<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C> <C> <C>
PROTECTION ONE, INC. PROTECTION ONE ALARM MONITORING, INC.
(Exact Name of Registrant as Specified in Its Charter) (Exact Name of Registrant as Specified in Its Charter)
DELAWARE 92-1063818 DELAWARE 93-1064579
(State or Other (I.R.S. Employer (State or Other (I.R.S. Employer
Jurisdiction of Identification No.) Jurisdiction of Identification No.)
Incorporation or Incorporation or
Organization) Organization)
</TABLE>
7382
(Primary Standard Industrial Classification Code Number)
(For Co-Registrants, please see "Table of Co-Registrants" on the following page)
<TABLE>
<S> <C>
JAMES M. MACKENZIE, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PROTECTION ONE, INC.
6011 BRISTOL PARKWAY 6011 BRISTOL PARKWAY
CULVER CITY, CALIFORNIA 90230 CULVER CITY, CALIFORNIA 90230
(310) 342-6300 (310) 342-6300
(Address, Including Zip Code, and Telephone Number, (Name, Address, Including Zip Code, and Telephone
Number,
Including Area Code, of Registrants' Principal Including Area Code, of Agent For Service)
Executive Office)
</TABLE>
Copies to:
JEREMY W. DICKENS
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201
(214) 746-7700
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is a compliance
with General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to the Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE(1)
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<S> <C> <C> <C> <C>
7 3/8% Senior Notes due 2005..................... $250,000,000 100% $250,000,000 $73,750
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Senior Guarantees(2)............................. -- -- -- --
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</TABLE>
(1) Calculated in accordance with Rule 457(f) under the Securities Act of 1933,
as amended.
(2) The 7 3/8% Senior Notes due 2005 are fully and unconditionally guaranteed by
the Guarantors on an unsecured, senior basis. No separate consideration will
be paid in respect of the guarantees in accordance with Rule 457(n)under the
Securities Act.
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THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
TABLE OF CO-REGISTRANTS
<TABLE>
<CAPTION>
STATE OR PRIMARY STANDARD IRS
OTHER INDUSTRIAL EMPLOYER
JURISDICTION OF CLASSIFICATION IDENTIFICATION
NAME INCORPORATION CODE NUMBER NUMBER
---- --------------- ---------------- --------------
<S> <C> <C> <C>
WestSec, Inc. .................................... Kansas 7382 75-2683068
Westar Security, Inc. ............................ Kansas 7382 48-1169432
Network Holdings, Inc. ........................... Delaware 7382 75-2418786
Network Multi-Family Security Corporation......... Delaware 7382 75-2050133
DSC Enterprises, Inc. ............................ Maryland 7382 52-1949951
Comsec/Narragansett Security, Inc. ............... Delaware 7382 06-1093130
</TABLE>
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
State.
SUBJECT TO COMPLETION, DATED SEPTEMBER 22, 1998
PROSPECTUS
OFFER TO EXCHANGE ALL OUTSTANDING
7 3/8% SENIOR NOTES DUE 2005
FOR
7 3/8% SENIOR NOTES DUE 2005
OF
PROTECTION ONE ALARM MONITORING, INC.,
AS ISSUER
AND
PROTECTION ONE, INC., WESTSEC, INC., WESTAR SECURITY, INC.,
NETWORK HOLDINGS, INC., NETWORK MULTI-FAMILY SECURITY CORPORATION, DSC
ENTERPRISES, INC.
AND COMSEC/NARRAGANSETT SECURITY, INC. AS GUARANTORS
Protection One Alarm Monitoring, Inc., a Delaware corporation
("Monitoring"), and the Guarantors (as defined) hereby offer, upon the terms and
subject to the conditions set forth in this Prospectus and the letter of
transmittal accompanying this Prospectus (the "Letter of Transmittal," which
together constitute the "Exchange Offer"), to exchange $1,000 principal amount
of 7 3/8% Senior Notes due 2005 (the "New Notes") issued by Monitoring for each
$1,000 principal amount of 7 3/8% Senior Notes due 2005 (the "Old Notes") issued
by Monitoring (the "Original Offering"), of which an aggregate principal amount
of $250.0 million is outstanding. The form and terms of the New Notes are
identical to the form and terms of the Old Notes except that the New Notes have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and, except for certain transfer restrictions, registration rights and
terms providing for an increase in the interest rate on the Old Notes under
certain events relating to registration of the New Notes. The New Notes will
evidence the same debt as the Old Notes and will be issued pursuant to, and
entitled to the same benefits of, the Senior Debt Indenture (as defined)
governing the Old Notes. The Exchange Offer is being made in order to satisfy
certain contractual obligations of Monitoring and the Guarantors (as defined).
See "The Exchange Offer" and "Description of the New Notes." The New Notes and
the Old Notes are sometimes collectively referred to herein as the "Notes".
------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NEW NOTES.
------------------------------
The New Notes will bear interest at the rate of 7 3/8% per annum, payable
semi-annually in arrears on February 15 and August 15 of each year, commencing
on February 15, 1999, and will mature on August 15, 2005. The New Notes will be
redeemable, in whole or in part, at the option of Monitoring at any time and
from time to time at a redemption price equal to the Make-Whole Price (as
defined). See "Description of the New Notes -- Optional Redemption." In
addition, in the event of a Change of Control Triggering Event (as defined),
each holder of the New Notes will have the right to require Monitoring to
repurchase all or any part of such holder's Notes at a repurchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest and
liquidated damages, if any, thereon to the date of purchase.
The New Notes will be general unsecured obligations of Monitoring and will
rank pari passu in right of payment with all senior indebtedness, whenever
incurred, of Monitoring, including the Company's Senior Credit Facility (as
defined), and senior in right of payment to all subordinated indebtedness,
whenever incurred, of Monitoring, including Monitoring's 13 5/8% Senior
Subordinated Discount Notes due 2005 (the "Discount Notes") and the 6 3/4%
Convertible Senior Subordinated Notes due 2003 (the "Convertible Notes"). See
"Description of the New Notes." The Notes will be fully and unconditionally
guaranteed (the "Guarantees") on a senior unsecured basis by the Guarantors. The
Guarantees will be unsecured and will rank pari passu with all other unsecured
and unsubordinated indebtedness of the respective Guarantors. See "Description
of the New Notes -- General" and "-- Certain Covenants -- Subsidiary
Guarantees."
------------------------------
MONITORING WILL ACCEPT FOR EXCHANGE ANY AND ALL OLD NOTES VALIDLY TENDERED
AND NOT WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON , 1998 (THE
TWENTY-FIRST DAY FOLLOWING THE INITIATION OF THE EXCHANGE OFFER), UNLESS
EXTENDED (AS SO EXTENDED, SUCH TIME AND DATE BEING THE "EXPIRATION DATE").
TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CUSTOMARY CONDITIONS. SEE "THE EXCHANGE
OFFER."
In order for a holder of Old Notes to participate in an Exchange Offer, such
holder must represent to Monitoring that, among other things, (i) the New Notes
acquired pursuant to such Exchange Offer are being obtained in the ordinary
course of business of the person receiving such New Notes, whether or not such
person is the holder of the Old Notes, (ii) neither the holder nor any such
other person is engaging or intends to engage in a distribution of such New
Notes, (iii) neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes within the meaning of the Securities Act, (iv) neither the holder nor any
such other person is an "affiliate," as defined under Rule 405 promulgated under
the Securities Act, of Monitoring or any Guarantor, and (v) if such holder or
other person is a broker-dealer, that it will receive New Notes for its own
account in exchange for Old Notes that were acquired as a result of marketmaking
activities or other trading activities. See "The Exchange Offer -- Purpose and
Effect."
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes pursuant to the Exchange Offer, where such Old Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities.
No public market existed for the Old Notes before the Exchange Offer.
Monitoring currently does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system, and no active public market for the New Notes is currently anticipated.
Monitoring will pay all the expenses incident to the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange pursuant to the Exchange Offer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE> 4
AVAILABLE INFORMATION
POI and Monitoring are, and the other Guarantors will be, subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith file reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information can be
inspected and copied at the offices of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington D.C. 20549, as well as at the
following regional offices of the Commission: The Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can also
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, the
Commission maintains a World Wide Web site on the Internet at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Such
reports, proxy statements and other information concerning Monitoring are also
filed with the National Association of Securities Dealers, Inc., as a result of
the listing of Common Stock of POI on the Nasdaq Stock Market, and may be
inspected at its offices at 1735 K Street, N.W., Washington, D.C. 20006.
