrow Agent agrees to hold all of the Escrowed Property in
escrow subject to the terms and conditions contained in this Escrow Agreement
and the Documents, if any. The provisions of this Escrow Agreement shall
control in the event of any conflict between the provisions hereof and the
provisions of the Documents, if any.
B. Unless otherwise provided for in this Escrow Agreement or any
addendum hereto, Escrow Agent shall disburse the Escrowed Property without
interest or other accumulation in value.
C. Escrow Agent shall not be deemed to have knowledge of any matter
or thing unless and until Escrow Agent has actually received written notice of
such matter or thing and Escrow Agent shall not be charged with any constructive
notice whatsoever.
D. In the event the Escrowed Property consists in whole or in part
of stocks, bonds or certificates of deposit (or any other property which may
fluctuate in value) Escrow Agent shall hold in escrow, pursuant to this Escrow
Agreement, any proceeds of the Escrowed Property actually delivered to Escrow
Agent and realized as a result of splits, calls, redemptions or otherwise, but
shall not be obligated to ascertain the existence of (or initiate recovery of)
such proceeds or to become or remain informed with respect to the possibility or
probability of such proceeds being realized at any time in the future, or to
inform any Principal(s) or any third party with respect to the nature and extent
of any proceeds realized, except upon the written request of such party, or to
monitor current market values of the Escrowed Property. Further, Escrow
Agent shall not be obligated to proceed with any action or inaction based on
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<PAGE>
information with respect to market values of the Escrowed Property which Escrow
Agent may in any manner learn, nor shall Escrow Agent be obligated to inform
Principal(s) or any third party with respect to market values of any one or more
of the Escrowed Property at any time, Escrow Agent having no duties with respect
to investment management or information, all Principal(s) understanding and
intending that Escrow Agent's responsibilities are purely ministerial in nature.
Any reduction in the market value or other value of the Escrowed Property while
deposited with Escrow Agent shall be at the sole risk of Principal(s).
E. In the event instructions from Principal(s) would require Escrow
Agent to expend any monies or to incur any cost, Escrow Agent shall be entitled
to refrain from taking any action until it receives payment for such costs.
F. Principal(s) acknowledge and agree that nothing in this Escrow
Agreement shall prohibit Escrow Agent from (1) serving in a similar capacity on
behalf of others or (2) acting in the capacity of attorneys for one or more
Principal(s) in connection with any matter.
II. Release of Escrowed Property
a. Escrow Agent agrees to release the Escrowed Property in
accordance with the terms and conditions set forth in the Documents, if any, and
this Escrow Agreement.
B. In the event Escrow Agent shall be uncertain as to its duties or
rights hereunder or shall receive instructions, claims or demands from any
Principal(s) or from third persons with respect to the Escrowed Property or any
other sums or things which may be held hereunder, which, in its sole opinion,
are in conflict with any provision of this Escrow Agreement and/or the
Documents, if any, Escrow Agent shall be entitled to refrain from taking any
action until it shall be directed otherwise in writing by all Principal(s) and
said third persons, if any, or by a final order or judgment of a court of
competent jurisdiction.
C. If all or any portion of the Escrowed Property delivered to
Escrow Agent is in the form of a check or in any other form other than cash,
Escrow Agent shall deposit same as required but shall not be liable for the
nonpayment thereof nor responsible to enforce collection thereof. If such
check or other instrument other than cash representing the Escrowed Property is
returned to Escrow Agent unpaid, Escrow Agent shall notify the applicable
Principal(s) for further instructions.
III. Liability of Escrow Agent
a. It is agreed that the duties of Escrow Agent are purely
ministerial in nature and shall be expressly limited to the safekeeping of the
Escrowed Property and for the disposition of same in accordance with the
Documents, if any, and this Escrow Agreement. Each Principal hereby
indemnifies Escrow Agent and holds it harmless from and against any and all
claims, liabilities, damages, costs, penalties, losses, actions, suits or
proceedings at law or in equity, or any other expenses, fees or charges of any
character or nature, which it may incur or with which it may be threatened
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directly or indirectly arising from or in any way connected with this Escrow
Agreement or which may result from Escrow Agent's following of instructions from
Principal(s), and in connection therewith, indemnifies Escrow Agent against any
and all expenses, including attorneys' fees and the cost of defending any
action, suit, or proceeding or resisting any claim, whether or not litigation
is instituted. Escrow Agent shall be vested with a lien on all Escrowed
Property held hereunder which is deliverable to Principal(s) under the terms of
this Escrow Agreement, for indemnification, attorneys' fees, court costs arising
from any suit, interpleader or otherwise, or other expenses, fees or charges of
any character or nature, which may be incurred by Escrow Agent by reason of
disputes arising between Principal(s) and/or any third party as to the
correct interpretation of this Escrow Agreement and/or the Documents, if any,
and instructions given to Escrow Agent hereunder, or otherwise, with the right
of Escrow Agent, regardless of the instruments aforesaid and without the
necessity of instituting any action, suit or proceeding, to hold the Escrowed
Property until and unless said additional expenses, fees and charges shall be
fully paid.
