SCHEDULE 14A
Rule 14a-101
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of l934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Guardian International, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No:
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4) Date Filed:
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<PAGE>
GUARDIAN INTERNATIONAL, INC.
3880 North 28th Terrace
Hollywood, Florida 33020-1118
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Notice of Annual Meeting of Shareholders
to be held on June 21, 1999
Notice is hereby given that the Annual Meeting of Shareholders of Guardian
International, Inc. (the "Company") will be held at University of Miami School
of Business, James W. McLamore Executive Education Center, 5250 University
Drive, Coral Gables, Florida, 33146, at 2:00 p.m., local time, on June 21, 1999
for the following purposes, as described in the attached Proxy Statement:
1. To elect eight (8) directors to the Board of Directors.
2. To ratify the appointment of Arthur Andersen LLP as the
independent accountants for the Company for the year ending
December 31, 1999.
3. To approve the 1999 Incentive Stock Option Plan and ratify
non-plan grants of stock options.
4. To approve a change of domicile of the Company from Nevada to
Florida.
5. To transact such other business as may properly come before
the meeting.
Admittance to the meeting will be limited to shareholders. The Board of
Directors fixed the close of business on May 3, 1999 as the record date for the
determination of shareholders entitled to notice and to vote at the meeting and
any adjournment thereof. Accordingly, only shareholders of record at the close
of business on that date will be entitled to vote at the meeting. YOU ARE URGED
TO COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING
POSTAGE-FREE ENVELOPE. SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY ATTEND THE
MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
By Order of the Board of Directors,
Sheilah Ginsburg
Secretary
May 27, 1999
<PAGE>
Guardian International, Inc.
Annual Meeting of Shareholders
June 21, 1999
Proxy Statement
This Proxy Statement has been prepared and is furnished by the Board of
Directors (the "Board of Directors") of Guardian International, Inc. (the
"Company") in connection with the solicitation of proxies for the Annual Meeting
of Shareholders of the Company (the "Annual Meeting") to be held at the
University of Miami School of Business, James W. McLamore Executive Education
Center, 5250 University Drive, Coral Gables, Florida, 33146, at 2:00 p.m., local
time, on June 21, 1999, and any adjournment or postponement thereof for the
purpose set forth in the accompanying notice of meeting.
Proxies; Voting Securities
The Company will bear the cost of solicitation of proxies. In addition to the
solicitation of proxies by mail, certain officers and employees of the Company,
without additional remuneration, may also solicit proxies personally, by telefax
or other electronic means and by telephone. In addition to mailing copies of
this material to shareholders, the Company may request persons who hold stock in
their names or custody, or in the names of nominees for others, to forward such
material to those persons for whom they hold shares of the Company and to
request their authority for execution of the proxies. The Company may reimburse
such persons for their expenses in connection with such request.
It is anticipated that this Proxy Statement and the accompanying form of proxy
will be mailed to shareholders on or about May 27, 1999. The Company's Annual
Report, including audited financial statements for the fiscal year ended
December 31, 1998, is being mailed or delivered concurrently with this Proxy
Statement. The Annual Report is not to be regarded as proxy soliciting material.
Only holders of record of the Company's Class A Voting Common Stock, par value
$.001 per share (the "Class A Common Stock"), on the books of the Company at the
close of business on May 3, 1999, are entitled to vote at the Annual Meeting. On
that date, there were 11,569,241 issued and 8,582,241 outstanding shares of
Class A Common Stock entitled to vote on each matter to be presented at the
Annual Meeting. The Class A Common Stock is referred to herein as the "Voting
Stock." Each shareholder of record is entitled to one vote for each share of
Voting Stock held on all matters that come before the Annual Meeting. A majority
of these shares of Voting Stock will constitute a quorum for the transaction of
business at the Annual Meeting.
The approval of a plurality of the outstanding shares of Voting Stock present in
person or represented by proxy at the Annual Meeting is required for election of
the nominees as directors as set forth in Proposal 1. All other proposals shall
be decided by majority vote of the outstanding shares of Voting Stock present in
person or represented by proxy at the Annual Meeting. Abstentions and broker
non-votes will have no effect on the outcome of the election of directors. With
respect to all other matters to be voted on by shareholders at the Annual
Meeting, abstentions will have the same effect as "no" votes, and broker
non-votes will have no effect on the outcome of the vote.
Shares represented by a properly executed proxy received in time to permit its
use at the meeting or any adjournment thereof will be voted in accordance with
the instructions indicated therein. If no instructions are indicated, the shares
represented by the proxy will be voted:
o For the election of all nominees named in this Proxy Statement for
director.
o For the ratification of the appointment of Arthur Andersen LLP as
independent accountants.
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o For the approval of the 1999 Incentive Stock Option Plan and the
ratification of the non-plan grants of stock options.
o For the change of domicile of the Company from Nevada to Florida.
o In accordance with the best judgment of the persons acting under the
proxy concerning other matters that are properly brought before the
meeting and at any adjournment or postponement thereof.
As of May 3, 1999, Harold Ginsburg, Sheilah Ginsburg, Richard Ginsburg and
Rhonda Ginsburg (collectively, the "Ginsburgs") held 35.8% of the outstanding
shares of Voting Stock. The Ginsburgs will vote in favor of Proposals 1 through
4 described below.
A shareholder who has given a proxy may revoke it at any time before it is voted
at the meeting by giving written notice of such revocation to the office of the
Secretary of the Company, by executing and delivering to the Company a proxy
bearing a later date or appearing at the Annual Meeting and voting in person.
PROPOSAL 1
Election of Directors
The persons named below and in the accompanying form of proxy intend to vote all
valid proxies received in favor of the election of each of the persons named
below as nominees for director unless authority is withheld. All nominees are
currently serving as directors of the Company. To the best of the Company's
knowledge, each of the nominees for director is able, and intends, if elected,
to serve on the Board of Directors. If, prior to the Annual Meeting, any of the
nominees should become unable to serve for any reason, the persons named as
proxies will have full discretion to vote for all other persons who are
nominated. Each director shall be elected by a plurality of the votes cast.
Directors elected at the meeting will serve until the next Annual Meeting of
Shareholders or until their successors are elected and qualified.
In accordance with the Company's Amended and Restated Bylaws (the "Bylaws"), the
number of directors is fixed at eight. The By-Laws provide that each director
serves from the date of his election until the next Annual Meeting of
Shareholders and until his successor is elected and qualified. Currently, eight
directors are serving on the Board of Directors.
The following individuals are nominated to serve as Directors:
HAROLD GINSBURG
SHEILAH GINSBURG
RICHARD GINSBURG
DARIUS G. NEVIN
WILLIAM REMINGTON
DOUGLAS T. LAKE
JOEL A. COHEN
DAVID HEIDECORN
The following table sets forth certain information with respect to each person
who is currently a director or executive officer of the Company, and is based on
the records of the Company and information furnished to it by such persons. See
"Security Ownership of Certain Beneficial Owners and Management" for information
pertaining to stock ownership of each director and executive officer of the
Company.
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Directors and Officers of the Company
The current directors and executive officers of the Company, their positions
with the Company and their ages are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Richard Ginsburg (1) 30 Chief Executive Officer, President, Director
Harold Ginsburg (1) 66 Chairman of the Board of Directors
Sheilah Ginsburg (1) 60 Secretary, Treasurer, Director
Darius G. Nevin 41 Vice President, Chief Financial Officer, Director
William Remington (5), (6) 69 Director
Terry Akins 52 Chief Operating Officer, Vice President
Douglas T. Lake (2), (5), (6) 48 Director
David Heidecorn (6) 42 Director
Joel A. Cohen (3) 59 Vice President, President of Mutual, Director
Raymond L. Adams (4) 69 Vice President of Mutual
</TABLE>
(1) Harold and Sheilah Ginsburg are married and Richard Ginsburg is their
son.
(2) In 1998, pursuant to a Stock Subscription Agreement dated as of October
21, 1998 (the "Subscription Agreement") between the Company and
Protection One, Inc. ("Protection One"), Protection One purchased 10,000
shares of Series D 6% Convertible Cumulative Preferred Stock ("Series D
Preferred Stock") of the Company. Pursuant to the related Stockholders
Agreement, Protection One received the right to nominate up to two
Directors, upon conversion of the Series D Preferred Stock to Class A
Common Stock. Based on its aggregate percentage of Class A Common Stock
ownership, and because Protection One has not exercised its right to
convert its shares of Series D Preferred Stock to shares of Class A
Common Stock, Protection One does not have the right to nominate any
directors. Mr. Lake is serving as a Director by invitation of the Board
of Directors.
(3) In 1998, the Company entered into an employment agreement with Mr. Cohen
coincident with the Company's purchase of Mutual Central Alarm Services,
Inc., a New York corporation and wholly-owned subsidiary of the Company
("Mutual"). The terms of Mr. Cohen's employment agreement required his
nomination to the Board of Directors.
(4) Mr. Adams is Vice President of Mutual.
(5) Mr. Remington and Mr. Lake comprise the Compensation Committee.
(6) Mr. Remington, Mr. Lake and Mr. Heidecorn comprise the Audit Committee.
The following is a brief summary of the business experience of each director and
executive officer of the Company:
Harold Ginsburg
Mr. Ginsburg was a co-founder and President of Guardian from its inception in
1993 until August 15, 1996. He has been a Director of the Company since its
inception. Mr. Ginsburg is an acknowledged authority on electronic/computer
technology security systems and has personally developed high-tech security
systems for many well-known regional and national firms. Mr. Ginsburg also has
served as a consultant to financial organizations and government agencies
throughout Latin America and Europe. He is responsible for the start-up of
several successful security companies, including Guardsman Security Corporation,
which he owned and operated from 1983 to 1991. In 1991, Guardsman was sold to
Alert Centre, Inc., now owned by ADT Security, Inc. In 1978, Mr. Ginsburg
founded Gibraltar Central Security Corporation, which he partially owned and
operated until 1982, at which time Gibraltar Central Security Corporation was
sold to Security Centres of London, England.
Mr. Ginsburg does not hold directorships in any other reporting companies.
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Sheilah Ginsburg
Mrs. Ginsburg was a co-founder of Guardian in 1993 and has been a Director of
the Company since that time. She is responsible for the human resources and
certain other administrative functions of the Company. Prior to her
participation in the development of Guardian, Mrs. Ginsburg was the Vice
President/Controller of Guardsman Security Corporation, a business similar to
Guardian.
Mrs. Ginsburg does not hold directorships in any other reporting companies.
Richard Ginsburg
Mr. Ginsburg was a co-founder of Guardian and has been a Director of the Company
since its inception. He has been President and Chief Executive Officer of
Guardian since August 1996. He received a Bachelor of Science degree in
communications from the University of Miami. He subsequently served as Central
Station Manager of Guardsman Security from 1987 to 1990. Mr. Ginsburg then
became Operations Manager for Alert Centre, Inc., another security alarm
company, a position he filled from 1990 to 1992.
Mr. Ginsburg does not hold directorships in any other reporting companies. Mr.
Ginsburg is a director of Paradigm Direct, in which Western Resources, Inc.
holds a significant minority ownership position.
Darius G. Nevin
Mr. Nevin has been a Director and has held the position of Chief Financial
Officer of the Company since October 1997. For most of the ten years leading up
to that time, Mr. Nevin served in senior executive positions of Guard
Technologies, Inc. (now Security Technologies Group, Inc.), a provider of
electronic security systems and services to the commercial market. Before
entering the security industry, Mr. Nevin was a junior partner of Madison
Dearborn Partners, at that time the venture capital division of First Chicago
Corp. Mr. Nevin holds an A.B. from Harvard University and an M.B.A. from the
University of Chicago.
Mr. Nevin does not hold directorships in any other reporting companies.
Douglas T. Lake
Mr. Lake has been a Director of the Company since April 1998. Mr. Lake is
Executive Vice President and Chief Strategic Officer of Western Resources, Inc.,
and Chairman of the Board of Directors of Protection One, a majority-owned
subsidiary of Western Resources, Inc. From 1995 to 1998, Mr. Lake was Senior
Managing Director of Investment Banking with Bear Stearns & Company in New York
City. Prior to 1995, he was Managing Director with Dillon Reed & Company in New
York City. Mr. Lake holds a B.A. from Trinity College in Hartford, Connecticut
and an M.B.A. from Amos Tuck School at Dartmouth.
Mr. Lake also holds a directorship with Oneok, Inc, a publicly-held company.
William Remington
Mr. Remington has been a director of the Company since 1996. Mr. Remington is a
Canadian citizen and resident and, for twenty-one years ending in 1998, served
as the Director General of the Town of Hampstead, Quebec, Canada. In addition,
Mr. Remington has participated in the design and installation of central
monitoring stations for alarm monitoring companies located in Montreal, Canada,
Kingston, Jamaica, London, England and Florida.
Mr. Remington does not hold directorships in any other reporting companies.
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David Heidecorn
Mr. Heidecorn has been a director since May 1999. Mr. Heidecorn served as
Executive Vice President, Chief Financial Officer and a director of Alarmguard
Holdings, Inc. from 1992 until February 1999 when the company was sold to
Tyco/ADT. From 1986 to 1992, Mr. Heidecorn was employed by GE Capital
Corporation as a Vice President in the Leveraged Finance Group and a Senior Vice
President for the Corporate Finance Group, where he led the Bankruptcy and
Reorganization Finance activity for the Northeast. He received his B.A. in
Economics from Lehigh University and his M.B.A. in Finance from Columbia
University.
Mr. Heidecorn does not hold directorships in any other reporting companies.
Terry E. Akins
Mr. Akins served as president of Alarm Control, Inc. ("ACI"), which he
co-founded in 1970, between 1989 and May 1997. From 1970 to 1989, Mr. Akins
served as Vice President of ACI. In addition, Mr. Akins has been active with
local, state and national alarm associations, having served in 1989 as President
of the Alarm Association of Florida, an association he co-founded in 1970. Mr.
Akins received a Bachelor of Science from the Georgia Institute of Technology in
1969.
Joel A. Cohen
Mr. Cohen is Vice President of the Company and President of Mutual and has been
a Director of the Company since February 1999. Mr. Cohen has served as President
of Mutual since March 1989. He holds a B.A. from Brooklyn College and an M.B.A.
from Long Island University in Brooklyn.
Raymond L. Adams
Mr. Adams has served as Vice President of Mutual since January 1991. Mr. Adams
holds a B.A. from Syracuse University.
BOARD OF DIRECTORS
Nomination of Certain Directors
The Company is party to a Stockholders Agreement which entitles certain
shareholders to nominate members of the Board of Directors, depending on their
percentage of ownership of Class A Common Stock. In 1998, pursuant to a
Subscription Agreement between the Company and Protection One, Protection One
purchased 10,000 shares of Series D Preferred Stock of the Company. Pursuant to
the related Stockholders Agreement, Protection One received the right to
nominate up to two Directors, upon conversion of the Series D Preferred Stock to
Class A Common Stock. Based on its aggregate percentage share ownership,
Protection One does not have the right to nominate any directors.
Compensation of Directors
As compensation for serving as a director, Mr. Lake received options in 1998 to
purchase 75,000 shares of Class A Common Stock and Mr. Heidecorn received
options in 1999 to purchase 75,000 shares of Class A Common Stock. Each option
granted to Mr. Lake and to Mr. Heidecorn has an exercise price of $0.84 per
share and $0.81 per share, respectively, and vested 20% upon grant and 20% upon
each of the subsequent four anniversaries after grant. Non-employee directors
receive compensation of $1,000 for each meeting of the Board of Directors which
he attends in person.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company held five meetings during the fiscal year
ended December 31, 1998. The Board of Directors has a Compensation Committee and
an Audit Committee. Messrs. Remington and Lake serve as members of the
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Compensation Committee. Messrs. Remington, Lake, and Heidecorn serve as members
of the Audit Committee. The functions of the Compensation Committee include
reviewing and approving the executive compensation program for the Company and
its subsidiaries; assessing executive performance; making grants of salary and
annual incentive compensation; and approving certain employment agreements. The
functions of the Audit Committee are to make recommendations to the Board of
Directors regarding the engagement of the Company's independent auditors; to
review with management and the independent auditors the plans for and results of
each audit engagement; to approve professional services provided by the
independent auditors and to review the independence of the independent auditors,
the accounting and financial policies and practices, the audit scope, and the
adequacy of internal accounting controls. Neither the Audit Committee nor the
Compensation Committee met during the fiscal year ended December 31, 1998.