Whether or not the Company is obligated under the Exchange Act to file such
reports, information and documents in the future, Monitoring, while any of the
Notes remain outstanding, will furnish to the holders of the Notes and file with
the Commission (unless the Commission will not accept such a filing) (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants and (ii) all reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such
reports. In addition, while any Notes remain outstanding, Monitoring will make
available to any holder or prospective purchaser of the Notes the information
required pursuant to Rule 144A(d)(4) promulgated under the Securities Act,
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act.
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT THE COMPANY THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. SUCH
INFORMATION IS AVAILABLE WITHOUT CHARGE TO SECURITY HOLDERS UPON WRITTEN OR ORAL
REQUEST. SUCH REQUEST MUST BE MADE TO MONTGOMERY W. CORNELL, TREASURER AND
DIRECTOR OF INVESTOR RELATIONS, PROTECTION ONE, INC., 4221 WEST JOHN CARPENTER
FREEWAY, IRVING, TEXAS 75063, TELEPHONE NUMBER (972) 916-6044. TO OBTAIN TIMELY
DELIVERY, SECURITY HOLDERS MUST REQUEST THE INFORMATION NO LATER THAN FIVE
BUSINESS DAYS BEFORE THE DATE THEY MUST MAKE THEIR INVESTMENT DECISION. SUCH
INFORMATION MUST BE REQUESTED BY , 1998.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(a) The Annual Report on Form 10-K of POI and Monitoring for the
fiscal year ended December 31, 1997; and
(b) The Quarterly Reports on Form 10-Q of POI and Monitoring for the
fiscal quarters ended March 31, 1998 and June 30, 1998.
All documents filed by POI and Monitoring pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act prior to the consummation of the transaction
contemplated by this Prospectus are a part of and shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such document.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by
i
<PAGE> 5
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus. Subject to the foregoing, all
information appearing in this Prospectus is qualified in its entirety by the
information appearing in the documents incorporated by reference.
POI and Monitoring will provide without charge to each person to whom this
Prospectus is delivered, upon the request of such person, a copy of any or all
the documents incorporated herein by reference, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests for such documents should be directed to Montgomery W.
Cornell, Vice President and Treasurer, Protection One, Inc., 6225 N. Hwy. 161,
Suite 400, Irving, Texas 75038, telephone number (972) 916-6044.
The public may read and copy any materials filed with the Commission by POI
and Monitoring at the Commission's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The
Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Commission at http://www.sec.gov.
FORWARD-LOOKING STATEMENTS
This Prospectus and the materials incorporated by reference herein and
therein include "forward-looking statements" intended to qualify for the safe
harbor from liability established by the Private Securities Litigation Reform
Act of 1995. These forward-looking statements generally can be identified by
phrases such as the Company or its management "believes," "expects,"
"anticipates," "foresees" or other words or phrases of similar import.
Similarly, statements herein that describe the Company's business strategy,
objectives, plans, intentions or goals also are forward-looking statements. All
such forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those in the forward-
looking statements. Important factors that could cause actual results to differ
materially from the expectations of the Company include, among others: (i) the
Company's leverage and capital structure; (ii) the impact of the Company's
acquisition strategy on its operations; (iii) the Company's need for additional
capital and history of losses; (iv) subscriber account attrition; (v) the risks
and uncertainties related to the Company's dealer program; (vi) the impact of
accounting differences for account purchases and new installations; (vii) the
possible adverse effect of false alarm ordinances and future government
regulations; (viii) risks of liability from operations; and (ix) competition in
the security alarm industry. For information with respect to these and other
factors, see "Risk Factors." Potential investors and other readers are urged to
consider these factors carefully in evaluating the forward-looking statements.
The forward-looking statements included herein are made only as of the date of
this Prospectus and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
CERTAIN DEFINITIONS
As used in this Prospectus, (i) "MRR" means monthly recurring revenue that
the Company is entitled to receive under contracts in effect at the end of the
referenced period, (ii) "POI" means Protection One, Inc., (iii) "Company" and
"Protection One" means, collectively, POI and its direct and indirect wholly
owned subsidiaries, and (iv) "Guarantors" means, collectively, POI, WestSec,
Inc. ("WestSec"), Westar Security, Inc. ("Westar"), Network Holdings, Inc.
("Network Holdings"), Network Multi-Family Security Corporation ("Network"), DSC
Enterprises, Inc. ("DSC"), and Comsec/Narragansett Security, Inc. ("Comsec").
ii
<PAGE> 6
PROSPECTUS SUMMARY
The following information does not purport to be complete and is qualified
in its entirety by the detailed information appearing elsewhere in this
Prospectus. Prospective investors should carefully consider the matters
discussed under the caption "Risk Factors."
THE COMPANY
Protection One is a leading provider of security alarm monitoring and
related services in the United States, with approximately 1.3 million
subscribers as of July 1998. The Company has grown rapidly by participating in
both the expansion and the consolidation of the security alarm monitoring
industry.
Protection One's revenues consist primarily of recurring payments for
monitoring and related services. Protection One monitors digital signals
communicated by security systems installed at subscribers' premises. Security
systems are designed to detect burglaries, fires and other events. Through a
network of approximately 65 service branches, the Company provides repair of
security systems and, in select markets, armed response to verify that an actual
emergency has occurred.
The Company provides its services to the residential, commercial and
wholesale segments of the alarm monitoring market. The Company believes the
residential segment, which represents in excess of 80% of its customer base, is
the most attractive because of its stronger growth prospects, higher gross
margins and larger potential size. Of the Company's customer base, approximately
62% reside in single-family households and approximately 19% reside in
multi-family complexes such as apartments and condominiums. Commercial
subscribers represent 12% of the customer base and subscribers served by
independent alarm dealers that subcontract monitoring services to the Company
represent 7% of the customer base. Protection One intends to grow its presence
in each of these key market segments, although the residential market remains
the most important for the Company's growth strategy.
RECENT DEVELOPMENTS
Since November 1997, Protection One has transformed itself from a regional
company into a nationwide provider of security alarm services through a series
of significant acquisitions. The most important of these acquisitions was the
November 1997 combination with the security business of Western Resources, a
transaction that increased the Company's size by approximately 440,000
subscribers.
Subsequent to the transaction consummated on November 24, 1997 in which POI
combined with WestSec, Inc., a Kansas corporation and wholly owned subsidiary of
Monitoring ("WestSec"), and Westar Security, Inc., a Kansas corporation and
direct, wholly owned subsidiary of POI ("Westar"; the "Combination") and through
June 1998, the Company used its strengthened financial position and national
infrastructure to acquire more than 500,000 subscribers, obtain a leading
position in the multi-family market segment and enter new markets in the United
Kingdom and Canada. As a result of these latest acquisitions, the Company has
further expanded its geographic reach and increased its customer density in key
markets and expects to realize operating efficiencies through the integration of
acquired operations.
In June 1998, Protection One issued approximately $400 million of its
Common Stock in a concurrent public offering and private placement
(collectively, the "Equity Offerings"), using the proceeds to repay borrowings
under its Senior Credit Facility (as defined) and to repurchase a portion of its
Discount Notes. As a result of this reduction in the Company's indebtedness,
management believes the Company is well positioned to pursue further subscriber
growth over the next several years.
On August 6, 1998, Protection One acquired, through a wholly-owned
subsidiary, approximately 69.4% of the outstanding shares of Compagnie
Europeenne de Telesecurite ("CET"), a French security alarm company, at a
purchase price of 450 FFR (or approximately $76.06) per share, for a total of
approximately $99.7 million. CET has approximately 60,000 subscribers and 36
branch offices, located primarily in France, as well as Belgium, Germany, the
Netherlands and Switzerland, and operates two state of the art monitoring
facilities located in Paris and Marseilles.
1
<PAGE> 7
Protection One has also initiated a public tender offer for the remaining
shares of CET, in accordance with French law, also at 450 FFR per share. The
completion of the tender offer is expected by the end of September, although
there can be no assurance that such tender offer will be completed on such terms
or at all. The acquisition of the shares of CET on August 6, 1998 and the tender
offer are hereinafter referred to as the "CET Acquisition." In connection with
the CET Acquisition, the commitment under the Senior Credit Facility was
increased to $472.8 million.
The Company's principal executive offices are located at 6011 Bristol
Parkway, Culver City, California 90230, telephone (310) 342-6300.