B. It is further agreed that Escrow Agent shall have the right to
utilize the services of Navon, Kopelman & O'Donnell, P.A. as its attorneys and
same shall not affect or in any way prejudice or limit Escrow Agent's
entitlement to reasonable attorney's fees for the services of such attorneys
as set forth in this Escrow Agreement.
IV. Disputes
a. In the event Escrow Agent is joined as a party to a lawsuit by
virtue of the fact that it is holding the Escrowed Property, Escrow Agent shall,
at its option, either (1) tender the Escrowed Property to the registry of the
appropriate court or (2) disburse the Escrowed Property in accordance with the
court's ultimate disposition of the case, and Principal(s) hereby, jointly and
severally, indemnify and hold Escrow Agent harmless from and against any damages
or losses in connection therewith including, but not limited to, reasonable
attorneys' fees and court costs at all trial and appellate levels.
B. In the event Escrow Agent tenders the Escrowed Property to the
registry of the appropriate court and files an action of interpleader naming the
Principal(s) and any affected third parties of whom Escrow Agent has received
actual notice, Escrow Agent shall be released and relieved from any and all
further obligation and liability hereunder or in connection herewith and
Principal(s) hereby, jointly and severally, indemnify and hold Escrow Agent
harmless from and against any damages or losses arising in connection therewith
including, but not limited to, all costs and expenses incurred by Escrow Agent
in connection with the filing of such action including, but not limited to,
reasonable attorneys' fees and court costs at all trial and appellate levels.
V. Term of Agreement
a. This Escrow Agreement shall remain in effect unless and until it
is cancelled in any of the following manners:
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1. Upon written notice given by all Principal(s) of
cancellation of designation of Escrow Agent to act and serve in said capacity,
in which event, cancellation shall take effect no earlier than twenty (20) days
after notice to Escrow Agent of such cancellation; or
2. Escrow Agent may resign as escrow agent at any time upon
giving notice to Principal(s) of its desire to so resign; provided, however,
that resignation of Escrow Agent shall take effect no earlier than ten (10) days
after the giving of notice of resignation; or
3. Upon compliance with all escrow provisions as set forth in
this Escrow Agreement and in the Documents, if any.
B. In the event Principal(s) fail to agree to a successor escrow
agent within the period described hereinabove, Escrow Agent shall have the right
to deposit all of the Escrowed Property held hereunder into the registry of an
appropriate court and request judicial determination of the rights between
Principal(s), by interpleader or other appropriate action, and Principal(s)
hereby, jointly and severally, indemnify and hold Escrow Agent harmless from and
against any damages or losses in connection therewith including, but not limited
to, reasonable attorneys' fees and court costs at all trial and appellate
levels.
C. Upon termination of the duties of Escrow Agent in either manner
set forth in subparagraphs 1. or 2. of Paragraph a. of this Article V., Escrow
Agent shall deliver all of the Escrowed Property to the newly appointed escrow
agent designated by the Principal(s), and, except for rights of Escrow Agent
specified in Paragraph a. of Article III. of this Escrow Agreement, Escrow
Agent shall not otherwise have the right to withhold Escrowed Property from said
newly appointed escrow agent.
D. Escrow Agent shall not be bound by any modification, cancellation
or rescission of this Escrow Agreement unless in writing and signed by all
Principal(s) and Escrow Agent. In no event shall any modification of this
Escrow Agreement, which shall affect the rights or duties of Escrow Agent, be
binding on Escrow Agent unless it shall have given its prior written consent.