The Board of Directors recommends a vote FOR the approval of the nominees for
election as Directors of the Company, which is designated as Proposal 1 on the
enclosed proxy card.
PROPOSAL 2
Ratification of Independent Accountants
The Board of Directors of the Company has appointed Arthur Andersen LLP as
independent accountants for the fiscal year ending December 31, 1999, and to
render other professional services as required. Arthur Andersen LLP replaced
McKean, Paul, Chrycy, Fletcher & Co. ("McKean Paul") as the Company's
independent accountants in 1998. This change in independent accountants was
approved by the Board of Directors effective September 1, 1998.
McKean Paul served as the Company's independent auditors for the fiscal years
ending December 31, 1997 and 1996.
The reports of McKean Paul on the Company's financial statements for both 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 Company's financial statements for each of
the two fiscal years ended December 31, 1997 and December 31, 1996 respectively,
and in the subsequent interim period preceding McKean Paul'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 to the satisfaction of McKean Paul would have caused McKean Paul to
make references to the matter in their report.
During the most recent fiscal year and any subsequent interim period, there have
been no "reportable events" as defined in Regulation S-K Item 304(a)(1)(v) with
McKean Paul.
The appointment of Arthur Andersen LLP is being submitted to shareholders for
ratification.
Representatives of McKean Paul will not be present at the Annual Meeting.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting,
will have the opportunity to make a statement if they desire to do so, and will
be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of Arthur Andersen
LLP as independent accountants of the Company, which is designated as Proposal 2
on the enclosed proxy card.
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PROPOSAL 3
Approval of the Guardian International, Inc.
1999 Incentive Stock Option Plan
and Ratification of Non-Plan Option Grants
At the Annual Meeting, a proposal will be presented for the shareholders to
approve the Guardian International, Inc. 1999 Incentive Stock Option Plan (the
"1999 Plan"), in the form attached hereto as Exhibit A, under which incentive
stock options ("ISOs") and non-qualified stock options (collectively, "Awards")
relating to up to 500,000 shares of the Class A Common Stock may be granted to
directors, officers, full-time employees and consultants of the Company and its
subsidiaries.
The purposes of the 1999 Plan are (a) to promote the identity of interests
between shareholders, directors, officers, employees and consultants of the
Company by encouraging and creating significant ownership of Class A Common
Stock of the Company by directors, officers and other salaried employees of the
Company and its subsidiaries; (b) to enable the Company to attract and retain
qualified directors, officers, employees and consultants who contribute to the
Company's success by their ability, ingenuity and industry; and (c) to provide
meaningful long-term incentive opportunities for directors, officers, full-time
employees and consultants who are responsible for the success of the Company and
who are in a position to make significant contributions toward its objectives.
The maximum amounts provided for in the 1999 Plan are intended to enable the
Company to meet the requirements for deductibility under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). Section 162(m) of the
Code places a $1 million limit on the deduction that may be taken for
compensation paid to the Chief Executive Officer and the Company's four other
most highly compensated executives on the last day of the year, unless certain
requirements are met.
General Discussion of the 1999 Plan
Administration
The Compensation Committee (the "Committee") will administer the 1999 Plan. The
Committee consists of two or more directors, each of whom is and must be an
"Outside Director" within the meaning of Section 162(m) of the Code and the
regulations thereunder and a "Non-Employee Director" as defined under Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As
previously discussed, the Committee is currently comprised of Messrs. Remington
and Lake. Additionally, the Committee is authorized to designate participants,
determine the type and number of Awards to be granted, set terms and conditions
of Awards, and make all determinations which may be necessary or advisable for
the administration of the 1999 Plan.
Awards and Exercise Price
Awards entitle the participant to purchase shares of Class A Common Stock at
prescribed prices. The exercise price of an Award may not be less than the fair
market value per share of the Class A Common Stock on the date of grant. Awards
are exercisable at such times and subject to such terms and conditions as are
established in the sole and absolute discretion of the Committee in a fair and
uniform manner, except no Award may have a term exceeding 10 years. Awards may
be exercised by payment of the exercise price in cash, Class A Common Stock,
outstanding Awards or other property as the Committee may determine from time to
time.
Eligible Participants
All employees, consultants, officers and directors of the Company and its
subsidiaries who the Committee determines to become participants in the 1999
Plan are eligible to participate in the 1999 Plan. However, only employees may
be granted ISOs.
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Term of Option
Options granted under the 1999 Plan may not be exercised more than 10 years from
the date of grant of the Option, and may be exercised during such term only in
accordance with the terms of the 1999 Plan and the award agreement.
Limitations on Awards
Under the 1999 Plan, 500,000 shares of the Company's Class A Common Stock are
reserved and available for Awards. A maximum of 250,000 shares may be made
subject to Awards in any year.
Other Terms of Awards
The Committee may require or permit participants to defer the distribution of
all or part of an Award in accordance with such terms and conditions as the
Committee may establish, including payment of interest or dividend equivalents
on any deferred amounts. The Committee may place shares or other property in
trust or make other arrangements to provide for payment of the Company's
obligations under the 1999 Plan.
Awards may not be pledged or otherwise encumbered and generally are not
transferable except by will or by the laws of descent and distribution. A
participant may, in the manner established by the Committee, designate a
beneficiary to exercise such person's rights and receive distributions under the
1999 Plan upon such person's death.
Amendment, Termination and Adjustments
The Committee may amend, alter, suspend or terminate the 1999 Plan without the
consent of shareholders or participants, except that shareholder approval will
be sought within one year after such Board of Directors action if shareholder
approval is required by any applicable law or regulation or rule of a stock
exchange, or if the Board of Directors in its discretion determines that
obtaining such approval is advisable. The Committee, at its discretion, may also
amend, alter, suspend, discontinue or terminate any outstanding Award and any
related agreement; however, no amendment or termination may diminish or impair
the rights of a participant under any outstanding Award without such
participant's consent. The 1999 Plan will continue for a ten year period or
until such time as it is terminated by the Committee, whichever is sooner.
In the event of certain changes affecting the shares of Class A Common Stock
(such as a stock dividend or distribution, recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, spin-off,
combination, repurchase or share exchange or other similar corporate transaction
or event), the Committee shall adjust the aggregate number or kind of shares
which may be issued under the 1999 Plan and terms of outstanding Awards as it
deems to be appropriate in order to prevent dilution or enlargement of
participants' rights under the 1999 Plan. The Committee may also make
adjustments in the terms and conditions of Awards in recognition of unusual or
nonrecurring events affecting the Company or any subsidiary or their financial
statements or changes in applicable laws, regulations or accounting principles.
Federal Income Tax Implications
The following discussion summarizes the Federal income tax consequences to
participants who may receive stock options under the 1999 Plan and to the
Company arising out of the granting of such Awards. The discussion is based upon
interpretations of the Code.
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The Company believes that under present law, the following federal income tax
consequences generally arise with respect to Awards granted under the 1999 Plan.
The grant of an Award will create no tax consequences for the participant or the
Company. A participant will not have taxable income upon exercising an ISO
(except that the alternative minimum tax may apply) and the Company will receive
no deduction at that time. Upon exercising a non-qualified stock option, the
participant must generally recognize ordinary income equal to the difference
between the exercise price and fair market value of the Class A Common Stock
acquired on the date of the exercise. The Company will be entitled to a
deduction equal to the amount recognized as ordinary income by the participant.
A participant's disposition of shares acquired upon the exercise of an Award
generally will result in short-term or long-term capital gain or loss (except in
the event that shares issued pursuant to the exercise of an ISO are disposed of
within two years after the date of grant or within one year after the date of
exercise by the participant). Generally, there will be no tax consequences to
the Company in connection with disposition of shares acquired upon exercise of
Award, except that the Company will be entitled to a deduction (and the
participant will recognize ordinary taxable income) if shares acquired upon
exercise of an ISO are disposed of before the applicable ISO holding periods
have been satisfied.
In each instance described above, the deduction available to the Company may be
limited, as to the Chief Executive Officer and the Company's four other most
highly compensated executives, by Section 162(m) of the Code. As previously
mentioned, Section 162(m) places a $1 million limit on the deduction that may be
taken for compensation paid to any such officer unless such compensation is
based on the attainment of "objective" performance goals established in advance
by a committee of two or more outside directors, and paid pursuant to a plan
approved by shareholders. Stock options are deemed to be "performance related"
for purposes of Section 162(m). Accordingly, the 1999 Plan is designed to enable
the Company to meet the requirements for deductibility.
The foregoing provides only a general description of the applicability of
federal income tax laws to Awards under the 1999 Plan. Different tax rules may
apply with respect to participants who are subject to Section 16 of the Exchange
Act, when they acquire stock in a transaction deemed to be a nonexempt purchase
under that statute or within six months of an exempt grant of a derivative
security. The summary does not address the effects of other federal taxes or
taxes imposed under state, local or foreign laws.
1999 Plan Activity
As of April 30, 1999, no grants of Awards had been made under the 1999 Plan.
Ratification of Previously Granted Non-Plan Options
As of May 3, 1999, options to purchase 228,622 shares of Class A Common Stock
have been granted to six persons who are neither Directors nor Executive
Officers, and options to purchase 650,000 shares of Class A Common Stock have
been granted to seven persons who are Directors and Executive Officers of the
Company under Employment Agreements between each such optionee and the Company
(collectively, the "Non-Plan Option Grants"). The strike price of each grant,
which in each case represented the fair market value of the underlying shares of
Class A Common Stock, as of the date of grant, was as follows:
Number Exercise
Date of Grant Issued Price
------------- ------ -----
November 1995 174,720 $2.00
May 1997 100,000 2.50
February 1998 100,000 3.25
August 1998 53,902 1.73
December 1998 375,000 0.84
May 1999 75,000 0.81
----------
878,622
==========
11
<PAGE>
Voting Requirements
The vote of holders of a majority of the shares of Voting Stock present in
person or by proxy at the Annual Meeting is required to approve the 1999 Plan
and ratify the Non-Plan Option Grants. If not approved, the 1999 Plan will not
become effective. If the Non-Plan Option Grants are not ratified by the
shareholders, such Non-Plan Option Grants will become null and void.
Recommendations of the Board of Directors
The Board of Directors believes that it is desirable and in the best interests
of the Company and its shareholders that the 1999 Plan be adopted. As discussed
above, the purposes of the 1999 Plan include attracting and retaining qualified
directors, officers, employees and consultants and providing meaningful
long-term incentive opportunities to such individuals. The Board of Directors
also believes that it is desirable and in the best interests of the Company and
its shareholders that the Non-Plan Option Grants be ratified.
The Board of Directors recommends a vote FOR the approval the 1999 Plan and the
ratification of the Non-Plan Option Grants, which is designated as Proposal 3 on
the enclosed proxy card.
PROPOSAL 4
Change of Domicile from Nevada to Florida
On July 20, 1998, the Board of Directors of the Company passed a unanimous
resolution authorizing a change of corporate domicile from Nevada to Florida.
Management believes that the change is consistent with the geographic focus of
the Company's personnel and operations. The Company's predecessor, Everest
Security Systems Corporation, formerly known as Everest Funding Corporation,
which was formerly known as Burningham Enterprises, Inc., was originally
incorporated in Nevada on October 30, 1986. For a number of years, however, the
Company's principal offices, center of operations and employees have been
located in Hollywood, Florida. The Company has no physical plant or employees in
Nevada, nor does it conduct operations from or within Nevada.
Management believes that the change of corporate domicile to Florida will result
in savings for the Company by eliminating the need for Nevada legal counsel.
During the fiscal year ending December 31, 1998, the Company incurred
approximately $24,000 in legal fees for Nevada counsel.
Management believes that the change of corporate domicile to Florida will
provide greater flexibility to the Company under the Florida Business
Corporation Act (the "Florida Act"). The summary of certain differences between
the Florida Act and Chapters 78 and 92A of the Nevada Revised Statutes (the
"Nevada Act") follows.
If the shareholders approve the change of domicile, the Company will file the
Certificate of Domestication set forth in Exhibit 1 attached hereto, along with
the Articles of Incorporation set forth in Exhibit 2 attached hereto, with the
Department of State of the State of Florida. The Company will take this
opportunity to simplify certain provisions in its existing Nevada Articles of
Incorporation and to take advantage of greater flexibility afforded by certain
provisions of the Florida Act. The Company's current Nevada Articles of
Incorporation are included as Exhibit 3 attached hereto. Shareholders are urged
to examine the differences between Exhibits 2 and 3.
Following is a summary of certain differences between the Florida Act and the
Nevada Act:
Certain Business Combinations
12
<PAGE>
The Florida Act requires an "affiliated transaction," which is defined to
include certain business combinations and certain other transactions with an
"interested shareholder" or its affiliate, to be approved by a vote of holders
of two-thirds of the voting shares other than shares beneficially owned by an
interested shareholder. An "interested shareholder" is, with certain exceptions,
one who is the beneficial owner of more than 10% of the corporation's
outstanding voting shares. This provision does not apply to a corporation which
has had not more than 300 shareholders of record at any time within the three
years preceding the announcement of the transaction, or if, among other things,
(i) the affiliated transaction has been approved by a majority of the
corporation's disinterested directors, (ii) consideration is paid to the
corporation's shareholders which meets certain "fair value" criteria, (iii) the
interested shareholder has been the beneficial owner of at least 80% of the
outstanding voting shares for at least 5 years preceding the announcement date
of the affiliated transaction, or at least 90% of the voting shares, with no
holding period requirement, exclusive of shares acquired from the corporation in
a transaction not approved by disinterested directors, or (iv) the corporation's
original articles of incorporation, or an amendment to the articles or bylaws
approved by the holders of a majority of the outstanding voting power (excluding
interested shareholders, their affiliates and associates) expressly elects not
to be governed by the statute and, in the case of such an amendment, the
amendment was approved at least 18 months prior to the date the interested
shareholder in question is determined to be such. [Section 607.0901 of the
Florida Act]
The Nevada Act, subject to certain conditions, restricts the ability of a
"resident domestic corporation" to engage in any combination with an "interested
stockholder" for three years following the interested stockholder's date of
acquiring the shares that cause such stockholder to become an interested
stockholder. The restrictions do not apply if the combination or the purchase of
shares by the interested stockholder on the interested stockholder's date of
acquiring the shares that caused such stockholder to become an interested
stockholder is approved by the board of directors of the resident domestic
corporation before that date. If the combination was not previously approved,
the interested stockholder may effect a combination after the three-year period
only if such stockholder receives approval from a majority of the disinterested
shares or the offer meets certain fair price criteria. [Sec. 78.411-78.444 of
the Nevada Act]
For purposes of the above provisions, "resident domestic corporation" means a
Nevada corporation that has 200 or more stockholders. "Interested stockholder"
means any person, other than the resident domestic corporation or its
subsidiaries, who is (i) the beneficial owner directly or indirectly, of 10% or
more of the voting power of the outstanding voting shares of the resident
domestic corporation or (ii) an affiliate or associate of the resident domestic
corporation and, at any time within three years immediately before the date in
question, was the beneficial owner, directly or indirectly, of 10% or more of
the voting power of the then outstanding shares of the resident domestic
corporation.
Under the Nevada Act, the above provisions do not apply to corporations that so
elect in a charter amendment approved by a majority of the disinterested shares.
Such a charter amendment, however, would not become effective for 18 months
after its passage and would apply only to stock acquisitions occurring after its
effective date. The Company's Articles of Incorporation and By-Laws do not
exclude the Company from the restrictions imposed by such provisions.
Merger with Subsidiary
The Florida Act permits the merger of a subsidiary corporation into its parent
corporation without shareholder approval if 80% or more of the outstanding
shares of each class of stock of the subsidiary is owned by the parent
corporation.
The Nevada Act permits the merger of a subsidiary corporation into its parent
corporation without shareholder approval if 90% or more of the outstanding
shares of each class of stock of the subsidiary is owned by the parent
corporation.