2
<PAGE> 8
THE EXCHANGE OFFER
THE EXCHANGE OFFER......... Monitoring hereby offers, upon the terms and
subject to the conditions set forth in this
Prospectus and the Letter of Transmittal to
exchange $1,000 principal amount of New Notes
issued by Monitoring for each $1,000 principal
amount the Old Notes issued by Monitoring, of which
an aggregate principal amount of $250.0 million is
outstanding. The form and terms of the New Notes
are identical to the form and terms of the Old
Notes except that the New Notes have been
registered under the Securities Act, and will not
bear any legends restricting their transfer. The
New Notes will evidence the same debt as the Old
Notes and will be issued pursuant to, and entitled
to the benefits of, the Senior Debt Indenture
governing the Old Notes. The Exchange Offer is
being made in order to satisfy certain contractual
obligations of Monitoring. See "The Exchange Offer"
and "Description of the New Notes."
Based on an interpretation by the Commission's
staff set forth in no-action letters issued to
third parties unrelated to Monitoring and the
Guarantors, Monitoring and the Guarantors believe
that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for
resale, sold and otherwise transferred by any
registered person receiving the New Notes, whether
or not that person is the registered holder (other
than any such holder or such other person that is
(i) an "affiliate" of Monitoring or the Guarantors
within the meaning of Rule 405 under the Securities
Act or (ii) a broker-dealer who purchased Old Notes
directly from Monitoring to resell pursuant to Rule
144A or any other available exception under the
Securities Act or (iii) a person participating in
the distribution of the New Notes), without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that (i) the New Notes are acquired in the ordinary
course of business of that holder or such other
person, (ii) neither the holder nor such other
person is engaging in or intends to engage in a
distribution of the New Notes, and (iii) neither
the holder nor such other person has an arrangement
or understanding with any person to participate in
the distribution of the New Notes. See "The
Exchange Offer -- Purpose and Effect." Each
broker-dealer that receives New Notes for its own
account in exchange for Old Notes, where those Old
Notes were acquired by the broker-dealer as a
result of its market-making activities or other
trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale
of these New Notes. See "Plan of Distribution."
REGISTRATION RIGHTS
AGREEMENT.................. The Old Notes were sold by Monitoring on August 17,
1998, in a private placement in reliance on Section
4(2) of the Securities Act and immediately resold
by the initial purchasers thereof in reliance on
Rule 144A under the Securities Act. In connection
with the sale, Monitoring and the Guarantors
entered into a Registration Rights Agreement with
the initial purchasers of the Old Notes (the
"Registration Rights Agreement") requiring
Monitoring and the Guarantors to make the Exchange
Offer. The Registration Rights Agreement further
provides that Monitoring and the Guarantors must
use their reasonable best efforts to (i) cause the
Registration Statement with respect to the Exchange
Offer to be declared effective on or before
December 15, 1998 and (ii) consummate the Exchange
Offer on or before the 45th business day following
the date on which the Registration Statement is
declared
3
<PAGE> 9
effective. See "The Exchange Offer -- Purpose and
Effect." If such registration requirements are not
complied with by the applicable deadlines,
Monitoring and the Guarantors must pay liquidated
damages ("Liquidated damages") to the holders of
Transfer Restricted Securities (as defined) as set
forth in the Registration Rights Agreement.
EXPIRATION DATE............ The Exchange Offer will expire at 5:00 p.m., New
York City time, , 1998 (the
twenty-first day following the initiation of the
Exchange Offer) or such later date and time to
which it is extended by Monitoring and the
Guarantors.
WITHDRAWAL................. The tender of the Old Notes pursuant to the
Exchange Offer may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration
Date. Any Old Notes not accepted for exchange for
any reason will be returned without expense to the
tendering holder thereof as promptly as practicable
after the expiration or termination of the Exchange
Offer.
INTEREST ON THE NEW NOTES
AND THE OLD NOTES.......... Interest on each New Note will accrue from the date
of issuance of the Old Note for which the New Note
is exchanged or from the date of the last periodic
payment of interest on such Old Note, whichever is
later. No additional interest will be paid on Old
Notes tendered and accepted for exchange.
CONDITIONS TO THE EXCHANGE
OFFER.................... The Exchange Offer is subject to certain customary
conditions, certain of which may be waived by
Monitoring. See "The Exchange Offer -- Conditions
to Exchange Offer."
PROCEDURES FOR TENDERING
OLD NOTES.................. Each holder of the Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a copy thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver the
Letter of Transmittal, or the copy, together with
the Old Notes and any other required documentation,
to the Exchange Agent (as defined) at the address
set forth herein. Persons holding the Old Notes
through the Depository Trust Company ("DTC") and
wishing to accept the Exchange Offer must do so
pursuant to the DTC's Automated Tender Offer
Program ("ATOP"), by which each tendering
participant will agree to be bound by the Letter of
Transmittal. By executing or agreeing to be bound
by the Letter of Transmittal, each holder will
represent to Monitoring and the Guarantors that,
among other things, (i) the New Notes acquired
pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person
receiving such New Notes, whether or not such
person is the registered holder of the Old Notes,
(ii) neither the holder nor any such other person
is engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the
holder nor any such other person has an arrangement
or understanding with any person to participate in
the distribution of such New Notes, and (iv)
neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 promulgated
under the Securities Act, of Monitoring or the
Guarantors. Pursuant to the Registration Rights
Agreement if (i) Monitoring determines that it is
not permitted to effect the Exchange Offer as
contemplated hereby
4
<PAGE> 10
because of any applicable law or Commission policy,
or (ii) any holder of Transfer Restricted
Securities (as defined) notifies Monitoring prior
to the 20th day following consummation of the
Exchange Offer (a) that it is prohibited by law or
Commission policy from participating in the
Exchange Offer (b) that it may not resell the New
Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and that
this Prospectus is not appropriate or available for
such resales or (c) that it is a broker-dealer and
owns Old Notes acquired directly from Monitoring or
an affiliate of Monitoring, Monitoring is required
to file a "shelf" registration statement for a
continuous offering pursuant to Rule 415 under the
Securities Act in respect of the Old Notes.
Monitoring will accept for exchange any and all Old
Notes which are properly tendered (and not
withdrawn) in the Exchange Offer prior to 5:00
p.m., New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange Offer
will be delivered promptly following the Expiration
Date. See "The Exchange Offer -- Terms of the
Exchange Offer."
EXCHANGE AGENT............. The Bank of New York is serving as Exchange Agent
(the "Exchange Agent") in connection with the
Exchange Offer.
FEDERAL INCOME TAX
CONSIDERATIONS........... The exchange pursuant to the Exchange Offer should
not be a taxable event for federal income tax
purposes. See "Certain Federal Income Tax
Considerations."
EFFECT OF NOT TENDERING.... Old Notes that are not tendered or that are
tendered but not accepted will, following the
completion of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer
thereof. Monitoring and the Guarantors will have no
further obligation to provide for the registration
under the Securities Act of such Old Notes.
THE NEW NOTES
ISSUER............................. Protection One Alarm Monitoring, Inc.
SECURITIES OFFERED................. $250,000,000 aggregate principal amount
of 7 3/8% Senior Notes due 2005.
MATURITY........................... August 15, 2005.
INTEREST PAYMENT DATES............. February 15 and August 15 of each year,
commencing on February 15, 1999.
GUARANTEES......................... The New Notes will be fully and
unconditionally guaranteed on a senior
unsecured basis by the Guarantors. The
Guarantees will be unsecured and will
rank pari passu with all other unsecured
and unsubordinated indebtedness of the
respective Guarantors. See "Description
of the New Notes -- General" and
"-- Certain Covenants -- Subsidiary
Guarantees."
RANKING............................ The New Notes will be general unsecured
obligations of Monitoring and will rank
pari passu in right of payment with all
senior indebtedness, whenever incurred,
of Monitoring, including that certain
credit agreement, as
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<PAGE> 11
amended to date, between the Company and
Westar Capital (the "Senior Credit
Facility"), and senior in right of
payment to all subordinated indebtedness,
whenever incurred, of Monitoring,
including the Discount Notes and the
Convertible Notes. See "Description of
the New Notes -- General."
OPTIONAL REDEMPTION................ The New Notes will be redeemable, in
whole or in part, at the option of
Monitoring at any time and from time to
time at a redemption price equal to the
Make-Whole Price. See "Description of the
New Notes -- Optional Redemption."
SINKING FUND....................... None.
CHANGE OF CONTROL.................. Upon the occurrence of a Change of
Control Triggering Event, each holder of
the New Notes will have the right to
require Monitoring to repurchase such
holders' New Notes, in whole or in part,
at a price equal to 101% of the aggregate
principal amount thereof, plus accrued
and unpaid interest to the date of
purchase. In the event that at any time
(i) both Rating Agencies (as defined)
assign the New Notes an Investment Grade
Rating (as defined) and (ii) no Default
(as defined) or Event of Default (as
defined) has occurred and is continuing
under the indenture governing the Notes
(the "Senior Debt Indenture"), the
provisions of the Senior Debt Indenture
with respect to a Change of Control
Triggering Offer (as defined) will be
permanently terminated.