VI. Notices
All notices, certificates, requests, demands, materials and other
communications hereunder shall be in writing and deemed to have been duly given
(1) upon delivery by hand to the appropriate address of each Principal or
Escrow Agent as set forth in this Escrow Agreement or in the Documents, if any,
or (2) on the third business day after mailing by United States registered or
certified mail, return receipt requested, postage prepaid to such address. All
notices to Escrow Agent shall be addressed to the attorney signing on behalf of
Escrow Agent at the following address:
Navon, Kopelman & O'Donnell, P.A.
2699 Stirling Road
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Suite B-303
Fort Lauderdale, Florida 33312
VII. Choice of Law and Venue
This Escrow Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. In the event any action, suit
or proceeding is instituted as a result of any matter or thing affecting this
Escrow Agreement, the parties hereto hereby designate Broward County, Florida,
as the proper jurisdiction and the venue in which same is to be instituted.
VIII. Cumulative Rights
No right, power or remedy conferred upon Escrow Agent by this Escrow
Agreement is exclusive of any other right, power or remedy, but each and every
such right, power or remedy shall be cumulative and concurrent and shall be in
addition to any other right, power or remedy Escrow Agent may have under the
Escrow Agreement or now or hereafter existing at law, in equity or by statute,
and the exercise of one right, power or remedy by Escrow Agent shall not be
construed or considered as a waiver of any other right, power or remedy.
IX. Binding Agreement
This Escrow Agreement shall be binding upon the Principal(s) and
Escrow Agent and their respective successors and assigns.
X. Escrow Agent Fees
Escrow Agent shall receive for its services in accepting this escrow
the sum of $0 per hour of time involved with respect to this escrow, plus
reimbursement of all costs, which fees and costs the Principal(s) hereby,
jointly and severally, agree to pay and it is hereby understood and agreed that
all such fees and costs shall constitute a first lien of the Escrowed Property
hereunder.
XI. Counterparts
This Escrow Agreement may be executed in counterparts, each of which
may be deemed an original, but all of which together, when filed in the
corporate records, shall be deemed one instrument.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed this 15 day of August, 1996.
Signed, sealed and delivered
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in the presence of:
NAVON, KOPELMAN & O'DONNELL, P.A.
By: /s/Samuel D. Navon/
Samuel D. Navon, President
PRINCIPALS:
INTERNATIONAL TREASURY AND
INVESTMENTS, LTD., a British Virgin
Islands corporation
By: /s/Michael Macey
Name: Michael Macey
Title: Authorized Signatory
/s/Harold Ginsburg/
Harold Ginsburg
/s/Richard Ginsburg/
Richard Ginsburg
/s/Sheilah Ginsburg/
Sheilah Ginsburg
/s/Rhonda Ginsburg/
Rhonda Ginsburg
/s/Robert Kasky/
Robert Kasky
EXHIBIT "a
NAME ADDRESS and FAX NUMBER OWNERSHIP %
<PAGE>
EXHIBIT "B"
One Million Shares of the Common Stock of Guardian International, Inc., the
"Surviving Corporation" under that certain Agreement and Plan of Merger dated
August 15, 1996, by and between Guardian International, Inc., a Florida
corporation and Everest Security Systems Corporation, a Nevada corporation
("Merger Agreement"), subject to collection.
<PAGE>
EXHIBIT "C"
The Merger Agreement and that certain Stock Pledge Agreement by and between
INTERNATIONAL TREASURY AND INVESTMENTS, LTD., G.M. CAPITAL PARTNERS,
LTD. and the persons listed on Exhibit "a" thereof, dated of even date herewith
to which this Escrow Agreement is attached as an Exhibit.
<PAGE>
SCHEDULE 9.3
ITI PROXY
IRREVOCABLE PROXY
The undersigned, being the record owner of One Million (1,000,000) shares
of the common stock of GUARDIAN INTERNATIONAL, INC., a Nevada corporation (f/k/a
Everest Security Systems Corporation)(the "Corporation") does hereby revoke any
and all proxies bearing a date prior to the date hereof, and hereby appoints
HAROLD GINSBURG (or his designee) of Broward County, Florida, as its proxy for
all meetings of the shareholders of the Corporation with full right, power and
authority to vote and act for it, in its name, place and stead, according to the
number of votes it would be entitled to vote if then personally present, upon
any question or issue which may be brought before such meetings.