Amendment to Bylaws
The Florida Act provides that a corporation's incorporators or board of
directors shall adopt the initial bylaws for the corporation, unless that power
is reserved to the shareholders in the articles of incorporation. The Florida
Act permits the board of directors to amend or repeal the bylaws unless such
power is expressly reserved to the shareholders in the articles of incorporation
13
<PAGE>
or the shareholders, in amending or repealing the bylaws, expressly provide that
the board of directors may not amend or repeal the bylaws.
The Nevada Act provides that the shareholders adopt the bylaws for the
corporation. The Nevada Act permits a corporation's board of directors to make
and amend the bylaws of the corporation, subject to the bylaws, if any, adopted
by the shareholders.
Amendment to Articles of Incorporation
The Florida Act permits the board of directors, without shareholder action, to
adopt certain amendments to the articles of incorporation, unless the articles
of incorporation provide otherwise, including, but not limited to, amendments to
(i) delete the names and addresses of the initial directors; (ii) to delete the
name and address of the initial registered agent or registered office, if a
statement of change is filed with the Florida Department of State; (iii) to
delete the authorization for a class or series of shares authorized in the
articles if not shares of such series or class are issued; (iv) to change the
par value for a class or series of shares; (v) to increase or decrease the
number of authorized shares and to make any other changes necessary or
appropriate to assure that the rights or preferences of each holder of issued
and outstanding shares of all classes and series will not be adversely affected
by the combination or division; (vi) to make certain changes to the
corporation's name; and (vii) to provide that if the corporation acquires its
own shares, such shares belong to the corporation and constitute treasury shares
until disposed of or canceled by the corporation.
The Nevada Act provides that the board of directors must adopt a resolution
setting forth any proposed amendment to the articles of incorporation and
declaring its advisability and must call a meeting of the shareholders entitled
to vote for the consideration thereof. A majority of the shareholders entitled
to vote must approve the amendment. If any proposed amendment would alter any
preference or right given to any class or series of outstanding shares, then the
amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment, regardless of
limitations or restrictions on the voting power thereof.
Limitations on Director Liability
The Florida Act provides that a director of a corporation will not be personally
liable for monetary damages for breach of his fiduciary duty as a director
unless the breach involves: (i) a violation of the criminal law; (ii) a
transaction from which the director derived an improper personal benefit; (iii)
an unlawful payment of a dividend or unlawful stock repurchase or redemption;
(iv) in a derivative proceeding or one by or in the right of a shareholder,
conscious disregard for the best interest of the corporation or willful
misconduct; or (v) in a proceeding by or in the right of someone other than the
corporation or a shareholder, recklessness or an act or omission that was
committed in bad faith, with malicious purpose or in a manner exhibiting wanton
and willful disregard of human rights, safety or property.
The Nevada Act allows a corporation to provide in its articles of incorporation
that a director or officer will not be personally liable for monetary damages to
the corporation or its stockholders for breach of fiduciary duty as a director
or officer, provided that such provision must not eliminate or limit the
liability of a director or officer for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or the payment of
distributions in violation of the Nevada Act.
Special Meetings of Shareholders
The Florida Act provides that a special meeting of shareholders may be called
by: (i) a corporation's board of directors; (ii) the persons authorized by the
articles of incorporation or bylaws; or (iii) the holders of not less than 10%
of all votes entitled to be cast on any issue to be considered at the proposed
special meeting. A corporation's articles of incorporation may require a higher
14
<PAGE>
percentage of votes, up to a maximum of 50%, to call a special meeting of
shareholders.
The Nevada Act contains no similar default provision for the calling of a
special meeting of stockholders. As a result, if a corporation's charter
documents do not set forth the procedure for calling special meetings, the
corporation will not have a procedure for the calling of such special meetings.
The Board of Directors recommends a vote FOR approval of the change of domicile
of the Company from Nevada to Florida, which is designated as Proposal 4 on the
enclosed proxy card.
15
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth information with respect to the beneficial
ownership as of May 3, 1999 of any person (including any "group") known by the
Company to be the beneficial owner of more than 5% of any class of stock.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Title of Class Name and Address of Beneficial Owner Beneficial Ownership (1) Class (2)(3)
-------------- ------------------------------------ ------------------------ ------------
<S> <C> <C> <C>
Preferred Stock (4) Protection One (6) 10,322 (7) 100.0
Class A Common Stock Harold and Sheilah Ginsburg (8), (9) 1,807,066 21.1
Class A Common Stock Richard Ginsburg (8) 672,096 (10) 7.8
Class A Common Stock Rhonda Ginsburg (8) 629,245 7.3
Class A Common Stock Estate of Norman Rubin 501,827 5.8
Class B Non-Voting Common
Stock (5) Heller (11) 634,035 6.9(12)
</TABLE>
(1) Unless otherwise indicated, the Company believes that each beneficial
owner listed in the above table has sole voting and investment power
with respect to the shares beneficially owned.
(2) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares which such person has the right to acquire on
or within 60 days of May 3, 1999. For purposes of computing the
percentage of the class held by each person named above, any shares
which such person has or has the right to acquire on or within 60 days
after May 3, 1999 are deemed to be outstanding for such person, but
are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(3) On a fully diluted basis as of May 3, 1999, Protection One holds
26.3%, Harold Ginsburg and Sheilah Ginsburg hold 13.8%, Richard
Ginsburg holds 5.1%, Rhonda Ginsburg holds 4.8% and Heller holds 4.8%
of the outstanding securities of the Company. See "Proxies; Voting
Securities" above.
(4) Shares of Preferred Stock are not convertible until at least the
third anniversary of their issuance on October 21, 1998, at a rate of
one share for 333.3333 shares of Class A Common Stock.
(5) Class B Common Stock is immediately convertible into Class A Common
Stock on a share-for-share basis at any time.
(6) The address for Protection One is 6225 North State Highway 161,
Suite 400, Irving, Texas, 75038. Protection One is the sole holder of
all of the outstanding shares of Preferred Stock. See "Proxies; Voting
Securities" above.
(7) The amount includes stock dividends accumulated through May 3, 1999.
(8) The address for such shareholder is c/o the Company, 3880 N. 28th
Terrace, Hollywood, Florida, 33020-1118.
(9) The shares of Harold and Sheilah Ginsburg are owned jointly as
tenants by the entireties.
(10) Includes 40,000 options which are immediately exercisable.
(11) Heller is the sole holder of all of the outstanding shares of Class
B Common Stock. See "Proxies; Voting Securities" above. The address
for Heller is 500 West Monroe Street, Chicago, Illinois, 60661.
(12) Represents the percent of outstanding shares of Common Stock.
16
<PAGE>
Security Ownership of Management
The following table sets forth information with respect to the beneficial
ownership as of May 3, 1999 of Class A Common Stock by (i) each Director of the
Company; (ii) each nominee to the Board of Directors; (iii) the Chief Executive
Officer; and (iv) all named directors and executive officers of the Company as a
group. On May 3, 1999, there were 11,569,241 and 8,582,241 shares of Class A
Common Stock issued and outstanding, respectively.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address of Beneficial Owner Beneficial Ownership (1) Class (2)
------------------------------------ ------------------------ ---------
<S> <C> <C>
Harold and Sheilah Ginsburg (3), (4) 1,807,066 21.1
Richard Ginsburg (3) 672,096 (5) 7.8
Darius G. Nevin (3) 152,000 (5) 1.8
William Remington (3) 0 *
Douglas T. Lake (3) 30,000 (6) *
Joel A. Cohen (7) 218,009 (8) 2.5
David Heidecorn (9) 25,000 (10) *
All Directors and Executive Officers as a Group (11) 3,446,606 40.2
* Represents less than 1% of outstanding Voting Stock.
</TABLE>
(1) Each director and executive officer has sole voting and investment
power with respect to the shares beneficially owned.
(2) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares of Class A Common Stock which such person has
the right to acquire on or within 60 days after May 3, 1999. For
purposes of computing the percentage of the class of Class A Common
Stock held by each person named above, any shares which such person has
or has the right to acquire on or within 60 days after May 3, 1999 are
deemed to be outstanding for such person, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of
any other person.
(3) The address of such shareholder is c/o the Company, 3880 North 28th
Terrace, Hollywood, Florida 33020-1118.
(4) The shares of Harold and Sheilah Ginsburg are owned jointly as
tenants by the entireties.
(5) Includes 40,000 options which are immediately exercisable.
(6) Includes 30,000 options which are immediately exercisable.
(7) The address of such shareholder is c/o Mutual Central Alarm Services,
Inc., 10 West 46th Street, New York, New York, 10036.
(8) Includes 20,000 options which are immediately exercisable.
(9) The address of such shareholder is c/o 9 Greenwich Office Park,
Greenwich, Connecticut, 06830.
(10) Includes 15,000 options which are immediately exercisable.
(11) Includes Messrs. Harold Ginsburg, Richard Ginsburg, Nevin,
Remington, Lake, Cohen, Heidecorn, Akins, Adams and Mrs. Ginsburg.
17
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following sets forth certain information regarding the aggregate
cash and other compensation paid to or earned by the executive officers of the
Company.
<TABLE>
<CAPTION>
Year Salary Other
---- ------ -----
<S> <C> <C> <C> <C>
Richard Ginsburg 1998 $100,000 $12,219 (1)
President and CEO, Director 1997 91,985 10,800
Darius G. Nevin 1998 135,537 12,084 (1)
Vice President and Chief Financial Officer, 1997 25,660 (2) 462
Director
Joel A. Cohen 1998 135,577 (3) 10,928 (1)
Vice President, President and CEO of Mutual, 1997 -
Director
Terry E. Akins 1998 144,808 (4) 12,559 (1)
Chief Operating Officer, Vice President 1997 96,346 7,089
</TABLE>
(1) Included in other annual compensation are auto allowances and payments for
medical insurance coverage.
(2) Mr. Nevin joined the Company in October 1997, with the execution of his
employment agreement. The annualized compensation for 1997 for Mr. Nevin
was $135,000.
(3) Mr. Cohen joined the Company in February 1998, with the execution of his
employment agreement. The annualized compensation for 1998 for Mr. Cohen
was $150,000.
(4) Mr. Akins joined the Company in May 1997, with the execution of his
employment agreement. The annualized compensation for 1997 and 1998 for
Mr. Akins was $150,000. Mr. Akins took extra vacation time in 1998 for
which he was not compensated.
Options/SAR Grants in Last Fiscal Year
- --------------------------------------
Individual Grants
<TABLE>
<CAPTION>
Number of
Securities Percent of Total
Underlying Options/SARs Granted Exercise of
Options/SARs to Employees in SARs Price
Name Granted Fiscal Year ($/Share) Expiration Date
---- ------- -------------------- ----------- ---------------
<S> <C> <C> <C> <C>
Richard Ginsburg 100,000 14.2% $0.84 October 15, 2007
Darius G. Nevin 100,000 14.2% $0.84 October 15, 2007
Joel Cohen 100,000 14.2% $0.84 February 23, 2008
Raymond L. Adams 100,000 14.2% $3.25 February 23, 2008
Douglas T. Lake 75,000 10.7% $0.84 February 23, 2008
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's directors and executive officers, and persons who
beneficially own more than ten percent (10%) of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and the other equity securities of the Company. Officers, directors
and persons who beneficially own more than ten percent (10%) of a registered
class of the Company's equity securities are required by the regulations of the
SEC to furnish the Company with copies of all Section 16(a) forms they file. To
the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended December 31, 1998, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its corporate headquarters from Guardian Investments, a
Florida partnership owned by Harold and Sheilah Ginsburg, both of whom are
directors, officers and principal shareholders of the Company.
18
<PAGE>
The corporate headquarters occupies a 12,000 square foot building which houses
the Company's central monitoring facility located at 3880 North 28 Terrace,
Hollywood, Florida 33020. The telephone number is (954) 926-5200. The lease
expires on December 31, 2002, but has a renewal option for an additional five
years under the same terms and conditions. The annual rent is approximately
$102,000, with annual increases not to exceed three percent (3%). The terms of
the lease are no less favorable to the Company than those which could be
obtained from an unaffiliated third party.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31, 1998 is
being mailed to Shareholders with this Proxy Statement.
DEADLINE FOR SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Pursuant to SEC regulations, shareholder proposals intended to be considered for
inclusion in the Proxy Statement for presentation at the Company's 2000 Annual
Meeting of Shareholders must be received at the Company's offices at 3880 North
28th Terrace, Hollywood, Florida, 33020-1118, Attention: Secretary, no later
than December 15, 1999, for inclusion in the Company's Proxy Statement and form
of proxy relating to such meeting. All proposals must comply with applicable SEC
rules and regulations. In addition, the proxy for voting on matters at the
Company's 2000 Annual Meeting will confer discretionary authority to vote on any
matter, notice of which was received by the Company after February 1, 2000.
OTHER MATTERS
The Board of Directors is not aware of any other matter other than those set
forth in this Proxy Statement that will be presented for action at the meeting
and does not intend to bring any other matters before the meeting. However, if
other matters properly come before the meeting, or any adjournment or
postponement thereof, the persons named in the enclosed proxy will have the
discretionary authority to vote the shares they represent in accordance with
their best judgment in the interest of the Company.
We will make available a list of shareowners of the Company at the close of
business on May 3, 1999, for inspection during normal business hours from June
14 through June 18, 1999, at the Company's corporate headquarters located at
3880 North 28 Terrace, Hollywood, Florida, 33020. The list will also be
available for inspection during the meeting.
THE COMPANY UNDERTAKES TO PROVIDE ITS SHAREHOLDERS WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES FILED THEREWITH. WRITTEN REQUESTS FOR SUCH REPORT SHOULD BE ADDRESSED
TO THE OFFICE OF THE SECRETARY, GUARDIAN INTERNATIONAL, INC., 3880 NORTH 28th
TERRACE, HOLLYWOOD, FLORIDA 33020-1118.
19
<PAGE>
Guardian International, Inc.
Annual Meeting of Shareholders
June 21, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of Guardian International, Inc. (the "Company")
hereby constitutes and appoints Richard Ginsburg and Darius G. Nevin, and each
of them, the shareholder's true and lawful attorneys and proxies, with full
power of substitution in and for each of them, to vote all shares of the Company
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
to be held at University of Miami School of Business, James W. McLamore
Executive Education Center, 5250 University Drive, Coral Gables, Florida, 33146,
on Monday, June 21, 1999, at 2:00p.m., local time, or at any postponement or
adjournment thereof, on any and all of the proposals contained in the Notice of
the Annual Meeting of Shareholders, with all the powers the undersigned would
possess if present personally at said meeting, or at any postponement or
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED ON THE REVERSE SIDE AND FOR THE APPROVAL
OF PROPOSALS 2, 3 AND 4.
(Continued and to be signed and dated on the other side)
- --------------------------------------------------------------------------------
Please mark your votes as this example [X]
The Directors recommend a vote FOR the Nominees listed in Proposal 1 and FOR
Proposals 2, 3 and 4.
1. Proposal to elect the following persons as Directors of the Company:
Harold Ginsburg Richard Ginsburg
Sheilah Ginsburg Darius G. Nevin
William Remington Douglas T. Lake
Joel A. Cohen David Heidecorn
FOR all nominees listed WITHHOLD AUTHORITY to
(except as marked to the vote for all nominees listed
contrary; see Instruction below)
[ ] [ ]
Instruction: To withhold authority to vote for any individual nominee, strike
through the name of the nominee above.
2. Proposal to ratify the appointment of Arthur Andersen LLP as independent
accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve the 1999 Incentive Stock Option Plan and ratify the
non-plan grants of stock options to Richard Ginsburg, Darius G. Nevin,
Joel A. Cohen, Terry Akins, Frank Bauer, GM Capital Partners, Douglas
T. Lake, David Heidecorn, Raymond L. Adams, Paul & Stella Ferrara,
Michael Assenza, Vincent Monardo and Kevin Killea.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE>
4. Proposal to approve the change of domicile of the Company from Nevada to
Florida
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The above named proxies are granted
the authority, in their discretion,
to act upon such other matters as
may properly come before the meeting
or any postponement or adjournment
thereof.