COVENANTS.......................... The Senior Debt Indenture contains
certain covenants, including but not
limited to, (i) restrictions on the
creation of liens securing indebtedness
and (ii) limitations on sale and
leaseback transactions.
RISK FACTORS
The risk factors that holders of Old Notes should consider in connection
with the Exchange Offer and that prospective investors in the New Notes should
consider include, but are not limited to: (i) consequences of the failure to
exchange the Old Notes, (ii) the Company's leverage, (iii) the impact of the
Company's acquisition strategy on operations, (iv) the attrition of subscriber
accounts, (v) the Company's history of losses, (vi) the control of the Company
by Western Resources (as defined) and Westar Capital (as defined), (vii) the
Company's need for additional capital, (viii) the risk related to the Dealer
Program, (ix) the possible adverse effect of "false alarm" ordinances, (x) the
possible effect of future government regulations and the risk of litigation,
(xi) the liability from the Company's operations, (xii) the impact of accounting
differences for account purchases and new installations, (xiii) the Company's
competition, (xix) the impact of declines in new construction of multi-family
dwellings, (xv) the impact of the year 2000 issue, (xvi) the repurchase of the
Notes upon a change of control triggering event, (xvii) the risks arising under
bankruptcy laws, and (xviii) the absence of a public market for the Notes.
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<PAGE> 12
RISK FACTORS
Prospective investors should carefully consider the risk factors set forth
below, as well as the other information set forth in this Prospectus, before
making an investment in the New Notes. This Prospectus contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such differences include, but are not
limited to, the risk factors set forth below.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act and applicable state
securities laws. Monitoring does not currently anticipate that it will register
Old Notes under the Securities Act. See "The Exchange Offer -- Purpose and
Effect." Based on interpretations by the staff of the Commission, as set forth
in no-action letters issued to third parties, Monitoring believes that New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold or otherwise transferred by holders thereof (other than any
such holder which is an "affiliate" of Monitoring within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders, other than broker-dealers, have no arrangement or understanding with
any person to participate in the distribution of such New Notes. However, the
Commission has not considered the Exchange Offer in the context of a no-action
letter and there can be no assurance that the staff of the Commission would make
a similar determination with respect to the Exchange Offer as in such other
circumstances. Each holder, other than a broker-dealer, must acknowledge that it
is not engaged in, and does not intend to engage in, a distribution of such New
Notes and has no arrangement or understanding to participate in a distribution
of New Notes. If any holder is an affiliate of Monitoring or the Guarantors or
is engaged in or intends to engage in or has any arrangement or understanding
with respect to the distribution of the New Notes to be acquired pursuant to the
Exchange Offer, such holder (i) may not rely on the applicable interpretations
of the staff of the Commission and (ii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives New Notes for its own
account in exchange for Old Notes pursuant to the Exchange Offer must
acknowledge that such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities and that it will deliver
a prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. In addition, to comply with the
securities laws of certain jurisdictions, if applicable, the New Notes may not
be offered or sold unless they have been registered or qualified for sale in
such jurisdictions or an exemption from registration or qualification is
available and is complied with. Monitoring and the Guarantors have agreed,
pursuant to the Registration Rights Agreement, subject to certain limitations
specified therein, to cooperate with the holders to register or qualify the New
Notes for offer or sale under the securities laws of such jurisdiction as any
holder reasonably requests. Unless a holder so requests, Monitoring does not
currently intend to register or qualify the sale of the New Notes in any such
jurisdictions. See "The Exchange Offer."
7
<PAGE> 13
LEVERAGE
The Company has substantial indebtedness. As of June 30, 1998, on a pro
forma basis after giving effect to the offering of the Old Notes (the
"Offering") (and the use of the proceeds therefrom), as though all such events
had occurred at such date, the Company would have had approximately $544.0
million of indebtedness outstanding, and there would have been approximately
$283.5 million available for future borrowings under the Senior Credit Facility.
Subsequent to June 30, 1998, the commitment under the Senior Credit Facility was
increased from $292.8 million to $472.8 million in connection with the
acquisition of approximately 69.4% of the outstanding shares of CET. For the six
months ended June 30, 1998 and the year ended December 31, 1997, earnings were
insufficient to cover fixed charges by $2.1 million and $82.3 million,
respectively. The Company may incur additional indebtedness in the future,
subject to certain limitations contained and to be contained in the various
indentures and credit agreements governing the Company's outstanding
indebtedness, and expects to do so in order to fund future additions of
subscriber accounts through purchases in connection with the Dealer Program and
future acquisitions of subscriber account portfolios as part of its business
strategy. To the extent the Company will need to rely on funds under the Senior
Credit Facility beyond its current maturity of March 30, 1999, the Company
believes that it will be able to obtain further extensions of the maturity date
of the Senior Credit Facility from time to time, or will be able to refinance
the Senior Credit Facility prior to its present maturity date, although there
can be no assurance that the Company will be able to do so. A portion of the
consolidated debt of the Company bears interest at floating rates; therefore,
the financial results of the Company are and will continue to be affected by
changes in prevailing interest rates. As of July 31, 1998, the Company had
approximately $304.7 million of debt outstanding bearing interest at floating
interest rates.
The Company's degree of leverage may have important consequences to holders
of the New Notes, including the following: (i) the Company's ability to obtain
additional financing in the future for working capital, the Dealer Program,
acquisitions of portfolios of subscriber accounts, capital expenditures, general
corporate purposes or other purposes may be impaired; (ii) the indenture under
which Monitoring's Discount Notes were issued (the "Discount Notes Indenture"),
the indenture under which the Convertible Notes were issued (the "Convertible
Notes Indenture") and the Senior Credit Facility contain, and are expected to
continue to contain, certain restrictive covenants, including covenants under
the Senior Credit Facility that require the Company to obtain the consent of the
lenders under the Senior Credit Facility to certain actions by the Company and
to maintain certain financial ratios in order to undertake significant
acquisitions of portfolios of subscriber accounts, all of which may impose
limitations on the Company's ability to execute its business strategy; (iii) the
Company may be more vulnerable to a downturn in the Company's business or the
economy generally; and (iv) the Company's ability to compete against other less
leveraged companies may be adversely affected.
IMPACT OF ACQUISITION STRATEGY ON OPERATIONS
A principal element of the Company's business strategy is to grow rapidly
by acquiring portfolios of alarm monitoring accounts. During the 1992-1997
period, acquisitions were the primary source of the Company's growth; however,
the Dealer Program has become an increasingly important component of the
Company's growth. Since November 1997, Protection One has completed 20
transactions, thereby adding approximately 1.0 million subscribers. The
Combination and subsequent acquisitions have placed and will continue to place
substantial demands on the Company's management, operational resources and
financial and internal control systems. The Company's future operating results
will depend in part on the Company's ability to continue to implement and
improve the Company's operating and financial controls and to expand, train and
manage the Company's employee base. Significant changes in quarterly revenues
and costs may result from the Company's execution of its business strategy,
resulting in fluctuating financial results. Additionally, management of growth
may limit the time available to the Company's management to attend to other
operational, financial and strategic issues. Moreover, due to the continuing
consolidation of the security alarm monitoring industry and the acquisition by
the Company and other alarm companies of a number of large portfolios of
subscriber accounts, there may in the future be fewer large portfolios of
subscriber accounts available for acquisition. The Company faces competition for
the acquisition of portfolios of subscriber accounts, and may
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<PAGE> 14
be required to offer higher prices for subscriber accounts it acquires in the
future than the Company has in the past. See "-- Competition." There can be no
assurance that the Company will be able to find acceptable acquisition
candidates or, if such candidates are identified, that acquisitions can be
consummated on terms acceptable to the Company.