This proxy is coupled with an interest and is irrevocable for a period of
two (2) years from the date hereof and is given in connection with an "Agreement
and Plan of Merger," dated August 15, 1996, by and between Guardian
International, Inc., a Florida corporation and Everest Security Systems
Corporation, a Nevada corporation. This proxy is subject to the terms of the
Agreement and Plan of Merger.
Date: Ft. Lauderdale, Florida
as of August 15, 1996
Signed, sealed and delivered
in the presence of:
INTERNATIONAL TREASURY AND
INVESTMENTS, LTD., a British Virgin
Islands corporation
_______________________ By:_/s/Michael Macey/______________
Print Name:________ _____ Name:_Michael Macey______________
Title:__Authorized Signature__________
_______________________
Print Name:_____________
<PAGE>
EXHIBIT 9.4
LOCK UP AGREEMENT
THIS LOCK-UP AGREEMENT ("Agreement") is made and entered this 15 day of
August, 1996, by and among GUARDIAN INTERNATIONAL, INC., a Nevada corporation
("Surviving Corporation"), INTERNATIONAL TREASURY AND INVESTMENTS, LTD.,
a British Virgin Islands corporation ("ITI"), STEVEN a. SANDERS ("Sanders"),
ROBERT KNIGHT ("Knight") and FRANK BAUER ("Bauer") (ITI, Sanders, Knight and
Bauer are sometimes hereinafter referred to individually as "Shareholder" and
collectively as the "Shareholders").
W I T N E S S E T H:
WHEREAS, Everest Security Systems Corporation, a Nevada corporation
("Everest"), and Guardian International, Inc., a Florida corporation
("Guardian"), entered into that certain Agreement and Plan of Merger dated
August 15, 1996 ("Merger Agreement"), essentially providing that Guardian will
merge into Everest but the name of the entity shall be changed to "Guardian
International, Inc."; and
WHEREAS, each of ITI, Sanders, Knight and Bauer is the record owner of
1,085,000, 66,250, 66,250, and 110,000, respectively, shares of the common
stock, $.001 par value ("Stock"), of the Surviving Corporation (f/k/a Everest
Security Systems Corporation); and
WHEREAS, as a material inducement for Guardian to consummate the
transactions contemplated by the Merger Agreement, each of the Shareholders have
agreed to restrict the transferability of seventy percent (70%) of their
respective Stock ("Restricted Shares"), as more particularly set forth herein;
NOW, THEREFORE, in consideration of Ten Dollars ($10) and other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. The foregoing recitals are true and correct and are hereby
incorporated into this Agreement by this reference. Certain capitalized terms
used herein shall have the same meaning ascribed to them in the Merger
Agreement, unless the context herein requires otherwise.
2. Each of the Shareholders hereby represents and warrants that (I)
he/she/it has the full right, power and authority to enter into this Agreement
to restrict the transferability and saleability of its Restricted Shares as
provided herein; (ii) except as set forth on Exhibit "a" attached hereto and
made a part hereof, it owns its Restricted Shares free and clear of any and all
liens, claims, charges and encumbrances; and (iii) except as set forth on
Exhibit "B" attached hereto and made a part hereof, compliance with the terms
and conditions of this Agreement will not conflict with, result in a breach of,
or constitute a default under any instrument or violate any law to which any of
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the Shareholders is a party or bound by.
3. Each Shareholder, its successors, assigns, heirs and personal
representatives, hereby agrees that it will not offer, sell, transfer, assign,
mortgage, pledge, hypothecate or in any manner dispose of its Restricted Shares,
unless and until the shares of the Surviving Corporation received by the former
Guardian shareholders pursuant to the Merger Agreement become freely
transferable, without any restrictions whatsoever, under the Securities Act of
1933, as amended and the rules and regulations promulgated thereunder.
4. Each Shareholder hereby consents and agrees, simultaneous with the
execution of this Agreement, to deliver the certificates representing the
Restricted Shares to the Surviving Corporation, and the Surviving Corporation
shall endorse on the face of each such certificate a legend reading
substantially as follows:
Any sale, assignment, transfer, pledge or other disposition of the shares
of stock represented by this certificate is restricted by and subject to
the terms and provisions of a Lock-Up Agreement, dated as of the 15 day of
August, 1996. A copy of said Lock-Up Agreement is on file with the
Secretary of the Surviving Corporation. By acceptance of this certificate,
the holder hereof agrees to be bound by the terms of said Lock-Up
Agreement.