Dated_______________________, 1999
Signature(s)______________________
Signature If Shares Held Jointly
NOTE: Please sign exactly as name
appears hereon. When shares are held
by joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by the President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Please sign exactly as your name appears and return this proxy immediately in
the enclosed self-addressed envelope.
<PAGE>
EXHIBIT A
1999 STOCK OPTION PLAN
of
GUARDIAN INTERNATIONAL, INC.
SECTION 1. Purpose. The purpose of this 1999 Stock Option Plan (the
"Plan") of Guardian International, Inc. (the "Company") is (a) to promote the
identity of interests between shareholders, directors, officers, employees and
consultants of the Company and its Subsidiaries by encouraging and creating
significant ownership of Common Stock of the Company by directors, officers and
other salaried employees of the Company and its Subsidiaries; (b) to enable the
Company to attract and retain qualified directors, officers, employees and
consultants who contribute to the Company's success by their ability, ingenuity
and industry; and (c) to provide meaningful long-term incentive opportunities
for directors, officers, employees and consultants who are responsible for the
success of the Company and who are in a position to make significant
contributions toward its objectives.
SECTION 2. Definitions. In addition to the terms defined elsewhere in
the Plan, the following shall be defined terms under the Plan:
2.01 "Award" means any Option granted to a Participant under the Plan.
2.02 "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
2.03 "Beneficiary" means the person or persons designated in writing by
the Participant as his beneficiary in respect of Awards or, in the absence of
such a designation or if the designated person or persons predecease the
Participant, the person or persons who shall acquire the Participant's rights in
respect of Awards by bequest or inheritance in accordance with the applicable
laws of descent and distribution. In order to be effective, a Participant's
designation of a beneficiary must be on file with the Company before the
Participant's death. Any such designation may be revoked and a new designation
substituted therefor by the Participant at any time before his death without the
consent of the previously designated beneficiary.
2.04 "Board" means the Board of Directors of the Company.
2.05 "Change of Control" has the meaning ascribed to such term in
Section 9.02.
2.06 "Change of Control Price" has the meaning ascribed to such term in
Section 9.03.
1
<PAGE>
2.07 "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.
2.08 "Committee" means the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the Plan,
or any subcommittee of either; which shall consist of two or more directors,
each of whom is a "Non-employee Director" within the meaning of Rule 16b-3 under
the Exchange Act and an "outside director" within the meaning of Treas. Reg.
Section 1.162-27.
2.09 "Common Stock" means the Class A Voting Common Stock, $.001 par
value, of the Company.
2.10 "Company" means Guardian International, Inc., a Florida
corporation, and any successor thereto.
2.11 "Covered Employee" has the meaning ascribed to such term as set
forth in Section 162(m) of the Code.
2.12 "Disability" means, as determined by the Company, unable to engage
in substantial gainful activity by reason of any medically determinable physical
or mental impairment which has lasted or which can be expected to last for a
continuous period of not less than 6 months.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time. References to any provision of the Exchange Act shall
be deemed to include successor provisions thereto and regulations thereunder.
2.14 "Fair Market Value" means, with respect to Shares, the fair market
value of such Shares determined by such methods or procedures as shall be
established, in good faith, from time to time by the Committee. Unless otherwise
determined by the Committee, the fair market value of Shares as of any date
shall be the average of the closing bid and asked prices for Shares reported in
the NASDAQ System for the Small Cap Market National Market, as applicable, for
that date or, if no such prices are so reported for that date, the average of
such closing bid and asked prices on the immediately preceding date for which
such closing prices are so reported. Fair market value shall be determined
without regard to any restriction other than a restriction which, by its terms,
will never lapse. If Shares are listed on any other exchange, the fair market
value of Shares as of any date shall be the closing sales price on that date of
a Share as reported on that exchange as reported in the Composite Transactions
for such day by the Wall Street Journal or, if such Shares were not traded on
such date, on the next preceding day on which such Shares were traded.
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2.15 "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code.
2.16 "Non-Qualified Stock Option" means an Option that is not intended
to be an Incentive Stock Option.
2.17 "Option" means a right, granted to a Participant under Section
6.02, to purchase Shares at a specified price during specified time periods. An
Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.
2.18 "Participant" means a person who, as a director, officer, salaried
employee, or consultant of the Company or any Subsidiary, has been granted an
Award under the Plan.
2.19 "Rule 16b-3" means Rule 16b-3, as from time to time amended and
applicable to Participants, promulgated by the Securities and Exchange
Commission under Section 16 of the Exchange Act.
2.20 "Shares" means the Common Stock.
2.21 "Subsidiary" means any corporation (other than the Company) with
respect to which the Company owns, directly or indirectly, 50% or more of the
total combined voting power of all classes of stock. In addition, any other
related entity may be designated by the Board as a Subsidiary, provided such
entity could be considered as a subsidiary according to generally accepted
accounting principles.
2.22 "Year" means a fiscal year of the Company.
SECTION 3. Administration.
3.01 Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(a) to select and designate Participants;
(b) to designate those Subsidiaries, the employees of
which shall be eligible to receive grants of Awards under the Plan;
(c) to determine the type or types of Awards to be granted to
each Participant;
(d) to establish the conditions relating to the grant of an
Award and, prior to the grant of an Award, to certify that such
material conditions of an Award are satisfied pursuant to the criteria
established by the Committee;
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(e) to determine the number of Awards to be granted, the
number of Shares to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not
limited to, any exercise price, any restriction or condition, any
schedule for lapse of restrictions or conditions relating to
transferability or forfeiture, exercisability of an Award, and waivers
or accelerations thereof, and waiver of conditions relating to an
Award, based in each case on such considerations as the Committee shall
determine), and all other matters to be determined in connection with
an Award;
(f) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an
Award may be paid, in cash, Shares, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
(g) to determine whether, to what extent, and under what
circumstances cash, Shares, other Awards, or other property payable
with respect to an Award will be deferred either automatically, at the
election of the Committee, or at the election of the Participant;
(h) to prescribe the form of each Award Agreement, which need
not be identical for each Participant;
(i) to adopt, amend, suspend, waive, and rescind such rules
and regulations and appoint such agents as the Committee may deem
necessary or advisable to administer the Plan;
(j) to correct any defect or supply any omission or reconcile
any inconsistency in the Plan and to construe and interpret the Plan
and any Award, rules and regulations, Award Agreement, or other
instrument hereunder;
(k) to terminate the Plan; and
(l) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
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3.02 Manner of Exercise of Committee Authority. Unless authority is
specifically reserved to the Board under the terms of the Plan or applicable
law, the Committee shall have sole and absolute discretion in exercising such
authority under the Plan. Any action of the Committee with respect to the Plan
shall be final, conclusive, and binding on all persons, including the Company,
Subsidiaries, their shareholders, Participants, beneficiaries, and any other
person claiming any rights under the Plan from or through any Participant or
beneficiary. The express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. A memorandum signed by all members of the
Committee shall constitute the act of the Committee without the necessity, in
such event, to hold a meeting. A majority of the members of the Committee shall
constitute a quorum, and the vote of a majority at a meeting of the Committee or
the written consent of all of the members of the Committee on a particular
matter shall constitute the act of the Committee on such matter. The Committee
may delegate to officers or managers of the Company or any Subsidiary the
authority, subject to such terms as the Committee shall determine, to perform
administrative functions under the Plan.
3.03 Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
Subsidiary, the Company's independent certified public accountants, or any
executive compensation consultant or other professional retained by the Company
to assist in the administration of the Plan. No member of the Committee, nor any
officer or employee of the Company acting on behalf of the Committee, shall be
personally liable for any action, determination, or interpretation taken or made
in good faith with respect to the Plan, and all members of the Committee and any
officer or employee of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action, determination, or interpretation.
SECTION 4. Shares Subject to the Plan. Subject to adjustment as
provided in Section 10, the total number of Shares reserved and available for
Awards under the Plan shall be 500,000. For purposes of this Section 4, the
number of and time at which Shares shall be deemed to be subject to Awards and
therefore counted against the number of Shares reserved and available under the
Plan shall be the earliest date on which the Committee can reasonably estimate
the number of Shares to be distributed in settlement of an Award or with respect
to which payments will be made; provided, however, that, subject to the
requirements of Rule 16b-3, the Committee may adopt procedures for the counting
of Shares relating to any Award for which the number of Shares to be distributed
or with respect to which payment will be made cannot be fixed at the date of
grant to ensure appropriate counting, avoid double counting (in the case of
substitute awards), and provide for adjustments in any case in which the number
of Shares actually distributed or with respect to which payments are actually
made differs from the number of Shares previously counted in connection with
such Award.
If any Shares to which an Award relates are forfeited or the Award is
settled or terminates without a distribution of Shares (whether or not cash,
other Awards, or other property is distributed with respect to such Award), any
Shares counted against the number of Shares reserved and available under the
Plan with respect to such Award shall, to the extent of any such forfeiture,
settlement or termination, again be available for Awards under the Plan;
provided, however, that such Shares shall be available for issuance only to the
extent permitted under Rule 16b-3.
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SECTION 5. Eligibility. Awards may be granted only to individuals who
are directors, officers, full-time employees (including employees who also are
directors) or consultants of the Company or a Subsidiary on the date on which
the Committee authorizes the grant to such individual of an Award; provided,
however, that no Award shall be granted to any member of the Committee.
SECTION 6. Specific Terms of Awards.
6.01 General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to Section
11.02), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine. Except as provided in
Sections 7.03 or 7.04, only services may be required as consideration for the
grant of any Award.
6.02 Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) Incentive Stock Options. The terms of any Incentive Stock
Option granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, including but not limited to the
requirement that such Option be designated by the Committee as an
Incentive Stock Option, and that no Incentive Stock Option shall be
granted more than ten years after the effective date of the Plan.
Notwithstanding anything in the Plan to the contrary, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended,
or altered, nor shall any discretion or authority granted under the
Plan be exercised, so as to disqualify either the Plan or any Incentive
Stock Option under Section 422 of the Code. In the event a Participant
voluntarily disqualifies an Option as an Incentive Stock Option, the
Committee may, but shall not be obligated to, make such additional
Awards or pay bonuses as the Committee shall deem appropriate to
reflect the tax savings to the Company which result from such
disqualification.
(1) Exercise of Incentive Stock Options. The
Committee shall determine the time or times at which Incentive
Stock Options may be exercised, provided that such time or
times shall not occur before the latest of:
(A) the first anniversary of the date on
which the Incentive Stock Option was granted;
(B) approval of the Plan by the stockholders
of the Company in the manner provided under Section
13 of the Plan; and
(C) the effectiveness of any registration
statement required to be filed under the Securities
Act of 1933 for the registration of the Shares to be
issued upon exercise of the Incentive Stock Option.
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(2) Payment of Incentive Stock Option Price. The
exercise price of Shares upon exercise of an Incentive Stock
Option shall be paid in full to the Company at the time of the
exercise of the Incentive Stock Option in cash or, at the
discretion of the Committee and subject to any limitations or
requirements that the Committee may adopt, by the surrender to
the Company of previously acquired Shares, or, at the
discretion of the Committee, by a combination of Shares, cash
and other property (including notes or other contractual
obligations of Participants to make payment on a deferred
basis, such as through "cashless exercise" arrangements, to
the extent permitted by applicable law). The exercise price of
an Incentive Stock Option shall not be less than 100% of the
Fair Market Value of the Incentive Stock Option on the date
that the Incentive Stock Option was granted. An Incentive
Stock Option shall expire not later than ten years after the
date of grant.
(3) Limitation on Exercisability. The aggregate Fair
Market Value (determined as of the time the Incentive Stock
Option is granted) of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by
the Participant during any calendar year shall not exceed
$100,000 (or such other amount as set forth in Section 422 of
the Code).
(4) Employment Requirement.
(A) In the event that a Participant
retires or otherwise ceases to be employed
by the Company or any Subsidiary for any
reason, including leaves of absences (other
than a termination by death, permanent and
total disability within the meaning of
Section 22(e)(3) of the Code, or for cause),
such Participant shall have the right to
exercise any Incentive Stock Options which
became exercisable prior to retirement or
cessation of employment but only within a
period of three (3) months from the date of
cessation of employment (but in any event
not later than the expiration date of the
Incentive Stock Option), after which time
any unexercised portion of all outstanding
Incentive Stock Options of the Participant
shall expire. If the Participant dies during
such three-month period, the executors,
administrators, legatees or distributees of
the Participant's estate shall have the
right to exercise such Incentive Stock
Options during the remainder of such period.
In the event that an Incentive Stock Option
is exercised after three (3) months
following the Participant's termination of
employment (other than because of
termination by death or permanent
disability) such Option shall be a
Non-Qualified Stock Option.
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(B) In the event that a Participant
dies while employed by the Company or any
Subsidiary the executors, administrators,
legatees or distributees of the estate of
the Participant shall have the right to
exercise any Incentive Stock Options which
became exercisable prior to the
Participant's death but only within a period
of one (1) year from the date of the
Participant's death (but in no event later
than the expiration date of the Incentive
Stock Option), after which time any
unexercised portion of all outstanding
Incentive Stock Options of the Participant
shall expire. The Company shall be under no
obligation to issue Shares hereunder unless
and until the Company is satisfied that the
person (or persons) exercising the
Participant's Incentive Stock Option is the
duly appointed legal representative of the
Participant's estate or the proper legatee
or distributee thereof.
(C) In the event that a Participant
becomes permanently disabled under Section
22(e)(3) of the Code while employed by the
Company or any Subsidiary, any Incentive
Stock Option which was exercisable on the
date when such Participant became disabled
may be exercised within one (1) year after
such Participant ceases employment (but in
no event later than the expiration date of
the Incentive Stock Option) after which time
any unexercised portion of all outstanding
Incentive Stock Options of the Participant
shall expire.
(D) In no event and under no
circumstances may an Incentive Stock Option
be exercised by a Participant (or his
personal representative) after termination
of the Participant's employment for cause
(as defined in the Award Agreement).
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(5) 10% Stockholder. If any Participant to whom an
Incentive Stock Option is granted pursuant to the provisions
of the Plan is, on the date of grant, the owner of stock (as
determined under Section 424(d) of the Code) possessing more
than 10% of the total combined voting power or value of all
classes of stock of the Company or Subsidiaries, then the
following special provisions shall be applicable:
(A) The exercise price per Share subject to
such Incentive Stock Option shall not be less than
110% of the Fair Market Value of each Share on the
date of grant; and
(B) The Incentive Stock Option shall not
have a term in excess of five years from the date of
grant.
(6) Nontransferability. An Incentive Stock Option
shall not be transferable by the Participant other than by
will or by the laws of descent and distribution, and such
Option shall be exercisable during the Participant's lifetime
only by such Participant; provided, however, that in the event
of the Participant's Disability, his legal representative may
exercise an Option on his behalf.
(b) Non-Qualified Stock Options. An Option granted to a
Participant which is not an Incentive Stock Option is a Non-Qualified
Stock Option.
(1) Exercise Price of Non-Qualified Stock Options.
The exercise price per Share purchasable under a Non-Qualified
Stock Option shall be determined by the Committee; provided,
however, that such exercise price shall be not less than the
Fair Market Value of a Share on the date of grant of such
Option.
(2) Time and Method of Exercise. Except as otherwise
provided in the Plan, the Committee shall determine the time
or times at which a Non-Qualified Stock Option may be
exercised in whole or in part, the methods by which such
exercise price may be paid or deemed to be paid, the form of
such payment, including, without limitation, cash, Shares,
other Awards or awards issued under other Company plans, or
other property (including notes or other contractual
obligations of Participants to make payment on a deferred
basis, such as through "cashless exercise" arrangements, to
the extent permitted by applicable law), and the methods by
which Shares will be delivered or deemed to be delivered to
Participants. Such Options shall expire not later than ten
years after the date of grant.
SECTION 7. Certain Provisions Applicable to Awards.
7.01 Maximum Yearly Awards. A maximum of 250,000 Shares may be made
subject to Awards in any Year. The Share amounts in this Section 7.01 are
subject to adjustment under Section 9 and are subject to the Plan maximum under
Section 4.