Acquisitions of portfolios of subscriber accounts involve a number of
risks, including the possibility of unanticipated problems not discovered prior
to the acquisition, higher than expected account attrition and the diversion of
management's attention from other business activities in order to focus on the
integration of accounts. For acquisitions that are structured as stock purchases
of other companies, the Company may assume unexpected liabilities and must
dispose of unnecessary or undesirable assets of the acquired companies. Because
the Company's primary consideration in acquiring a portfolio of subscriber
accounts is the MRR associated with the purchased accounts, the price paid by
the Company is customarily directly tied to such MRR. The price paid varies
based on the number and quality of accounts being purchased from the seller, the
historical activity of such accounts and other factors. The seller typically
does not have audited historical financial information with respect to the
acquired accounts. In making acquisition decisions, the Company generally has
relied on management's knowledge of the industry, due diligence procedures and
representations and warranties of the sellers. There can be no assurance that
such representations and warranties are true and complete or, if such
representations and warranties are inaccurate, that the Company will be able to
uncover such inaccuracies in the course of its due diligence or recover damages
from the seller in an amount sufficient to fully compensate the Company for any
resulting losses. The Company expects that future acquisitions will present at
least the same risks to the Company as its prior acquisitions.
An important aspect of the Company's acquisition program is the integration
of subscriber accounts into the Company's operations after purchase. Depending
on the size, frequency and location of acquisitions, the integration of
subscribers may adversely affect the provision of field repair services to
existing subscribers, which may cause subscriber attrition to increase. In
addition, if the Company's corporate or branch operations fail to integrate a
substantial portion of or do not adequately service acquired subscriber
accounts, the Company may experience higher attrition in the future.
ATTRITION OF SUBSCRIBER ACCOUNTS
The Company experiences attrition of subscriber accounts as a result of,
among other factors, relocation of subscribers, adverse financial and economic
conditions, and competition from other alarm service companies. In addition, the
Company experiences attrition of newly acquired accounts to the extent the
Company does not integrate such accounts or does not adequately service those
accounts. An increase in attrition rates could have a material adverse effect on
the Company's revenues and earnings.
When acquiring accounts, the Company seeks to withhold a portion of the
purchase price as a partial reserve against excess subscriber attrition. If the
actual attrition rate for the accounts acquired is greater than the rate assumed
by the Company at the time of the acquisition, and the Company is unable to
recoup its damages from the portion of the purchase price held back from the
seller, such attrition could have a material adverse effect on the Company's
business, financial condition, results of operations, prospects or ability to
service their debt obligations, including the Notes. There can be no assurance
that the Company will be able to obtain purchase price holdbacks in future
acquisitions, particularly acquisitions of large portfolios. The Company has no
assurance that actual account attrition for acquired accounts will not be
greater than the attrition rate assumed or historically incurred by the Company.
In addition, because some acquired accounts are prepaid on an annual, semiannual
or quarterly basis, attrition may not become evident for some time after an
acquisition is consummated.
As of June 30, 1998, the cost of intangible assets, net of previously
accumulated amortization, was $1.9 billion, which constituted approximately
90.1% of the book value of the Company's total assets. The Company's purchased
subscriber accounts are amortized on a straight-line basis over the estimated
life of the related revenues (generally ten years) and goodwill is amortized
over a 40 year life. The effects of gross subscriber attrition has historically
been offset by adding new accounts from subscribers who move into premises
previously occupied by prior subscribers and in which security alarm systems are
installed,
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<PAGE> 15
conversions of accounts that were previously monitored by other alarm companies
to the Company's monitoring services and accounts for which the Company obtains
a guarantee from the seller that provides for the Company to "put" back to the
seller canceled accounts. The resulting figure is used as a guideline to
determine the estimated life of subscriber revenues. It is the Company's policy
to review periodically actual account attrition and, when necessary, adjust the
remaining estimated lives of the Company's purchased accounts to reflect assumed
future attrition. There could be a material adverse effect on the Company's
business, financial condition, results of operations, prospects or ability to
service their debt obligations, including the Notes if actual account attrition
significantly exceeds assumed attrition and the Company has to shorten the
period over which it amortizes the cost of purchased subscriber accounts.
HISTORY OF LOSSES
The Company incurred a net loss of $49.3 million in 1997 and a net loss of
$0.7 million in 1996, and Westinghouse Security (a predecessor of the Company
for accounting purposes) reported net losses of $4.9 million, $5.9 million, $1.8
million and $9.2 million in fiscal 1996, 1995, 1994 and 1993, respectively.
These losses reflect, among other factors, substantial charges incurred by the
Company and Westinghouse Security for amortization of purchased subscriber
accounts, interest incurred on indebtedness and non-recurring charges. Such
charges, with the exception of the non-recurring charges, will increase as the
Company continues to purchase subscriber accounts, if the Company's indebtedness
increases, or if interest rates increase. The Company's earnings have been
insufficient to cover its fixed charges since the Company was formed, and there
can be no assurance that the Company will attain profitable operations on an
annual basis or at all.
CONTROL BY WESTERN RESOURCES
Western Resources, Inc., a Kansas corporation ("Western Resources"),
through Westar Capital, Inc., a wholly owned subsidiary of Western Resources
("Westar Capital"), currently owns approximately 85% of the outstanding Common
Stock of POI. As long as Westar Capital continues to beneficially own in excess
of 50% of the shares of Common Stock outstanding, Westar Capital will be able to
direct the election of all directors of POI and exercise a controlling influence
over the business and affairs of POI, including any determinations with respect
to mergers or other business combinations involving POI, the acquisition or
disposition of assets by POI and the incurrence of indebtedness by POI.
NEED FOR ADDITIONAL CAPITAL
The Company's purchases of subscriber accounts through the Dealer Program
and acquisitions of portfolios of subscriber accounts have generated cash needs
that exceed the Company's net cash provided by operating activities. The Company
intends to continue to pursue subscriber account growth through the Dealer
Program and acquisitions. As a result, the Company will be required to seek
additional funding from additional borrowings under the Senior Credit Facility
or a successor credit facility and the sale of additional securities in the
future, which may lead to higher leverage. See "-- Leverage." Any inability of
the Company to obtain funding through external financing is likely to adversely
affect the Company's ability to increase its subscribers, revenues and cash
flows from operations. There can be no assurance that external funding will be
available to the Company on terms considered favorable by the Company or at all.
RISKS RELATED TO THE DEALER PROGRAM
During 1995-1997, the Company's Dealer Program became an increasingly
important source of growth for the Company. The Company expects that this
emphasis will continue. Several of the Company's competitors also have or are
initiating dealer programs, and there can be no assurance that the Company will
be able to retain or expand its current dealer base or that competitive offers
to the Company's dealers will not require the Company to pay higher prices to
the Company's dealers for subscriber accounts than previously paid.
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<PAGE> 16
POSSIBLE ADVERSE EFFECT OF "FALSE ALARM" ORDINANCES
According to the Company's experience and industry data, substantially all
alarm activations that result in the dispatch of police or fire department
personnel are not emergencies, and thus are "false alarms." Significant concern
has arisen in certain municipalities about this high incidence of false alarms.
This concern could cause a decrease in the likelihood or timeliness of police
response to alarm activations and thereby decrease the propensity of consumers
to purchase or maintain alarm monitoring services.
A number of local governmental authorities have considered or adopted
various measures aimed at reducing the number of false alarms. Such measures
include (i) subjecting alarm monitoring companies to fines or penalties for
transmitting false alarms, (ii) licensing individual alarm systems and the
revocation of such licenses following a specified number of false alarms, (iii)
imposing fines on alarm subscribers for false alarms, (iv) imposing limitations
on the number of times the police will respond to alarms at a particular
location after a specified number of false alarms, and (v) requiring further
verification of an alarm signal before the police will respond. Enactment of
such measures could adversely affect the Company's future business and
operations.
POSSIBLE ADVERSE EFFECT OF FUTURE GOVERNMENT REGULATIONS; RISKS OF LITIGATION
The Company's operations are subject to a variety of laws, regulations and
licensing requirements of federal, state and local authorities. In certain
jurisdictions, the Company is required to obtain licenses or permits, to comply
with standards governing employee selection and training, and to meet certain
standards in the conduct of the Company's business. The loss of such licenses,
or the imposition of conditions to the granting or retention of such licenses,
could have a material adverse effect on the Company's business, financial
condition, results of operations, prospects or ability to service their debt
obligations, including the Notes.
The Company's advertising and sales practices are regulated by both the
Federal Trade Commission and state consumer protection laws. Such regulations
include restrictions on the manner in which the Company promotes the sale of
security alarm systems and the obligation of the Company to provide purchasers
of alarm systems with certain rescission rights. While the Company believes that
it has complied with these regulations in all material respects, there can be no
assurance that none of these regulations was violated in connection with the
solicitation of the Company's existing subscriber accounts, particularly with
respect to accounts acquired from third parties, or that no such violation will
occur in the future.