In addition, the Surviving Corporation shall make its transfer agent aware of
the terms and provisions of this Agreement and shall place stop transfer orders
with such transfer agent against the future transfer of the Restricted Shares
in accordance with the terms and provisions set forth herein.
5. (a) This Agreement sets forth all the promises, covenants,
agreements, conditions and understandings between the parties hereto, and
supersedes all prior and contemporaneous agreements, understandings,
inducements or conditions, expressed or implied, oral or written, to the extent
such agreements relate in any way to the subject matter hereof, except as
herein contained.
(b) This Agreement shall be binding upon the parties hereto, their
heirs, administrators, successors and assigns.
The parties hereby irrevocably agree that no attempted amendment,
modification, termination, discharge or change (collectively, "Amendment") of
this Agreement shall be valid and effective, unless the parties shall
unanimously agree in writing to such Amendment.
(d) No waiver of any provision of this Agreement shall be effective
unless it is in writing and signed by the party against whom it is asserted, and
any such written waiver shall only be applicable to the specific instance to
which it relates and shall not be deemed to be a continuing or future waiver.
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(e) All pronouns shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identity of the party or parties, or their
personal representatives, successors and assigns may require.
(f) This Agreement and any amendments may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
(g) This Agreement shall be construed in accordance with the laws of
the State of Florida and any proceeding arising between the parties in any
manner pertaining or to this Agreement shall, to the extent permitted by law, be
held in Broward County, Florida.
(h) The parties hereto will execute and deliver such further
instruments and do such further acts and things as may be reasonably required to
carry out the intent and purposes of this Agreement.
(I) This Agreement is intended to be performed in accordance with,
and only to the extent permitted by, all applicable laws, ordinances, rules and
regulations of the jurisdiction in which the parties do business. If any
provision of this Agreement, or the application thereof to any person or
circumstance shall, for any reason or to any extent, be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by law.
(j) If any party hereto is required to engage in litigation against
any other party hereto, either as plaintiff or as defendant, in order to enforce
or defend any of its or his rights under this Agreement, and such litigation
results in a final judgment in favor of such party ("Prevailing Party"), then
the party or parties against whom said final judgment is obtained shall
reimburse the Prevailing Party for all direct, indirect or incidental expenses
incurred by the Prevailing Party in so enforcing or defending its or his rights
hereunder, including, but not limited to, all attorneys' fees and court costs
and other expenses incurred throughout all negotiations, trials or appeals
undertaken in order to enforce the Prevailing Party's rights hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement upon
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the day and year first set forth above.
Signed, sealed and delivered Surviving Corporation:
in the presence of:
GUARDIAN INTERNATIONAL, INC., a
Nevada corporation
By:_/s/Richard Ginsburg/_____________
Print Name: Name:_Richard Ginsburg ____________
Title:__President____________________
Print Name:
ITI:
INTERNATIONAL TREASURY AND
INVESTMENTS, LTD., a British Virgin
Islands corporation
By: /s/Michael Macey/
Name: Michael Macey
Title: Authorized Signatory
Print Name:
Sanders:
/s/Steven a. Sanders
STEVEN a. SANDERS
Print Name:
Knight:
/s/Robert Knight/
Print Name: ROBERT KNIGHT
Print Name:
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Bauer:
/s/Frank Bauer/
FRANK BAUER
Print Name:
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EXHIBIT "a"
<PAGE>
EXHIBIT "B"
<PAGE>
SCHEDULE 9.5(a)
EMPLOYMENT AGREEMENT - RICHARD GINSBURG
<PAGE>
SCHEDULE 9.5(b)
CONSULTING AGREEMENT - HAROLD GINSBURG
Letterhead of Semple And Cooper, P.L.C.
Certified Public Accountants
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
Re: Guardian International, Inc.
Dear Ladies and Gentlemen:
We have read Item 4 of the Form 8-K of Guardian International, Inc. dated August
28, 1996 and are in agreement with the statements contained therein regarding
Semple & Cooper, P.L.C.
Yours very truly,
per:/s/Semple & Cooper, P.L.C./
Semple & Cooper, P.L.C.
Phoenix, Arizona
August 28, 1996