7.02 Stand-Alone, Additional and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee and in compliance with
applicable law, be granted either alone or in addition to, or in substitution
for any other Award granted under the Plan or any award granted under any other
plan of the Company, any Subsidiary, or any business entity to be acquired by
the Company or a Subsidiary, or any other right of a Participant to receive
payment from the Company or any Subsidiary. If an Award is granted in
substitution for another Award or award, the Committee shall require the
surrender of such other Award or award in consideration for the grant of the new
Award. Awards granted in addition to other Awards or awards may be granted
either as of the same time as or a different time from the grant of such other
Awards or awards. The per Share exercise price of any Option granted in
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substitution for an outstanding Award or award shall be not less than the lesser
of the Fair Market Value of a Share at the date such substitute award is granted
or such Fair Market Value at that date reduced to reflect the Fair Market Value
at that date of the Award or award required to be surrendered by the Participant
as a condition to receipt of the substitute Award.
7.03 Exchange Provisions. The Committee may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Shares,
other Awards (subject to Section 7.02), or other property based on such terms
and conditions as the Committee shall determine and communicate to the
Participant at the time that such offer is made.
7.04 Loan Provisions. With the consent of the Committee, and subject to
compliance with applicable laws and regulations, the Company may make,
guarantee, or arrange for, a loan or loans to a Participant with respect to the
exercise of any Option, including the payment by a Participant of any or all
federal, state, or local income or other taxes due in connection with any Award.
Subject to such limitations, the Committee shall have full authority to decide
whether to make a loan or loans hereunder and to determine the amount, terms,
and provisions of any such loan or loans, including the interest rate to be
charged in respect of any such loan or loans, whether the loan or loans are to
be with or without recourse against the borrower, the terms on which the loan is
to be repaid and conditions, if any, under which the loan or loans may be
forgiven. Nothing in this Section shall be construed as implying that the
Committee shall or will offer such loans.
SECTION 8. General Restrictions Applicable to Awards.
8.01 Restrictions Under Rule 16b-3.
(a) Six-Month Holding Period. Unless a Participant could
otherwise transfer an equity security, derivative security, or Shares
issued upon exercise of a derivative security, granted under the Plan
without incurring liability under Section 16(b) of the Exchange Act,
(i) an equity security issued under the Plan, other than an equity
security issued upon exercise or conversion of a derivative security
granted under the Plan, shall be held for at least six months from the
date of acquisition; and (ii) with respect to a derivative security
issued under the Plan, at least six months shall elapse from the date
of acquisition of the derivative security to the date of disposition of
the derivative security (other than upon exercise or conversion) or its
underlying equity security.
(b) Compliance with Rule 16b-3. It is the intent of the
Company that this Plan comply in all respects with Rule 16b-3 in
connection with any Award granted to a person who is subject to Section
16 of the Exchange Act. Accordingly, if any provision of this Plan or
any Award Agreement does not comply with the requirements of Rule 16b-3
as then applicable to any such person, such provision shall be
construed or deemed amended to the extent necessary to conform to such
requirements with respect to such person.
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8.02 Limits on Transfer of Awards; Beneficiaries. No right or interest
of a Participant in any Award shall be pledged, encumbered, or hypothecated to
or in favor of any party (other than the Company or a Subsidiary), or shall be
subject to any lien, obligation, or liability of such Participant to any party
(other than the Company or a Subsidiary) except by will or the laws of descent
and distribution; provided, however, that a Participant may, in the manner
established by the Committee, designate a Beneficiary or Beneficiaries to
exercise the rights of the Participant, and to receive any distribution, with
respect to any Award, upon the death of the Participant. A Beneficiary,
guardian, legal representative, or other person claiming any rights under the
Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award Agreement applicable to such Participant or
agreement applicable to such, except to the extent the Plan and such Award
Agreement or agreement otherwise provide with respect to such persons, and to
any additional restrictions deemed necessary or appropriate by the Committee.
8.03 Registration and Listing Compliance. The Company shall not be
obligated to deliver any Award or distribute any Shares with respect to any
Award in a transaction subject to regulatory approval, registration, or any
other applicable requirement of federal or state law, or subject to a listing
requirement under any listing or similar agreement between the Company and any
national securities exchange or automated quotation system, until such laws,
regulations, and contractual obligations of the Company have been complied with
in full, although the Company shall be obligated to use its best efforts to
obtain any such approval and comply with such requirements as promptly as
practicable.
8.04 Share Certificates. All certificates for Shares delivered under
the Plan pursuant to any Award or the exercise thereof shall be subject to such
stop-transfer order and other restrictions as the Committee may deem advisable
under applicable federal or state laws, rules and regulations thereunder, and
the rules of any national securities exchange or automated quotation system on
which Shares are listed or quoted. The Committee may cause a legend or legends
to be placed on any such certificates to make appropriate reference to such
restrictions or any other restrictions that may be applicable to Shares,
including under the terms of the Plan or any Award Agreement. In addition,
during any period in which Awards or Shares are subject to restrictions under
the terms of the Plan or any Award Agreement, or during any period during which
delivery or receipt of an Award or Shares has been deferred by the Committee or
a Participant, the Committee may require the Participant to enter into an
agreement providing that certificates representing Shares issuable or issued
pursuant to an Award shall remain in the physical custody of the Company or such
other person as the Committee may designate.
8.05 Right of First Refusal. At the time of grant of any Award, the
Committee may provide that any Shares to be received in connection with such
Award shall be subject to a right of first refusal, pursuant to which the
Participant shall be required to offer to the Company any shares that the
Participant wishes to sell, with the repurchase price the then Fair Market Value
of the Shares, subject to such other terms and conditions as the Committee may
specify at the time of grant of the Award.
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SECTION 9. Change of Control Provisions. Notwithstanding any other
provision of the Plan, the following acceleration and valuation provisions shall
apply in the event of a "Change of Control" as defined in Section 9.02:
9.01 Acceleration and Cash-Out Rights. In the event of a Change of
Control automatically in the case of Participants subject to Section 16 of the
Exchange Act, and unless otherwise determined by the Committee in writing at or
after grant but prior to the occurrence of the Change of Control in the case of
Participants not subject to Section 16 of the Exchange Act:
(a) Any Option which was not previously exercisable and vested
shall become fully exercisable and vested, subject only to the
restrictions on dispositions of equity securities set forth in Section
8.01(a) and legal restrictions on the issuance of Shares set forth in
Section 8.03; and
(b) Any other restrictions and forfeiture conditions
applicable to Options granted under the Plan shall lapse and such
Options shall be deemed fully vested, subject only to the restrictions
on dispositions of equity securities set forth in Section 8.01(a) and
legal restrictions on the issuance of Shares set forth in Section 8.03.
9.02 Change of Control. For purposes of Section 9.01, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 50% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions shall
not constitute a Change of Control: (x) any acquisition by the Company
or any of its Subsidiaries, (y) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
of its Subsidiaries, or (z) any acquisition by any Company with respect
to which, following such acquisition, more than 50% of, respectively,
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such acquisition in substantially the same proportions as their
ownership, immediately prior to such acquisition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be; or
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(b) Individuals who, as of the effective date of the Plan,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened solicitation to
which Rule 14a-11 of Regulation 14A promulgated under the Exchange Act
applies or other actual or threatened solicitation of proxies or
consents; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares
of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may
be; or
(d) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following
such sale or other disposition, more than 50% of, respectively, the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be. The term "the sale or other disposition
of all or substantially all of the assets of the Company" shall mean a
sale or other disposition transaction or series of related transactions
involving assets of the Company or of any direct or indirect Subsidiary
of the Company (including the stock of any direct or indirect
Subsidiary of the Company) in which the value of the assets or stock
being sold or otherwise disposed of (as measured by the purchase price
being paid therefor or by such other method as the Board determines is
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appropriate in a case where there is no readily ascertainable purchase
price) constitutes more than two-thirds of the fair market value of the
Company (as hereinafter defined). The "fair market value of the
Company" shall be the aggregate market value of the then Outstanding
Company Common Stock (on a fully diluted basis) plus the aggregate
market value of the Company's other outstanding equity securities. The
aggregate market value of the shares of Outstanding Company Common
Stock shall be determined by multiplying the number of shares of
Outstanding Company Common Stock (on a fully diluted basis) outstanding
on the date of the execution and delivery of a definitive agreement
with respect to the transaction or series of related transactions (the
"Transaction Date") by the average closing price of the shares of
Outstanding Company Common Stock for the five trading days immediately
preceding the Transaction Date. The aggregate market value of any other
equity securities of the Company shall be determined in a manner
similar to that prescribed in the immediately preceding sentence for
determining the aggregate market value of the shares of Outstanding
Company Common Stock or by such other method as the Board shall
determine is appropriate.
9.03 Change of Control Price. For purposes of this Section 9, "Change
of Control Price" means the highest price per share paid in any transaction
reported on the securities exchange or trading system on which the Shares are
then primarily listed or traded, or paid or offered in any transaction related
to a Change of Control of the Company at any time during the preceding 60-day
period as determined by the Committee, except that in the case of Incentive
Stock Options, such price shall be based only on transactions reported for the
date on which the Committee decides to cash out such Awards.
SECTION 10. Adjustment Provisions. In the event that the Committee
shall determine that any dividend or other distribution (whether in the form of
cash, Shares, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, spin-off, combination, repurchase,
or share exchange, or other similar corporate transaction or event, affects the
Shares such that an adjustment is determined by the Committee to be appropriate
in order to prevent dilution or enlargement of the rights of Participants under
the Plan, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and kind of Shares which may thereafter be
issued in connection with Awards (ii) the number and kind of Shares issued or
issuable in respect of outstanding Awards, and (iii) the exercise price relating
to any Award or, if deemed appropriate, make provision for a cash payment with
respect to any outstanding Award; provided, however, in each case, that, with
respect to Incentive Stock Options, no such adjustment shall be authorized to
the extent that such authority would cause the Plan to violate Section 422(b)(1)
of the Code. In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events (including, without limitation, events described
in the preceding sentence) affecting the Company or any Subsidiary or the
financial statements of the Company or any Subsidiary, or in response to changes
in applicable laws, regulations, or accounting principles.
14
<PAGE>
SECTION 11. Changes to the Plan and Awards.
11.01 Termination or Amendment of the Plan. Both the Board and the
Committee are authorized to amend, alter, suspend, discontinue or terminate the
Plan without the consent of shareholders or Participants, except that any such
amendment, alteration, suspension, discontinuation, or termination shall be
subject to the approval of the Company's shareholders within one year after such
Board or Committee action if such shareholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Shares may be listed or quoted, or if
the Board or the Committee in its discretion determines that obtaining such
shareholder approval is for any reason advisable; provided, however, (i) that no
such termination or amendment shall adversely affect or impair any then
outstanding Option or related agreement without the consent of the Participant
holding such Option or related agreement; and (ii) that no such amendment which
(a) increases the maximum number of Shares subject to this Plan, (b) materially
increases the benefits accruing to Participants, or (c) materially modifies the
requirements as to eligibility for participation in the Plan may be made without
obtaining, or being conditioned upon, stockholder approval.
11.02 Changes to Awards. The Committee may waive any conditions or
rights under, or amend, alter, suspend, discontinue, or terminate, any Award
theretofore granted and any Award Agreement relating thereto; provided, however,
that, without the consent of an affected Participant, no such amendment,
alteration, suspension, discontinuation, or termination of any Award may impair
the rights of such Participant under such Award.
SECTION 12. General Provisions.
12.01 No Rights to Awards. No Participant or employee shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants and employees.
12.02 No Shareholder Rights. No Award shall confer on any Participant
any of the rights of a shareholder of the Company unless and until Shares are
duly issued or transferred to the Participant in accordance with the terms of
the Award.
12.03 Tax Withholding. The Company or any Subsidiary is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares, or any payroll or other payment
to a Participant, amounts of withholding and other taxes due with respect
thereto, its exercise, or any payment thereunder, and to take such other action
as the Committee may deem necessary or advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax liabilities relating to any Award. This authority shall include
authority to withhold or receive Shares or other property and to make cash
payments in respect thereof in satisfaction of Participant's tax obligations.
12.04 No Right to Employment. Nothing contained in the Plan or any
Award Agreement shall confer, and no grant of an Award shall be construed as
conferring, upon any employee any right to continue in the employ of the Company
or any Subsidiary or to interfere in any way with the right of the Company or
any Subsidiary to terminate his employment at any time or increase or decrease
his compensation from the rate in existence at the time of granting of an Award.
15
<PAGE>
12.05 Termination of Employment. If the employment of a Participant by
the Company or a Subsidiary terminates for any reason, all unexercised Awards
may be exercisable or paid only in accordance with rules established by the
Committee. These rules may provide, as the Committee in its sole discretion may
deem appropriate, for the expiration, forfeiture, continuation, or acceleration
of the vesting, except as may be provided in an Award Agreement, of all or part
of the Awards.
12.06 Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Participant any rights that are greater than those of
a general creditor of the Company; provided, however, that the Committee may
authorize the creation of trusts or make other arrangements to meet the
Company's obligations under the Plan to deliver cash, Shares, other Awards, or
other property pursuant to any award, which trusts or other arrangements shall
be consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.
12.07 Other Compensatory Arrangements. The Company or any Subsidiary
shall be permitted to adopt other or additional compensation arrangements (which
may include arrangements which relate to Awards), and such arrangements may be
either generally applicable or applicable only in specific cases.
12.08 Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
12.09 Governing Law. The validity, construction, and effect of the
Plan, any rules and regulations relating to the Plan, and any Award Agreement
shall be determined in accordance with the laws of the State of Florida, without
giving effect to principles of conflicts of laws, and applicable federal law.
12.10 Duration of the Plan. This Plan shall terminate ten (10) years
from the effective date hereof, unless terminated earlier pursuant to Section
11.01.
12.11 No Obligations to Exercise Options. The granting of an Option
shall impose no obligation upon a Participant to exercise the Option.
16
<PAGE>
SECTION 13. Effective Date. The Plan shall become effective as of
January 1, 1999; provided, however, that, within one year of such date, the Plan
shall have been approved by the affirmative votes of the holders of a majority
of the total votes eligible to be cast at a legal meeting of the Company
shareholders, or any adjournment thereof or by written consent of the holders of
a majority of the Shares entitled to vote. Any Awards granted under the Plan
prior to such approval of shareholders shall be effective when granted (unless
with respect to any Award, the Committee specifies otherwise at the time of
grant), but no such Award may be exercised or settled, no restrictions relating
to any Award may lapse, and no Shares may be issued under the plan prior to such
shareholder approval, and, if shareholders fail to approve the Plan as specified
hereunder, any previously granted shall be forfeited and canceled.
17
EXHIBIT 1
CERTIFICATE OF DOMESTICATION
of
GUARDIAN INTERNATIONAL, INC.
The undersigned, _____________________________, _______________________________,
(Name) (Title)
of Guardian International, Inc., (the "Corporation"), a foreign corporation, in
accordance with Florida Statutes, section 607.1801 does hereby certify that:
1. The date on which Corporation was first incorporated was October 30,
1986;
2. The jurisdiction where the Corporation was first incorporated was
Nevada;
3. The name of the Corporation immediately prior to the filing of this
Certificate of Domestication was Guardian International, Inc.;
4. The name of the Corporation, as set forth in its Articles of
Incorporation, to be filed pursuant to Sections 607.0202 and 607.0401
with this Certificate of Domestication is Guardian International,
Inc.; and
5. The jurisdiction that constituted the seat, siege, social principal
place of business or central administration of the Corporation, or any
other equivalent thereto under applicable law immediately prior to the
filing of the Certificate of Domestication was Nevada.
I am ________________________, of ______________________________________________
and am authorized to sign this Certificate of Domestication on behalf of the
Corporation and have done so this ____ day of June, 1999.
------------------------------------------------
(Authorized Signature)
EXHIBIT 2
ARTICLES OF INCORPORATION
OF
GUARDIAN INTERNATIONAL, INC.
(a Florida corporation)
ARTICLE I
Name of Corporation
The name of the corporation is Guardian International, Inc. (the "Corporation")
ARTICLE II
Address of Corporation
The principal place of business and mailing address of the Corporation
is:
3880 North 28th Terrace
Hollywood, Florida 33020
ARTICLE III
Capital Stock
Section 1. Total Authorized Shares
-----------------------
The amount of the total authorized capital stock of the Corporation is
131,000,000 shares, consisting of (i) 100,000,000 shares of `Class A Voting
Common Stock', par value $.001 per share; (ii) 1,000,000 shares of `Class B
Nonvoting Common Stock', par value $.001 per share; and (iii) 30,000,000 shares
of Preferred Stock, par value $.001 per share.