LIABILITY FROM OPERATIONS
The nature of the services provided by the Company potentially exposes it
to greater risks of liability for employee acts or omissions or system failure
than may be inherent in other businesses. Most of the Company's alarm monitoring
agreements and other agreements pursuant to which the Company sells its products
and services contain provisions limiting liability to subscribers in an attempt
to reduce this risk. However, in the event of litigation with respect to such
matters, there can be no assurance that these limitations will be enforced, and
the costs of such litigation could have a material adverse effect on the
Company.
The Company's alarm response and patrol services require Company personnel
to respond to emergencies that may entail risk of harm to such employees and to
others. In most cities in which the Company provides such services, the
Company's patrol officers carry firearms, which may increase such risk. Although
the Company screens and trains its employees, the provision of alarm response
service subjects the Company to greater risks related to accidents or employee
behavior than other types of businesses. Reduction of police participation in
the handling of emergencies could expose the Company's patrol officers to
greater hazards and further increase the Company's risk of liability.
The Company carries insurance of various types, including general liability
and errors and omissions insurance. The loss experience of the Company and other
security service companies may affect the availability and cost of such
insurance. Certain of the Company's insurance policies and the laws of some
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<PAGE> 17
states may limit or prohibit insurance coverage for punitive or certain other
types of damages, or liability arising from gross negligence.
IMPACT OF ACCOUNTING DIFFERENCES FOR ACCOUNT PURCHASES AND NEW INSTALLATIONS
A difference between the accounting treatment of the purchase of subscriber
accounts (including both purchases of subscriber account portfolios and
purchases under ongoing agreements with independent alarm dealers) and the
accounting treatment of the generation of subscriber accounts through direct
sales by the Company's sales force has a significant impact on the Company's
results of operations. All direct external costs associated with purchases of
subscriber accounts are capitalized and amortized over 10 years on a
straight-line basis. Also included in capitalized costs are certain acquisition
transition costs that reflect the Company's estimate of costs associated with
incorporating the purchased subscriber accounts into the Company's operations.
Such costs include costs incurred by the Company in fulfilling the seller's pre-
acquisition obligations to the acquired subscribers, such as providing warranty
repair services. In contrast, the Company's costs related to the sales and
marketing of new alarm monitoring systems generated by the Company's sales
force, as well as indirect overhead incurred in support of such activities, are
expensed in the period in which such activities occur. The Company's sales,
marketing and indirect overhead expenses for new systems generally exceed
installation revenues. The Company has recently converted the internal sales
force of WestSec and Westar into independent dealers participating in the Dealer
Program.
There can be no assurance that the Company will not increase its emphasis
on the marketing and sales of new alarm system installations in the future,
however, particularly in connection with a joint venture or other strategic
alliance. Any such increase could have a material adverse effect on reported
results.
COMPETITION
The security alarm industry is highly competitive and highly fragmented.
The Company competes with major firms with substantial financial resources,
including ADT Operations Inc., a subsidiary of Tyco International, Inc.; the
security subsidiaries of the Ameritech Corporation; and Brinks Home Security
Inc., a subsidiary of The Pittston Services Group. Other alarm service companies
have adopted a strategy similar to the Company's that entails the aggressive
purchase of alarm monitoring accounts both through acquisitions of account
portfolios and through dealer programs. Some competitors have greater financial
resources than the Company, or may be willing to offer higher prices than the
Company is prepared to offer, to purchase subscriber accounts. The effect of
such competition may be to reduce the purchase opportunities available to the
Company, thus reducing the Company's rate of growth, or to increase the price
paid by the Company for subscriber accounts, which could have a material adverse
effect on the Company's return on investment in such accounts and the Company's
results of operations.
IMPACT OF DECLINES IN NEW CONSTRUCTION OF MULTI-FAMILY DWELLINGS
Demand for alarm monitoring services in the multi-family alarm monitoring
market is tied to the construction of new multi-family structures. The Company
believes that developers of multi-family dwellings view the provision of alarm
monitoring services as an added feature that can be used in marketing newly
developed condominiums, apartments and other multi-family structures.
Accordingly, the Company anticipates that the growth in the multi-family alarm
monitoring market will continue so long as there is a demand for new
multi-family dwellings. However, the real estate market in general is cyclical
and, in the event of a decline in the market for new multi-family dwellings, it
is likely that demand for the Company's alarm monitoring services to
multi-family dwellings would also decline, which could negatively impact the
Company's results of operations.
IMPACT OF YEAR 2000 ISSUE
An issue exists for all companies that rely on computers as the year 2000
approaches. The "Year 2000" problem is the result of the past practice in the
computer industry of using two digits rather than four to identify the
applicable year. This practice will result in incorrect results when computers
perform arithmetic
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operations, comparisons or data field sorting involving years later than 1999.
The Company is reviewing its computer and signal processing to identify and
correct any components that could be affected by the change of the date to
January 1, 2000 (the "Year 2000 Issue"). The Company will continue its review
until January 1, 2000, particularly with respect to acquisition of security
businesses that include additional computer systems and equipment. In addition,
changes in the state of compliance or preparedness within companies that provide
services or equipment to the Company will require the Company to continue its
evaluation. Based on its on-going review, management believes the Year 2000
Issue does not pose material operational problems and estimates the costs
associated with the assessment of risk and the execution of corrective action to
be approximately $4.0 million.
REPURCHASE OF THE NOTES UPON A CHANGE OF CONTROL TRIGGERING EVENT
Upon a Change of Control Triggering Event, the holders of the Notes will
have the right to require Monitoring to repurchase such holders' Notes, in whole
or in part, at a price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase. If a Change of Control Triggering Event were to occur, Monitoring
may not have the financial resources to repurchase all of the Notes and repay
any other indebtedness that would become payable upon the occurrence of such
Change of Control Triggering Event. The Change of Control purchase feature of
the Notes may in certain circumstances discourage or make more difficult a sale
or takeover of Monitoring and/or POI. See "Description of the New
Notes -- Certain Covenants -- Change of Control."
FRAUDULENT CONVEYANCE
Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if, among other things, Monitoring
or any Guarantor, at the time it incurred the indebtedness evidenced by the
Notes or its Guarantee, (i) (a) was or is insolvent or rendered insolvent by
reason of such occurrence of (b) was or is engaged in a business or transaction
for which the assets remaining with Monitoring or such Guarantor constituted
unreasonably small capital or (c) intended or intends to incur, or believed or
believes that it would incur, debts beyond its ability to pay such debts as they
mature, and (ii) Monitoring or such Guarantor received or receives less than
reasonably equivalent value or fair consideration for the incurrence of such
indebtedness, then the Notes and the Guarantees could be voided, or claims in
respect of the Notes or the Guarantees could be subordinated to all other debts
of Monitoring or such Guarantor, as the case may be. In addition, the payment of
interest and principal by Monitoring pursuant to the Notes or the payment of
amounts by a Guarantor pursuant to its Guarantee could be voided and required to
be returned to the person making such payment, or to a fund for the benefit of
the creditors of Monitoring or such Guarantor, as the case may be.
The measures of insolvency for purposes of the foregoing considerations
will vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, Monitoring or a Guarantor would be considered
insolvent if (i) the sum of its debts, including contingent liabilities, were
greater than the saleable value of all of its assets at a fair valuation or if
the present fair saleable value of its assets were less than the amount that
would be required to pay its probable liability on its existing debts, including
contingent liabilities, as they become absolute and mature or (ii) it could not
pay its debts as they become due. There can be no assurance, however, as to what
standard a court would apply in making such determinations or that a court would
agree with the Monitoring's or the Guarantors' conclusions in this regard.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The New Notes are being offered to the holders of the Old Notes. The New
Notes constitute a new class of securities with no established trading market.
To the extent that Old Notes are tendered and accepted in the Exchange Offer,
the trading market for the remaining untendered Old Notes could be adversely
affected. There is no existing trading market for the New Notes, and there can
be no assurance regarding the future development of a market for the New Notes,
or the ability of holders of the New Notes to sell their New Notes or the price
at which such holders may be able to sell their New Notes. If such a market were
to develop, the New Notes could trade at prices that may be higher or lower than
their principal amount or
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<PAGE> 19
purchase price, depending on many factors, including prevailing interest rates,
the Company's operating results and the market for similar securities. Each of
Bear, Stearns & Co. Inc., Lehman Brothers, Inc., Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc. (collectively, the "Initial Purchasers")
has advised Monitoring that it currently intends to make a market in the New
Notes. The Initial Purchasers are not obligated to do so, however, and any
market-making with respect to the New Notes may be discontinued at any time
without notice. Therefore, there can be no assurance as to the liquidity of any
trading market for the New Notes or that an active public market for the New
Notes will develop. Monitoring does not intend to apply for listing or quotation
of the New Notes on any securities exchange or stock market.
Historically, the market for noninvestment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for the New Notes will not
be subject to similar disruptions. Any such disruptions may have an adverse
effect on holders of the New Notes.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
In calculating the ratio of earnings to fixed charges, earnings consist of
income before income taxes plus fixed charges. Fixed charges consist of interest
expense and the component of rental expense believed by management to be
representative of the interest factor thereon. Earnings were insufficient to
cover fixed charges by approximately $82.3 million and $1.0 million for the
Company during the years ended December 31, 1997 and 1996, respectively. For the
Company's predecessor, earnings were insufficient to cover fixed charges by
approximately $7.8 million for the 53 weeks ended December 30, 1996, $9.6
million for the 52 weeks ended December 20, 1995, $2.8 million for the 52 weeks
ended December 20, 1994, and $14.8 million for the 52 weeks ended December 16,
1993.
14
<PAGE> 20
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by Monitoring on August 17, 1998 in the Offering.
In connection with that placement, Monitoring entered into the Registration
Rights Agreement, which requires that Monitoring file the Registration Statement
under the Securities Act with respect to the New Notes and, upon the
effectiveness of that Registration Statement, offer to the holders of the Old
Notes the opportunity to exchange their Old Notes for a like principal amount of
New Notes, which will be issued without a restrictive legend and which generally
may be reoffered and resold by the holder without registration under the
Securities Act. The Registration Rights Agreement further provides that
Monitoring must use its reasonable best efforts to (i) cause the Registration
Statement with respect to the Exchange Offer to be declared effective on or
before December 15, 1998 and (ii) consummate the Exchange Offer on or before the
45th business day following the date on which the Registration Statement is
declared effective. Except as provided below, upon the completion of the
Exchange Offer, Monitoring's obligations with respect to the registration of the
Old Notes and the New Notes will terminate. A copy of the Registration Rights
Agreement has been filed as an exhibit to the Registration Statement, of which
this Prospectus is a part, and the summary herein of the material provisions
thereof does not purport to be complete and is qualified in its entirety by
reference thereto. As a result of the timely filing and the effectiveness of the
Registration Statement, the Liquidated Damages provided for in the Registration
Rights Agreement will not become payable by Monitoring or the Guarantors.
Following the completion of the Exchange Offer (except as set forth in the
paragraph immediately below), holders of Old Notes not tendered will not have
any further registration rights and those Old Notes will continue to be subject
to certain restrictions on transfer. Accordingly, the liquidity of the market
for the Old Notes could be adversely affected upon consummation of the Exchange
Offer.
In order to participate in the Exchange Offer, a holder must represent to
Monitoring and the Guarantors, among other things, that (i) the New Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving the New Notes, (ii) neither the
holder nor any such other person is engaging in or intends to engage in a
distribution of the New Notes, (iii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of the New Notes and (iv) neither the holder nor any such other
person is an "affiliate," as defined under Rule 405 promulgated under the
Securities Act, of Monitoring and the Guarantors. Pursuant to the Registration
Rights Agreement if (i) Monitoring determines that it is not permitted to effect
the Exchange Offer as contemplated hereby because of any applicable law or
Commission policy, or (ii) any holder of Transfer Restricted Securities notifies
Monitoring prior to the 20th day following consummation of the Exchange Offer
(a) that it is prohibited by law or Commission policy from participating in the
Exchange Offer, (b) that it may not resell the New Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and that this
Prospectus is not appropriate or available for such resales, or (c) that it is a
broker-dealer and owns Old Notes acquired directly from Monitoring or an
affiliate of Monitoring, Monitoring is required to file a "shelf" registration
statement for a continuous offering pursuant to Rule 415 under the Securities
Act in respect of the Old Notes. For purposes of the foregoing, "Transfer
Restricted Securities" means each Old Note until (i) the date on which such Old
Note has been exchanged for a New Note in the Exchange Offer, (ii) the date on
which such Old Note has been electively registered under the Securities Act and
disposed of in accordance with such "shelf" registration statement, (iii) the
date on which such Old Note is sold pursuant to Rule 144 under circumstances in
which any legend borne by such Old Note relating to restrictions on
transferability thereof, under the Securities Act or otherwise, is removed or
such Old Note is eligible to be sold pursuant to paragraph (k) of Rule 144, or
(iv) such Old Note shall cease to be outstanding. Other than as set forth in
this paragraph, no holder will have the right to participate in the "shelf"
registration statement nor otherwise require that Monitoring register such
holder's shares of Old Notes under the Securities Act. See "-- Procedures for
Tendering."
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third parties unrelated to Monitoring and the Guarantors,
Monitoring believes that, with the exceptions set forth below, New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold
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<PAGE> 21
and otherwise transferred by any person receiving such New Notes, whether or not
such person is the registered holder (other than any such holder or such other
person which is (i) an "affiliate" of Monitoring or the Guarantors within the
meaning of Rule 405 under the Securities Act or (ii) a broker-dealer that
purchased such Old Notes directly from Monitoring to resell pursuant to Rule
144A or any other available exemption under the Securities Act or (iii) a person
participating in the distribution of the New Notes) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the New Notes are acquired in the ordinary course of business of the holder
or such other person and neither the holder nor such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes. Holders of Old Notes accepting the Exchange Offer will
represent to the Company in the Letter of Transmittal that such conditions have
been met. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Notes cannot rely on this
interpretation by the Commission's staff and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Each broker-dealer that receives New Notes for its
own account in exchange for Old Notes, where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution."
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it acquired the Old Notes as a result
of market-making activities or other trading activities and will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Letter of
Transmittal states that by acknowledging and delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Except as aforesaid, this Prospectus may not be used for an offer to
resell, resale or other retransfer of New Notes.
The Exchange Offer is not being made to, nor will Monitoring accept tenders
for exchange from, holders of Old Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offer (except as set forth in the
second paragraph under "-- Purpose and Effect" above), holders of Old Notes not
tendered will not have any further registration rights and those Old Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for a holder's Old Notes could be adversely affected
upon completion of the Exchange Offer if the holder does not participate in the
Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, Monitoring will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. Monitoring will issue $1,000 principal amount of New Notes
in exchange for each $1,000 principal amount of outstanding Old Notes accepted
in the Exchange Offer. Holders may tender some or all of their Old Notes
pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are substantially the same as the form
and terms of the Old Notes except that the New Notes have been registered under
the Securities Act and will not bear legends restricting their transfer. The New
Notes will evidence the same debt as the Old Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture pursuant to which the Old
Notes were issued.
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<PAGE> 22
As of September 11, 1998, Old Notes representing $250.0 million aggregate
principal amount were outstanding and there was one registered holder, a nominee
of DTC. This Prospectus, together with the Letter of Transmittal, is being sent
to such registered holder and to others believed to have beneficial interests in
the Old Notes. Monitoring intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder.
Monitoring shall be deemed to have accepted validly tendered Old Notes
when, as, and if Monitoring has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from Monitoring. If any tendered Old
Notes are not accepted for exchange because of an invalid tender, the occurrence
of certain other events set forth herein or otherwise, certificates for any such
unaccepted Old Notes will be returned, without expense, to the tendering holder
thereof as promptly as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. Monitoring will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless Monitoring, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. In order to extend the
Exchange Offer, Monitoring will notify the Exchange Agent and each registered
holder of any extension by oral or written notice prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. Monitoring reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth under "-- Conditions to Exchange Offer" shall not have been
satisfied, to terminate the Exchange Offer, by giving oral or written notice of
such delay, extension or termination to the Exchange Agent, or (ii) to amend the
terms of the Exchange Offer in any manner.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender the Old Notes in the Exchange Offer.
Except as set forth under "-- Book-Entry Transfer," to tender in the Exchange
Offer a holder must complete, sign, and date the Letter of Transmittal, or a
copy thereof, have the signatures thereon guaranteed if required by the Letter
of Transmittal, and mail or otherwise deliver the Letter of Transmittal or copy
to the Exchange Agent prior to the Expiration Date. In addition, (i)
certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal prior to the Expiration Date, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old
Notes, if that procedure is available, into the Exchange Agent's account at DTC
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date or (iii) the holder must comply with the guaranteed delivery
procedures described below. To be tendered effectively, the Letter of
Transmittal and other required documents must be received by the Exchange Agent
at the address set forth under "-- Exchange Agent" prior to 5:00 p.m., New York
City time, on the Expiration Date.