Section 2. Class B Common Stock
--------------------
Except as otherwise provided herein all shares of Class A
Voting Common Stock and Class B Nonvoting Common Stock will be identical and
will entitle the holders thereof to the same rights and privileges.
(a) Voting Rights. The holders of Class A Voting Common Stock
will be entitled to one (1) vote per share on all matters to be voted on by the
Corporation's stockholders, and except as otherwise required by law, the holders
of Class B Nonvoting Common Stock will have no right to vote their shares of
Class B Nonvoting Common Stock on any matters to be voted on by the
Corporation's stockholders.
<PAGE>
(b) Dividends. When and as dividends are declared thereon,
whether payable in cash, property or securities of the Corporation, the holders
of Class A Voting Common Stock and the holders of Class B Nonvoting Common Stock
will be entitled to share ratably according to the number of shares of Class A
Voting Common Stock or Class B Nonvoting Common Stock held by them, in such
dividends; provided, that if dividends are declared which are payable in shares
of Class A Voting Common Stock or Class B Nonvoting Common Stock, dividends will
be declared which are payable at the same rate on both classes of common stock,
and the dividends payable in shares of Class A Voting Common Stock to holders of
Class A Voting Common Stock, and the dividends payable in shares of Class B
Nonvoting Common Stock will be payable to the holders of Class B Nonvoting
Common Stock.
(c) Liquidation Rights. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of Class A Voting Common Stock and Class B Nonvoting Common Stock
shall be entitled to share ratably, according to the number of shares of Class A
Voting Common Stock or Class B Nonvoting Common Stock held by them, in the
remaining assets of the Corporation available for distribution to its
stockholders.
(d) Conversion of Class B Nonvoting Common Stock.
--------------------------------------------
i. At any time and from time to time, each record holder of
Class B Nonvoting Common Stock will be entitled to convert any and all of the
shares of such holder's Class B Nonvoting Common Stock into the same number of
shares of Class A Voting Common Stock at holder's election, provided, that each
holder of Class B Nonvoting Common Stock shall only be entitled to convert any
share or shares of Class B Nonvoting Common Stock to the extent that after
giving effect to such conversion such holder or its affiliates shall not
directly or indirectly, own, control or have power to vote a greater quantity of
securities of any kind issued by the Corporation than such holder and its
affiliates are permitted to own, control or have power to vote under any law or
under any regulation, rule or other requirement of any governmental authority at
any time applicable to such holder and its affiliates.
ii. Each conversion of shares of Class B Nonvoting Common
Stock into shares of Class A Voting Common Stock will be effected by the
surrender of the certificate or certificates representing the shares to be
converted at the principal office of the Corporation at any time during normal
business hours, together with a written notice by the holder of such Class B
Nonvoting Common Stock stating that such holder desires to convert the shares,
or a stated number of the shares, of Class B Nonvoting Common Stock represented
by such certificate or certificates into Class A Voting Common Stock and a
written undertaking that upon such conversion such holder and its affiliates
will not directly or indirectly own, control or have the power to vote a greater
quantity of securities of any kind issued by the Corporation than such holders
and its affiliates are permitted to own, control or have the power to vote under
any applicable law, regulation, rule or other governmental requirement. Such
conversion will be deemed to have been effected as of the close of business on
the date on which certificate or certificates have been surrendered and such
notice has been received, and at such time the rights of the holder of the
converted Class B
2
<PAGE>
Nonvoting Common Stock as such holder will cease and the person or persons in
whose name or names the certificate or certificates for shares of Class A Voting
Common Stock are to be issued upon such conversion will be deemed to have become
the holder or holders of record of the shares of Class A Voting Common Stock
represented thereby.
iii. Promptly after such surrender and the receipt of such
written notice, the Corporation will issue and deliver in accordance with the
surrendering holder's instructions (x) the certificate or certificates for the
Class A Voting Common Stock issuable upon such conversion and (y) a certificate
representing any Class B Nonvoting Common Stock which was represented by the
certificate or certificates delivered to the Corporation in connection with such
conversion but which was not converted.
iv. If the Corporation in any manner subdivides or combines
the outstanding shares of one class of either Class A Voting Common Stock or
Class B Nonvoting Common Stock, the outstanding shares of the other class will
be proportionately subdivided or combined.
v. In the case of, and as a condition to, any capital
reorganization of, or any reclassification of the capital stock of, the
Corporation (other than a subdivision or combination of shares of Class A Voting
Common Stock or Class B Nonvoting Common Stock into a greater or lesser number
of shares [whether with or without par value] or a change in the par value of
Class A Voting Common Stock or Class B Nonvoting Common Stock or from par value
to no par value) or in the case of, and as a condition to, the consolidation or
merger of the Corporation with or into another corporation (other than a merger
in which the Corporation is the continuing corporation and which does not result
in any reclassification of outstanding shares of Class A Voting Common Stock or
Class B Nonvoting Common Stock), each share of Class B Nonvoting Common Stock
shall be convertible into the number of shares of stock or other securities or
property receivable upon such reorganization, reclassification, consolidation or
merger by a holder of the number of shares of Class A Voting Common Stock of the
Corporation into which such shares of Class B Nonvoting Common Stock were
convertible immediately prior to such reorganization, reclassification,
consolidation or merger; and, in any such case, appropriate adjustment shall be
made in the application of the provisions set forth in this paragraph with
respect to the rights and interests thereafter of the holders of Class B
Nonvoting Common Stock to the end that the provisions set forth in this
paragraph (including provisions with respect to the conversion rate) shall
thereafter be applicable, as nearly as they reasonably may be, in relation to
any shares of stock or other securities or property thereafter deliverable upon
the conversion of the shares of Class B Nonvoting Common Stock.
vi. The shares of Class B Nonvoting Common Stock which are
converted into shares of Class A Voting Common Stock as provided herein shall
not be reissued.
vii. The Corporation will at all times reserve and keep
available out of its authorized but unissued shares of Class A Voting Common
Stock or its treasury shares, solely for the purpose of issue upon conversion of
the Class B Nonvoting Common Stock as provided above,
3
<PAGE>
such number of Class A Voting Common Stock as shall then be issuable upon the
conversion of all then outstanding shares of Class B Nonvoting Common Stock
(assuming that all such shares of Class B Nonvoting Common Stock are held by
persons entitled to convert such shares into Class A Voting Common Stock).
viii. The issuances of certificates for Class A Voting Common
Stock upon the conversion of Class B Nonvoting Common Stock will be made without
charge to the holders of such shares for any issuance tax in respect thereof or
other cost incurred by the Corporation in connection with such conversion and
the related issuance of Class A Voting Common Stock. The Corporation will not
close its books against the transfer of Class B Nonvoting Common Stock or Class
A Voting Common Stock issued or issuable upon the conversion of Class B
Nonvoting Common Stock in any manner which would interfere with the timely
conversion of Class B Nonvoting Common Stock.
Section 3. Preferred Stock
(a) Shares of Preferred Stock may be issued from time to time
in one or more series as may from time to time be determined by the Board of
Directors, each of said series to be distinctly designated. All shares of any
one series of Preferred Stock shall be alike in every particular, except that
there may be different dates from which dividends, if any, thereon shall be
cumulative, if made cumulative. The voting powers and the preferences and
relative, participating, optional and other special rights of each such series,
and the qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding; and the Board of
Directors of the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any shares of a
particular series of Preferred Stock, the voting powers and the designation,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
i. Designation and Number. The distinctive designation of, and
the number of shares of Preferred Stock which shall constitute such series,
which number may be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action by the Board of Directors;
ii. Dividends. The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of such series shall
be paid, the extent of the preference or relation, if any, of such dividends to
the dividends payable on any other class or classes, or series of the same or
other classes of stock and whether such dividends shall be cumulative or
noncumulative;
iii. Conversion Privileges. The right, if any, of the holders
of Preferred Stock of such series to convert the same into or exchange the same
for, shares of any other class or
4
<PAGE>
classes, or of any series of the same or any other class or classes of stock of
the Corporation and the terms and conditions of such conversion or exchange;
iv. Redemption. Whether or not Preferred Stock of such series
shall be subject to redemption, and the redemption price or prices and the time
or times at which, and the terms and conditions on which, Preferred Stock of
such series may be redeemed;
v. Liquidation. The rights, if any, of the holders of
Preferred Stock of such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets, dissolution or winding
up, of the Corporation;
vi. Sinking Fund Requirements. The terms of the sinking fund
or redemption or purchase account, if any, to be provided for the Preferred
Stock of such series; and
vii. Voting Rights. The voting powers, if any, of the holders,
of such series of Preferred Stock which may, without limiting the generality of
the foregoing, include the right, voting as a series or by itself or together
with other series of Preferred Stock or all series of Preferred Stock as a
class, to elect one or more directors of the Corporation if there shall have
been a default in the payment of dividends on any one or more series of
Preferred Stock or under such other circumstances and on such conditions as the
Board of Directors may determine.
(b) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the powers, preferences and rights of each other
series of Preferred Stock shall, in each case, be as fixed from time to time by
the Board of Directors in the resolution or resolutions adopted pursuant to
authority granted in paragraph 3(a) of this Article FOURTH and the consent, by
class or series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be required for
the issuance by the Board of Directors of any other series of Preferred Stock
whether or not the powers, preferences and rights of such other series shall be
fixed by the Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution or
resolutions as to any series of Preferred Stock adopted pursuant to paragraph
3(a) of this Article FOURTH that the consent of the holders of a majority (or
such greater proportion as shall be therein fixed) of the outstanding shares of
such series voting therein shall be required for the issuance of any or all
other series of Preferred Stock.
4. Subject to the provisions of paragraphs 2 and 3, shares of Common
Stock or any series of Preferred Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
5. The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased from time
to time by the affirmative vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon;
5
<PAGE>
That the number of shares of the Corporation outstanding and entitled
to vote on an amendment to the Articles of Incorporation is 6,496,804 shares;
that the said change(s) and amendment have been consented to and approved by a
majority of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
ARTICLE IV
Initial Registered Agent and Office Address
-------------------------------------------
The street address of the registered office of the Corporation is 3880
North 28th Terrace Hollywood, Florida 33020 and the name of the registered
agent of the Corporation at that address is ______________.
ARTICLE V
Incorporator
------------
The name and address of the incorporator to these Articles of
Incorporation are:
-----------------------
3880 North 28th Terrace
Hollywood, Florida 33020
ARTICLE VI
Board of Directors
------------------
The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time, in accordance with the Bylaws of the
Corporation, but shall never be less than one. The manner of election of
directors shall be regulated by the Bylaws.
ARTICLE VII
Indemnification of Directors and Officers
Section 1. Indemnification.
(a) Except as provided below, the Corporation (and any successor to the
Corporation by merger or otherwise) shall, and does hereby, indemnify, to the
fullest extent permitted or authorized by current or future legislation or
current or future judicial or administrative decisions (but, in the case of any
such future legislation or decisions, only to the extent that it permits the
Corporation to provide broader indemnification rights than permitted prior to
such legislation or decision), each officer and director of the Corporation
(including the heirs, executors, administrators and estate of the person) who
was or is a party, or is threatened to be made a party, or was or is a witness,
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative
6
<PAGE>
or investigative and any appeal therefrom (collectively, a "Proceeding"),
against all liability (which for purposes of this Article includes all
judgments, settlements, penalties and fines) and costs, charges, and expenses
(including attorneys' fees) asserted against him or incurred by him by reason of
the fact that the person is or was a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including serving as a fiduciary of an employee benefit plan).
(b) Notwithstanding the foregoing, except with respect to the
indemnification specified in the third sentence of Section 3 of this Article,
(i) the Corporation shall indemnify a person entitled to indemnification under
Section 1(a) in connection with a Proceeding (or part thereof) initiated by an
indemnified person only if authorization for the Proceeding (or part thereof)
was not denied by the Board of Directors of the Corporation within 60 days after
receipt of notice thereof from the indemnified person and (ii) the Corporation
shall not be required to indemnify or advance costs to any director or officer
(or such person's heirs, executors, administrators or estate) in an action in
which such person is an adverse party to the Corporation.
Section 2. Advance of Costs, Charges and Expenses. Costs, charges and
expenses (including attorneys' fees) incurred by a person referred to in Section
1(a) of this Article in defending a Proceeding may be paid by the Corporation to
the fullest extent permitted or authorized by current or future legislation or
current or future judicial or administrative decisions (but, in the case of any
future legislation or decisions, only to the extent that it permits the
Corporation to provide broader rights to advance costs, charges and expenses
than permitted prior to the legislation or decisions) in advance of the final
disposition of the Proceeding, upon receipt of an undertaking reasonably
satisfactory to the Board of Directors (the "Undertaking") by or on behalf of
the indemnified person to repay all amounts so advanced if it is ultimately
determined that such person is not entitled to be indemnified by the Corporation
as authorized in this Article; provided that, in connection with a Proceeding
(or part thereof) initiated by such person (except a Proceeding authorized by
Section 3 of this Article), the Corporation shall pay the costs, charges and
expenses in advance of the final disposition of the Proceeding only if
authorization for the Proceeding (or part thereof) was not denied by the Board
of Directors of the Corporation within 60 days after receipt of a request for
advancement accompanied by an Undertaking. A person to whom costs, charges and
expenses are advanced pursuant to this Article shall not be obligated to repay
pursuant to the Undertaking until the final determination of (a) the pending
Proceeding in a court of competent jurisdiction concerning the right of that
person to be indemnified or (b) the obligation of the person to repay pursuant
to the Undertaking. The Board of Directors may, upon approval of the indemnified
person, authorize the Corporation's counsel to represent the person in any
action, suit or proceeding, whether or not the Corporation is a party to the
action, suit or proceeding.
Section 3. Procedure For Indemnification. Any indemnification or
advance under this Article shall be made promptly, and in any event within 60
days after delivery of the written request of the director or officer. The right
to indemnification or advances as granted by this Article shall be enforceable
by the director or officer in any court of competent jurisdiction if the
Corporation
7
<PAGE>
denies the request under this Article in whole or in part, or if no disposition
of the request is made within the 60-day period after delivery of the request.
The requesting person's costs and expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in part, in
any action shall also be indemnified by the Corporation. It shall be a defense
available to the Corporation to assert in the action that indemnification is
prohibited by law or that the claimant has not met the standard of conduct, if
any, required by current or future legislation or by current or future judicial
or administrative decisions for indemnification (but, in the case of future
legislation or decision, only to the extent that the legislation does not impose
a more stringent standard of conduct than permitted prior to the legislation or
decisions). The burden of proving this defense shall be on the Corporation.
Neither the failure of the Corporation to have made a determination (prior to
the commencement of the action) that indemnification of the claimant is proper
in the circumstances because he has met the applicable standard of conduct, if
any, nor the fact that there has been an actual determination by the Corporation
that the claimant has not met the applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
Section 4. Indemnification Not Exclusive; Survival of Indemnification;
Other Indemnification. The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which those indemnified may now or
hereafter be entitled under any statute, agreement, vote of stockholders or
disinterested directors or recommendation of counsel or otherwise, both as to
actions in the person's capacity as an officer or director and as to actions in
another capacity while still an officer or director, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the estate, heirs, beneficiaries, executors and administrators of such a
person. All rights to indemnification under this Article shall be deemed to be a
contract between the Corporation and each director and officer of the
Corporation described in Section 1 of this Article who serves or served as such
at any time while this Article is in effect. Any repeal or modification of this
Article or any repeal or modification of relevant provisions of the Florida
Business Corporation Act or any other applicable laws shall not in any way
diminish the rights to indemnification of such director or officer or the
obligations of the Corporation arising hereunder for claims relating to matters
occurring prior to the repeal or modification. The Board of Directors of the
Corporation shall have the authority, by resolution, to provide for
indemnification of agents of the Corporation and for such other indemnification
of the directors and officers of the Corporation as it deems appropriate.
Section 5. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (including serving as a fiduciary of an
employee benefit plan), against any liability asserted against him and incurred
by him in any such capacity or arising out of his status as such, whether or not
the Corporation would have the power to indemnify him against such liability
under the provisions of this Article or the applicable provisions of the Florida
Business Corporation Act.
8
<PAGE>
Section 6. Savings Clause. If this Article or any portion is
invalidated or held to be unenforceable on any ground by a court of competent
jurisdiction, the Corporation shall nevertheless indemnify each director and
officer of the Corporation described in Section 1 of this Article to the fullest
extent permitted by all applicable portions of this Article that have not been
invalidated or adjudicated unenforceable, and as permitted by applicable law.
The incorporator executed these Articles of Incorporation the _____day
of _______, 1999.
______________________
9
<PAGE>
CERTIFICATE DESIGNATING THE NAME AND OFFICE ADDRESS
OF REGISTERED AGENT UPON WHOM PROCESS MAY BE SERVED
Name of Corporation: Guardian International, Inc.
Name and Office
Address of
Registered Agent: __________________
3880 North 28th Terrace
Hollywood, Florida 33020
I agree to act as initial registered agent to accept service of process
for the corporation named above at the place designated in this certificate. I
agree to comply with Section 607.0505, Florida Statutes, and all other statutes
relating to the proper and complete performance of my duties. I am familiar with
and accept the obligations of my position as registered agent.
__________________________
Date: ______________, 1999
10
FILED OCTOBER 30, 1986
Nevada Secretary of State
No. 7659-86
ARTICLES OF INCORPORATION
OF
BURNINGHAM ENTERPRISES, INC.
*****
FIRST, The name of the corporation is BURNINGHAM ENTERPRISES, INC.
SECOND, its principal office in the State of Nevada is located in One
East First Street, Reno, Washoe County, Nevada 89501. The name and address of
its resident agent is The Corporation Trust Company of Nevada, One East First
Street, Reno, Nevada 89501.
To hold, purchase and convey real and personal estate and to mortgage
or lease any such real and personal estate with its franchises and to take the
same by devise or bequest.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, build, hold, sell, assign, lease, grant licenses in respect
of, mortgage, or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trade-marks and trade names, relating to
or useful in connection with any business of this corporation.
To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge
or otherwise dispose of the shares of the capital stock of or any bonds,
securities or evidences of the indebtedness created by any other corporation or
corporations of this state, or any other state or government,
<PAGE>
and, while owner of such stock, bonds, securities or evidences of indebtedness,
to exercise all the rights, powers and privileges of ownership, including the
right to vote, if any.
To borrow money and contract debts when necessary for the transaction
of its business, or for the exercise of its corporate rights, privileges or
franchises, or for any other lawful purpose of its incorporation; to issue
bonds, promissory notes, bills of exchange, debentures, and other obligations
and evidences of indebtedness, payable at specified time or times, or payable
upon the happening of a specified event or events, whether secured by mortgage,
pledge or otherwise, or unsecured, for money borrowed, or in payment for
property purchased, or acquired, or for any other lawful objects.
To purchase, hold, sell and transfer shares of its own capital stock,
and use therefor its capital, capital surplus, surplus, or other property or
funds; provided it shall not use its funds or property for the purchase of its
own shares of capital stock when such use would cause any impairment of its
capital; and provided further, that shares of its own capital stock belonging to
it shall not be voted upon, directly or indirectly, nor counted as outstanding,
for the purpose of computing any stockholders' quorum or vote.
To conduct business, have one or more offices, and hold, purchase,
mortgage and convey real and personal property in this state, and in any of the
several states, territories, possessions and dependencies of the United States,
the District of Columbia, and in any foreign countries.
To do all and everything necessary and proper for the accomplishment of
the objects hereinbefore enumerated or necessary or incidental to the
2
<PAGE>
protection and benefit of the corporation, and, in general, to carry on any
lawful business necessary or incidental to the attainment of the objects of the
corporation, whether or not such business is similar in nature to the objects
hereinbefore set forth.
The object and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in no wise limited or restricted by
reference to, or inference from, the terms of any other clause in these articles
of incorporation, but the objects and purposes specified in each of the
foregoing clauses of this article shall be regarded as independent objects and
purposes.
FOURTH. The amount of the total authorized capital stock of the
corporation is One Hundred Thousand Dollars ($100,000) consisting of One Hundred
Million (100,000,000) shares of stock of the par value of One Hundredth of a
Cent Dollars ($.001) each.
FIFTH. The governing board of this corporation shall be known as
directors, and the number of directors may from time to time be increased or
decreased in such manner or shall be provided by the by-laws of this
corporation, provided that the number of directors shall not be reduced to less
than three (3), except that in cases where all the shares of the corporation are
owned beneficially and of record by either one or two stockholders, the number
of directors may be less than three (3) but not less than the number of
stockholders.
The names and post-office addresses of the first board of directors,
which shall be three in number, are as follows:
NAME POST-OFFICE ADDRESS
---- -------------------
Brent Jay Burningham 1164 W. 500 N.
Salt Lake City, UT 84116
Gary Van Vracken 641 N. 200 W.
Salt Lake City, UT 84103
3
<PAGE>
Bret Van Leevwen 560 W. Fine Drive
Salt Lake City, UT 84115
SIXTH. The capital stock, after the amount of the subscription price,
or par value, has been paid in shall not be subject to assessment to pay the
debts of the corporation.
SEVENTH. The name and post-office address of each of the incorporators
signing the articles of incorporation are as follows:
NAME POST-OFFICE ADDRESS
---- -------------------
Keyoumara Saced 1200 Broadway, Ste. 1211
Denver, CO 80290
Carol M. Carpenter 1200 Broadway, Ste. 1211
Denver, CO 80290
Corinne M. Lude 1200 Broadway, Ste. 1211
Denver, CO 80290
EIGHTH. The corporation is to have perpetual existence.
NINTH. In furtherance, and not in limitation of the powers conferred
by statute, the board of directors is expressly authorized:
Subject to the by-laws, if any, adopted by the stockholders, to make,
alter or amend the by-laws of the corporation.
To fix the amount to be reserved as working capital over and above its
capital stock paid in, to authorize and cause to be executed mortgages and liens
upon the real and personal property of this corporation.
By resolution passed by a majority of the whole board, to designate one
(1) or more committees, each committee to consist of one (1) or more of the
directors of the corporation,
4
<PAGE>
which, to the extent provided in the resolution or in the by-laws of the
corporation, shall have and may exercise the powers of the board of directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may be stated in
the by-laws of the corporation or as may be determined from time to time by
resolution adopted by the board of directors.
When and as authorized by the affirmative vote of stockholders holding
stock entitling them to exercise at least a majority of the voting power given
at a stockholders' meeting called for that purpose, or when authorized by the
written consent of the holders of at least a majority of the voting stock issued
and outstanding, the board of directors shall have power and authority at any
meeting to sell, lease or exchange all of the property and assets of the
corporation, including its good will and its corporate franchises, upon such
terms and conditions as its board of directors deem expedient and for the best
interests of the corporation.
TENTH, meetings of stockholders may be held outside the State of
Nevada, if the by-laws so provide. The books of the corporation may be kept
(subject to any provisions contained in the statutes) outside the State of
Nevada at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
ELEVENTH. This corporation reserves the right to amend, alter, change
or repeal any provision contained in the articles of incorporation, in the
manner now or hereafter prescribed by statute, or by the articles of
incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
5
<PAGE>
TWELFTH: No shareholder shall be entitled as a matter of right to
subscribe for or receive additional shares of any class of stock of the
corporation, whether now or hereafter authorized, or any bonds, debentures or
other securities convertible into stock, but such additional shares of stock or
other securities convertible into stock may be issued or disposed of by the
board of directors to such persons and on such persons and on such terms as in
its discretion it shall deem advisable. WE, THE UNDERSIGNED, being each of the
incorporators hereinbefore named, for the purpose of forming a corporation
pursuant to the General Corporation Law of the State of Nevada, do make and file
these articles of incorporation, hereby declaring and certifying that the facts
herein stated are true, and accordingly have hereunto set our hands this 29th
day of October, 1986.
/s/
---------------------------------
Keyoumara Saced
/s/
----------------------------------
Carol M. Carpenter
/s/
----------------------------------
Corinne M. Lude
6
<PAGE>
STATE OF Colorado
COUNTY OF Denver
On this 29th day of October, 1986, before me, a Notary Public,
personally appeared Keyoumara Saced, Carol M. Carpenter and Corinne M. Lude, who
severally acknowledged that they executed the above instrument.
/s/
--------------------------------
Notary Public
Virginia M. Omstead
My commission expires: 6/30/89
7
<PAGE>
FILED FEBRUARY 25, 1988
Nevada Secretary of State
No. 7659-86
CERTIFICATE OF AMENDMENT
to the
ARTICLES OF INCORPORATION
of
BURNINGHAM ENTERPRISES, INC.
Pursuant to the provisions of Article 78.390 of the Nevada Revised
Statutes, the undersigned Corporation adopts the following Articles of Amendment
to its Articles of Incorporation.
FIRST: The name of the Corporation is BURNINGHAM ENTERPRISES, INC.
SECOND: That at a meeting of the Board of Directors of Burningham
Enterprises, Inc., resolutions were adopted setting forth a proposed amended to
the Articles of Incorporation of the Company declaring said amendment advisable
and calling a meeting of the stockholders of the Company for consideration
thereof.
THIRD: The following Amendment to the Articles of Incorporation of
Burningham Enterprises, Inc. was duly adopted by the shareholders of the
corporation at a meeting held February 23, 1988, in the manner prescribed by the
laws of the State of Nevada, to-wit:
ARTICLE I - NAME
The name of this corporation is EVEREST FUNDING CORPORATION
FOURTH: The number of shares of the corporation outstanding at the time
of the adoption of such amendments was 6,010,000 and the number entitled to vote
thereon was 6,010,000.
FIFTH: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows, to-wit:
<PAGE>
CLASS NUMBER OF SHARES
Common 6,010,000
SIXTH: The number of shares voted for such amendments was 5,420,000,
with none opposing and none
abstaining.
SEVENTH: These amendments do not provide for any exchange,
reclassification or cancellation of issued shares.
EIGHTH: These amendments do not effect a change in the stated capital
of the corporation as set forth
above.
IN WITNESS WHEREOF, the undersigned President and Secretary having been
thereunto duly authorized have executed the foregoing Articles of Amendment for
the corporation this 23rd day of February, 1988.
BURNINGHAM ENTERPRISES, INC.
/s/
By________________________________
President
Attest:
/s/
- ----------------------------------
Secretary
State of Utah )
) ss.
County of Salt Lake )
On the 23rd day of February, 1988, personally appeared before me Brent
Burningham, who acknowledged to me that (s)he is the President of Burningham
Enterprises, Inc. who signed the foregoing instrument and that (s)he has read
the foregoing instrument and knows the content thereof.
2
<PAGE>
SUBSCRIBED AND SWORN TO before me this 23rd day of February, 1988.
/s/
------------------------------
Notary Public
Residing at:
Salt Lake City, Utah
My Commission Expires:
2-17-1992
State of Utah )
) ss.
County of Salt Lake )
On the 23rd day of February, 1988, personally appeared before me J.
Todd Martin, who acknowledged to me that (s)he is the Secretary of Burningham
Enterprises, Inc. who signed the foregoing instrument and that (s)he has read
the foregoing instrument and knows the content thereof.
SUBSCRIBED AND SWORN TO before me this 23rd day of February, 1988.
/s/
------------------------------
Notary Public
Residing at:
Salt Lake City, Utah
My Commission Expires:
2-17-1992
3
<PAGE>
FILED NOVEMBER 27, 1995
Nevada Secretary of State
7659-86
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
Everest Funding Corporation
Name of Corporation
We, the undersigned, Robert Knight , President and Steven A. Sanders,
Secretary of Everest Funding Corporation, do hereby certify that the Board of
Directors of said corporation at a meeting duly convened held October 19, 1995,
adopted a resolution to amend the original Articles of Incorporation
RESOLVED, that the name of the corporation be changed to Everest
Security Systems Corporation
The number of shares outstanding and entitled to vote on an amendment of the
Articles of Incorporation is 1,524,902, that the said changes and amendment have
been consented to and approved by a majority of stockholders to and at least a
majority of each class of stock outstanding and entitled to vote thereon.
/s/
-----------------------------------------------------
President ID#2138965
/s/
-----------------------------------------------------
Secretary
2
<PAGE>
ACKNOWLEDGMENT
[STATE OF] British Columbia
[COUNTY OF]
On October 24, 1995, personally appeared before me, a Notary Public, the above
individuals, acknowledged he/she/they executed the above instrument on behalf of
said Corporation.
/s/
-------------------------------------
NOTARY PUBLIC
PANJAJ SHOH
Notary Public
211-3030 Lincoln Avenue
Coquition , B.C. V 3B 8B4
Tel: 941-7434
<PAGE>
FILED DECEMBER 18, 1996
Nevada Secretary of State
C -7659-86
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
GUARDIAN INTERNATIONAL, INC.
We the undersigned, Richard Ginsburg, President, and Sheilah Ginsburg,
Secretary, of Guardian International, Inc., a Nevada corporation (the
"Company"), do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 14th day of November, 1996, adopted a resolution to amend
the original articles as follows:
RESOLVED, Article First is deleted in its entirety and the following is
inserted in lieu thereof:
"FIRST. The name of the corporation is Guardian International, Inc."
RESOLVED, Article Fourth is deleted in its entirety and the following
is inserted in lieu thereof.
"FOURTH. The amount of the total authorized capital stock of the
Company is 100,485,035 shares, consisting of: (i) 100,000,000 shares of 'Class A
Voting Common Stock,' par value $0.001 per share; and (ii) 484,035 shares of
'Class B Nonvoting Common Stock,' par value $0.001 per share.
Except as otherwise provided herein, all shares of Class A
Voting Common Stock and Class B Nonvoting Common Stock will be identical and
will entitle the holders thereof to the same rights and privileges.
1. Voting Rights. The holders of Class A Voting Common Stock will be
entitled to one (1) vote per share on all matters to be voted on by the
corporation's stockholders, and except as otherwise required by law, the holders
of Class B Nonvoting Common Stock will have no right to vote their shares of
Class B Nonvoting Common Stock on any matters to be voted on by the
corporation's stockholders.
<PAGE>
2. Dividends. When and as dividends are declared thereon, whether
payable in cash, property or securities of the corporation, the holders of Class
A Voting Common Stock and the holders of Class B Nonvoting Common Stock will be
entitled to share ratably according to the number of shares of Class A Voting
Common Stock or Class B Nonvoting Common Stock held by them, in such dividends;
provided, that if dividends are declared which are payable in shares of Class A
Voting Common Stock or Class B Nonvoting Common Stock, dividends will be
declared which are payable at the same rate on both classes of common stock, and
the dividends payable in shares of Class A Voting Common Stock to holders of
Class A Voting Common Stock, and the dividends payable in shares of Class B
Nonvoting Common Stock will be payable to the holders of Class B Nonvoting
Common Stock.
3. Liquidation Rights. In the event any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, the holders of
Class A Voting Common Stock and Class B Nonvoting Common Stock shall be entitled
to share ratably, according to the number of shares of Class A Voting Common
Stock or Class B Nonvoting Common Stock held by them, in the remaining assets of
the Company available for distribution to its stockholders.
4. Conversion of Class B Nonvoting Common Stock.
(a) At any time and from time to time, each record holder of
Class B Nonvoting Common Stock will be entitled to convert any and all of the
shares of such holder's Class B Nonvoting Common Stock into the same number of
shares of Class A Voting Common Stock at holder's election, provided, that each
holder of Class B Nonvoting Common Stock shall only be entitled to convert any
share or shares of Class B Nonvoting Common Stock to the extent that after
giving effect to such conversion such holder or its affiliates shall not
directly or indirectly own, control or have power to vote a greater quantity of
securities of any kind issued by the Company than such holder and its affiliates
are permitted to own, control or have power to vote under any law or under any
regulation, rule or other requirement of any governmental authority at any time
applicable to such holder and its affiliates.
(b) Each conversion of shares of Class B Nonvoting Common
Stock into shares of Class A Voting Common Stock will be effected by the
surrender of the certificate or certificates representing the shares to be
converted at the principal office of the Company at any time during normal
business hours, together with a written notice by the holder of such Class B
Nonvoting Common Stock stating that such holder desires to convert the shares,
or a stated number of the shares, of Class B Nonvoting Common Stock represented
by such certificate or certificates into Class A Voting Common Stock and a
written undertaking that upon such conversion such holder and its affiliates
will not directly or indirectly own, control or have the power to vote a greater
quantity of securities of any kind issued by the Company than such holders and
its affiliates are permitted to own, control or have the power to vote under any
applicable law, regulation, rule or other governmental requirement. Such
conversion will be deemed to have effected as of the close of business on the
date on which certificate or certificates have been surrendered and such notice
has been received, and at such time the rights of the holder of the converted
Class B Nonvoting Common Stock as such holder will cease and the person or
persons in whose name or names the certificate or certificates for shares of
Class A Voting Common Stock are to be issued upon such conversion will be deemed
to have become the holder or holders of record the shares of Class A Voting
Common Stock represented thereby.
2
<PAGE>
(c) Promptly after such surrender and the receipt of such
written notice, the Company will issue and deliver in accordance with the
surrendering holder's instructions (i) the certificate or certificates for the
Class A Voting Common Stock issuable upon such conversion and (ii) a certificate
representing any Class B Nonvoting Common Stock which was represented by the
certificate or certificates delivered to the Company in connection with such
conversion but which was not converted.
(d) If the Company in any manner subdivides or combines the
outstanding shares of one class of either Class A Voting Common Stock or Class B
Nonvoting Common Stock, the outstanding shares of the other class will be
proportionately subdivided or combined.
(e) In the case of, and as a condition to, any capital
reorganization of, or any reclassification of the capital stock of, the Company
(other than a subdivision or combination of shares of Class A Voting Common
Stock or Class B Nonvoting Common Stock into a greater or lesser number of
shares (whether with or without par value) or a change in the par value of Class
A Voting Common Stock or Class B Nonvoting Common Stock or from par value to no
par value) or in the case of, and as a condition to, the consolidation or merger
of the Company with or into another corporation (other than a merger in which
the corporation is the continuing corporation and which does not result in any
reclassification of outstanding shares of Class A Voting Common Stock or Class B
Nonvoting Common Stock), each share of Class B Nonvoting Common Stock shall be
convertible into the number of shares of stock or other securities or property
receivable upon such reorganization, reclassification, consolidation or merger
by a holder of the number of shares of Class A Voting Common Stock of the
Company in which such shares of Class B Nonvoting Common Stock was convertible
immediately prior to such reorganization, reclassification, consolidation or
merger; and, in any such case, appropriate adjustment shall be made in the
application of the provisions set forth in this paragraph with respect to the
rights and interests thereafter of the holders of Class B Nonvoting Common Stock
to the end that the provisions set forth in this paragraph (including provisions
with respect to the conversion rate) shall thereafter be applicable, as nearly
as they reasonably may be, in relation to any shares of stock or other
securities or property thereafter deliverable upon the conversion of the shares
of Class B Nonvoting Common Stock.
(f) The shares of Class B Nonvoting Common Stock which are
converted into shares of Class A Voting Common Stock as provided herein shall
not be reissued.
(g) The Company will at all times reserve and keep available
out of its authorized but unissued shares of Class A Voting Common Stock or its
treasury shares, solely for the purpose of issue upon conversion of the Class B
Nonvoting Common Stock as provided above, such number of Class A Voting Common
Stock as shall then be issuable upon the conversion of all then outstanding
shares of Class B Nonvoting Common Stock (assuming that all such shares of Class
B Nonvoting Common Stock are held by persons entitled to convert such shares
into Class A Voting Common Stock).
<PAGE>
(h) The issuance of certificates for Class A Voting Common
Stock upon the conversion of Class B Nonvoting Common Stock will be made without
charge to the holders of such shares for any issuance tax in respect thereof or
other cost incurred by the Company in connection with such conversion and the
related issuance of Class A Voting Common Stock. The Company will not close its
books against the transfer of Class B Nonvoting Common Stock or Class A Voting
Common Stock issued or issuable upon the conversion of Class B Nonvoting Common
Stock in any manner which would interfere with the timely conversion of Class B
Nonvoting Common Stock."
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 6,453,804; that the
said change and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/
----------------------------
Richard Ginsburg, President
/s/
----------------------------
Sheilah Ginsburg, Secretary
State of Florida
County of Broward
On November 14, 1996, personally appeared before me, a Notary Public,
Richard Ginsburg and Sheilah Ginsburg, who acknowledged that they executed the
above instrument.
/s/
--------------
(Signature of Notary)
L. Marlene Crossley
Notary Public, State of Florida
Commission No. CC 570109
My Commission Exp. 08/11/2000
<PAGE>
FILED NOVEMBER 24, 1997
Nevada Secretary of State
C-7659-86
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
GUARDIAN INTERNATIONAL, INC.
We the undersigned, Richard Ginsburg, President and Chief Executive
Officer, and Sheilah Ginsburg, Secretary of Guardian International, Inc., a
Nevada corporation (the "Corporation"), do hereby certify:
That the Board of Directors of the Corporation at a meeting duly
convened, held on the 14th day of October, 1997, adopted a resolution to amend
the original articles as follows:
RESOLVED, Article FOURTH is deleted in its entirety and the following
is inserted in lieu thereof:
"FOURTH.
1. The amount of the total authorized capital stock of the Corporation
is 131,000,000 shares, consisting of: (i) 100,000,000 shares of 'Class A Voting
Common Stock,' par value $.001 per share; (ii) 1,000,000 shares of 'Class B
Nonvoting Common Stock,' par value $.001 per share; and (iii) 30,000,000 shares
of Preferred Stock, par value $.001 per share.
2. CLASS B COMMON STOCK.
Except as otherwise provided herein, all shares of Class A
Voting Common Stock and Class B Nonvoting Common Stock will be identical and
will entitle the holders thereof to the same rights and privileges.
(a) Voting Rights. The holders of Class A Voting Common Stock
will be entitled to one (1) vote per share on all matters to be voted on by the
Corporation's stockholders, and except as otherwise required by law, the holders
of Class B Nonvoting Common Stock will have no right to vote their shares of
Class B Nonvoting Common Stock on any matters to be voted on by the
Corporation's stockholders.
<PAGE>
7
(b) Dividends. When and as dividends are declared thereon,
whether payable in cash, property or securities of the corporation, the holders
of Class A Voting Common Stock and the holders of Class B Nonvoting Common Stock
will be entitled to share ratably according to the number of shares of Class A
Voting Common Stock or Class B Nonvoting Common Stock held by them, in such
dividends; provided, that if dividends are declared which are payable in shares
of Class A Voting Common Stock or Class B Nonvoting Common Stock, dividends will
be declared which are payable at the same rate on both classes of common stock,
and the dividends payable in shares of Class A Voting Common Stock to holders of
Class A Voting Common Stock, and the dividends payable in shares of Class B
Nonvoting Common Stock will be payable to the holders of Class B Nonvoting
Common Stock.
(c) Liquidation Rights. In the event any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of Class A Voting Common Stock and Class B Nonvoting Common Stock
shall be entitled to share ratably, according to the number of shares of Class A
Voting Common Stock or Class B Nonvoting Common Stock held by them, in the
remaining assets of the Corporation available for distribution to its
stockholders.
(d) Conversion of Class B Nonvoting Common Stock.
i. At any time and from time to time, each record
holder of Class B Nonvoting Common Stock will be entitled to convert any and all
of the shares of such holder's Class B Nonvoting Common Stock into the same
number of shares of Class A Voting Common Stock at holder's election, provided,
that each holder of Class B Nonvoting Common Stock shall only be entitled to
convert any share or shares of Class B Nonvoting Common Stock to the extent that
after giving effect to such conversion such holder or its affiliates shall not
directly or indirectly own, control or have power to vote a greater quantity of
securities of any kind issued by the Corporation than such holder and its
affiliates are permitted to own, control or have power to vote under any law or
under any regulation, rule or other requirement of any governmental authority at
any time applicable to such holder and its affiliates.
ii. Each conversion of shares of Class B Nonvoting
Common Stock into shares of Class A Voting Common Stock will be effected by the
surrender of the certificate or certificates representing the shares to be
converted at the principal office of the Corporation at any time during normal
business hours, together with a written notice by the holder of such Class B
Nonvoting Common Stock stating that such holder desires to convert the shares,
or a stated number of the shares, of Class B Nonvoting Common Stock represented
by such certificate or certificates into Class A Voting Common Stock and a
written undertaking that upon such conversion such holder and its affiliates
will not directly or indirectly own, control or have the power to vote a greater
quantity of securities of any kind issued by the Corporation than such holders
and its affiliates are permitted to own, control or have the power to vote under
any applicable law, regulation, rule or other governmental requirement. Such
conversion will be deemed to have effected as of the close of business on the
date on which certificate or certificates have been surrendered and such notice
has been received, and at such time the rights of the holder of the converted
Class B Nonvoting Common Stock as such holder will cease and the person or
persons in whose name or names the certificate or certificates for shares of
Class A Voting Common Stock are to be issued upon such conversion will be deemed
to have become the holder or holders of record the shares of Class A Voting
Common Stock represented thereby.
<PAGE>
iii. Promptly after such surrender and the receipt of
such written notice, the Corporation will issue and deliver in accordance with
the surrendering holder's instructions (x) the certificate or certificates for
the Class A Voting Common Stock issuable upon such conversion and (y) a
certificate representing any Class B Nonvoting Common Stock which was
represented by the certificate or certificates delivered to the Corporation in
connection with such conversion but which was not converted.
iv. If the Corporation in any manner subdivides or
combines the outstanding shares of one class of either Class A Voting Common
Stock or Class B Nonvoting Common Stock, the outstanding shares of the other
class will be proportionately subdivided or combined.
v. In the case of, and as a condition to, any capital
reorganization of, or any reclassification of the capital stock of, the
Corporation (other than a subdivision or combination of shares of Class A Voting
Common Stock or Class B Nonvoting Common Stock into a greater or lesser number
of shares (whether with or without par value) or a change in the par value of
Class A Voting Common Stock or Class B Nonvoting Common Stock or from par value
to no par value) or in the case of, and as a condition to, the consolidation or
merger of the Corporation with or into another corporation (other than a merger
in which the corporation is the continuing corporation and which does not result
in any reclassification of outstanding shares of Class A Voting Common Stock or
Class B Nonvoting Common Stock), each share of Class B Nonvoting Common Stock
shall be convertible into the number of shares of stock or other securities or
property receivable upon such reorganization, reclassification, consolidation or
merger by a holder of the number of shares of Class A Voting Common Stock of the
Corporation in which such shares of Class B Nonvoting Common Stock was
convertible immediately prior to such reorganization, reclassification,
consolidation or merger; and, in any such case, appropriate adjustment shall be
made in the application of the provisions set forth in this paragraph with
respect to the rights and interests thereafter of the holders of Class B
Nonvoting Common Stock to the end that the provisions set forth in this
paragraph (including provisions with respect to the conversion rate) shall
thereafter be applicable, as nearly as they reasonably may be, in relation to
any shares of stock or other securities or property thereafter deliverable upon
the conversion of the shares of Class B Nonvoting Common Stock.
vi. The shares of Class B Nonvoting Common Stock
which are converted into shares of Class A Voting Common Stock as provided
herein shall not be reissued.
vii. The Corporation will at all times reserve and
keep available out of its authorized but unissued shares of Class A Voting
Common Stock or its treasury shares, solely for the purpose of issue upon
conversion of the Class B Nonvoting Common Stock as provided above, such number
of Class A Voting Common Stock as shall then be issuable upon the conversion of
all then outstanding shares of Class B Nonvoting Common Stock (assuming that all
such shares of Class B Nonvoting Common Stock are held by persons entitled to
convert such shares into Class A Voting Common Stock).
<PAGE>
viii. The issuance of certificates for Class A Voting
Common Stock upon the conversion of Class B Nonvoting Common Stock will be made
without charge to the holders of such shares for any issuance tax in respect
thereof or other cost incurred by the Corporation in connection with such
conversion and the related issuance of Class A Voting Common Stock. The
Corporation will not close its books against the transfer of Class B Nonvoting
Common Stock or Class A Voting Common Stock issued or issuable upon the
conversion of Class B Nonvoting Common Stock in any manner which would interfere
with the timely conversion of Class B Nonvoting Common Stock.
3. PREFERRED STOCK.
(a) Shares of Preferred Stock may be issued from time to time
in one or more series as may from time to time be determined by the Board of
Directors, each of said series to be distinctly designated. All shares of any
one series of Preferred Stock shall be alike in every particular, except that
there may be different dates from which dividends, if any, thereon shall be
cumulative, if made cumulative. The voting powers and the preferences and
relative, participating, optional and other special rights of each such series,
and the qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding; and the Board of
Directors of the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any shares of a
particular series of Preferred Stock, the voting powers and the designation,
preferences and relative, option and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
i. Designation and Number. The distinctive
designation of, and the number of shares of Preferred Stock which shall
constitute such series, which number may be increased (except where otherwise
provided by the Board of Directors) or decreased (but not below the number of
shares thereof then outstanding) from time to time by like action by the Board
of Directors;
ii. Dividends. The rate and times at which, and the
terms and conditions on which, dividends, if any, on Preferred Stock of such
series shall be paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or series of
the same or other classes of stock and whether such dividends shall be
cumulative or noncumulative;
iii. Conversion Privileges. The right, if any, of the
holders of Preferred Stock of such series to convert the same into or exchange
the same for, shares of any other class or classes, or of any series of the same
or any other class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
<PAGE>
iv. Redemption. Whether or not Preferred Stock of
such series shall be subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed;
v. Liquidation. The rights, if any, of the holders of
Preferred Stock of such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets, dissolution or winding
up, of the Corporation;
vi. Sinking Fund Requirements. The terms of the
sinking fund or redemption or purchase account, if any, to be provided for the
Preferred Stock of such series; and
vii. Voting Rights. The voting powers, if any, of the
holders, of such series of Preferred Stock which may, without limiting the
generality of the foregoing, include the right, voting as a series or by itself
or together with other series of Preferred Stock or all series of Preferred
Stock as a class, to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any one or more series
of Preferred Stock or under such other circumstances and on such conditions as
the Board of Directors may determine.
(b) The relative powers, preferences and rights of each series
of Preferred Stock in relation to the powers, preferences and rights of each
other series of Preferred Stock shall, in each case, be as fixed from time to
time by the Board of Directors in the resolution of resolutions adopted pursuant
to authority granted in paragraph 3(a) of this Article FOURTH and the consent,
by class or series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be required for
the issuance by the Board of Directors of any other series of Preferred Stock
whether or not the powers, preferences an rights of such other series shall be
fixed by the Board of Directors as senior to, or on parity with, the powers,
preferences and rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution or
resolutions as to any series of Preferred Stock adopted pursuant to paragraph
3(a) of this Article FOURTH that the consent of the holders of a majority (or
such greater proportion as shall be therein fixed) of the outstanding shares of
such series voting therein shall be required for the issuance of any or all
other series of Preferred Stock.
4. Subject to the provisions of paragraphs 2 and 3, shares of Common
Stock or any series of Preferred Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
5. The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased from time
to time by the affirmative vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon.";
<PAGE>
That the number of shares of the Corporation outstanding and entitled
to vote on an amendment to the Articles of Incorporation is 6,496,804; that the
said change(s) and amendment have been consented to and approved by a majority
vote of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/
-----------------------------
Richard Ginbsurg, President
and Chief Executive Officer
/s/
-----------------------------
Sheilah Ginsburg, Secretary
State of Florida
County of Broward
On 20, Oct, 1997, personally appeared before me, a Notary Public, L.
Marlene Crossley, who acknowledged that they executed the above instrument.
/s/
----------------------------
(Notary Stamp or Seal)
L. Marlene Crossley
Notary Public, State of Florida
Commission No. CC 570109
My Commission Exp. 08/11/2000