The tender by a holder that is not withdrawn before the Expiration Date
will constitute an agreement between that holder and Monitoring in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT
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<PAGE> 23
TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR
SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the Letter of Transmittal and delivering the owner's
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in the beneficial owner's name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration Instruction"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, the
guarantee must be by any eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an
"Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to Monitoring
of their authority to so act must be submitted with the Letter of Transmittal
unless waived by Monitoring.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined by
Monitoring in its sole discretion, which determination will be final and
binding. Monitoring reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes Monitoring's acceptance of which would,
in the opinion of counsel for Monitoring, be unlawful. Monitoring also reserves
the right to waive any defects, irregularities or conditions of tender as to
particular Old Notes. Monitoring's interpretation of the terms and conditions of
the Exchange Offer (including the instructions in the Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as Monitoring shall determine. Although Monitoring intends to notify
holders of defects or irregularities with respect to tenders of Old Notes,
neither Monitoring, the Exchange Agent, nor any other person shall incur any
liability for failure to give such notification. Tenders of Old Notes will not
be deemed to have been made until such defects or irregularities have been cured
or waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In addition, Monitoring reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "-- Conditions to the Exchange Offer," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions, or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
By tendering, each holder will represent to Monitoring and the Guarantors
that, among other things, (i) the New Notes acquired pursuant to the Exchange
Offer are being obtained in the ordinary course of business of the person
receiving such New Notes, whether or not such person is the registered holder,
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<PAGE> 24
(ii) neither the holder nor any such other person is engaging in or intends to
engage in a distribution of such New Notes, (iii) neither the holder nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes and (iv) neither the holder
nor any such other person is an "affiliate," as defined under Rule 405 of the
Securities Act, of Monitoring and the Guarantors.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or, with respect to the DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of and
agreement to be bound by the Letter of Transmittal), and all other required
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if Old Notes are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged Old Notes will be returned without expense to the
tendering holder thereof (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such
nonexchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes being tendered by
causing the Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or copy thereof, with
any required signature guarantees and any other required documents, must, in any
case other than as set forth in the following paragraph, be transmitted to and
received by the Exchange Agent at the address set forth under "-- Exchange
Agent" on or prior to 5:00 p.m., New York City time, on the Expiration Date or
the guaranteed delivery procedures described below must be complied with.
ATOP is the only method of processing exchange offers through DTC. To
accept the Exchange Offer through ATOP, participants in DTC must send electronic
instructions to DTC through DTC's communication system in lieu of sending a
signed, hard copy Letter of Transmittal. DTC is obligated to communicate those
electronic instructions to the Exchange Agent. To tender Old Notes through ATOP,
the electronic instructions sent to DTC and transmitted by DTC to the Exchange
Agent must contain the character by which the participant acknowledges its
receipt of and agrees to be bound by the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent receives from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by Monitoring (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the
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<PAGE> 25
tender is being made thereby and guaranteeing that within three New York Stock
Exchange ("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be, and
any other documents required by the Letter of Transmittal will be deposited by
the Eligible Institution with the Exchange Agent and (iii) the certificates for
all physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the Letter
of Transmittal, are received by the Exchange Agent within three NYSE trading
days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or
(for DTC participants) electronic ATOP transmission notice of withdrawal must be
received by the Exchange Agent at its address set forth under "-- Exchange
Agent" prior to 5:00 p.m., New York City time, on the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to
be withdrawn (including the certificate number or numbers and principal amount
of such Old Notes), (iii) be signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee register the transfer of
such Old Notes into the name of the person withdrawing the tender, and (iv)
specify the name in which any such Old Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form, and
eligibility (including time of receipt) of such notices will be determined by
Monitoring, whose determination shall be final and binding on all parties. Any
Old Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer. Any Old Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender, or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures under "-- Procedures for Tendering" at any time on or prior to
the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, Monitoring shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, Monitoring determines that the Exchange Offer violates
applicable law, any applicable interpretation of the staff of the Commission or
any order of any governmental agency or court of competent jurisdiction.
The foregoing conditions are for the sole benefit of Monitoring and may be
asserted by Monitoring regardless of the circumstances giving rise to any such
condition or may be waived by Monitoring in whole or in part at any time and
from time to time in its sole discretion. The failure by Monitoring at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, Monitoring will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended. In any such event Monitoring is required to use every reasonable effort
to obtain the withdrawal of any stop order at the earliest possible time.
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<PAGE> 26
EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange
Agent. The Bank of New York has been appointed as Exchange Agent for the
Exchange Offer. Questions, requests for assistance and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent addressed as follows:
THE BANK OF NEW YORK
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery before 4:30
p.m.:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Floor 7-E Corporate Trust Services Window
New York, New York 10286 Ground Level
New York, New York 10286
Attn: Reorganization Section,
Gertude Jeanpierre Attn: Reorganization Section,
(212) 815-5920 Gertude Jeanpierre
(212) 815-5920
</TABLE>
By Facsimile (for Eligible Institutions):
(212) 815-6339
For Information or
Confirmation by Telephone:
(212) 815-5920
(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail,
by hand or by overnight delivery service.)
FEES AND EXPENSES
Monitoring will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of Monitoring.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by Monitoring and are estimated in the aggregate to be
$100,000, which includes fees and expenses of the Exchange Agent, accounting,
legal, printing, and related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
Monitoring to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
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DESCRIPTION OF THE NEW NOTES
As used in this "Description of the New Notes," all references to (i)
"Monitoring" shall mean Protection One Alarm Monitoring, Inc., excluding, unless
the context otherwise requires or as otherwise expressly stated, its
subsidiaries and (ii) "Protection One" shall mean Protection One, Inc.,
excluding, unless the context otherwise requires or as otherwise expressly
stated, its subsidiaries. Whenever this "Description of the New Notes" refers to
particular defined terms of the Senior Debt Indenture that are not otherwise
defined herein, such defined terms are incorporated herein by reference. For
definitions of certain capitalized terms used in the following summary, see
"-- Certain Definitions" below.
GENERAL
The New Notes offered hereby will be issued pursuant to the Senior Debt
Indenture among Monitoring, the Guarantors and The Bank of New York, as trustee
(the "Senior Trustee"). The Old Notes were also issued pursuant to the Senior
Debt Indenture. The following summary of certain provisions of the Senior Debt
Indenture and the New Notes describes all material terms of such documents, but
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the provisions of the Senior Debt Indenture, including
the definitions therein of certain terms, and of those terms in the Trust
Indenture Act of 1939 made a part thereof.
The New Notes will be limited to $250.0 million aggregate principal amount
and will bear interest at the rate shown on the front cover of this Prospectus
from August 17, 1998 or from the most recent interest payment date to which
interest has been paid or duly provided for, payable semi-annually in arrears on
each February 15 and August 15 commencing February 15, 1999, to the persons in
whose names the New Notes are registered at the close of business on the
February 1 or August 1 as the case may be, preceding such February 15 or August
15. The New Notes will mature on August 15, 2005.
Principal of, premium, if any, and interest on the Notes is payable, and
the Notes may be exchanged or transferred, at the office or agency of Monitoring
in the Borough of Manhattan, the City of New York (which initially will be the
corporate trust office of the Senior Trustee located in New York, New York) or,
at the option of Monitoring, payment of interest may be made by check mailed to
the Holders of the Notes at their respective addresses set forth in the register
of Holders of Notes; provided, however, that all payments of principal, premium
and interest with respect to Notes the Holders of which have given wire transfer
instructions to Monitoring will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
The obligations of Monitoring under the Notes are fully and unconditionally
guaranteed by the Guarantors. The Notes are unsecured and rank pari passu with
all other unsecured and unsubordinated indebtedness of Monitoring and senior to
subordinated indebtedness, including the Discount Notes and the Convertible
Notes. The Guarantees are unsecured and rank pari passu with all other unsecured
and unsubordinated indebtedness of the respective Guarantors. Monitoring's
obligations under the Notes are effectively subordinated to all liabilities
(including trade payables) of its Subsidiaries that are not Subsidiary
Guarantors and Protection One's Guarantee are effectively subordinated to all
liabilities (including trade payables) of its Subsidiaries.
Except as described under "-- Certain Covenants -- Change of Control" and
"Certain Covenants -- Merger, Consolidation and Sale of Assets" below, the
Senior Debt Indenture does not contain any other provisions that limits the
ability of Monitoring or the Guarantors to incur indebtedness or that affords
Holders of the Notes protection in the event of (a) a highly leveraged or
similar transaction involving Monitoring or a Guarantor or (b) a reorganization,
restructuring, merger or similar transaction involving Monitoring or a Guarantor
that may adversely affect the Holders of the New Notes. In addition, subject to
the limitations set forth under "-- Certain Covenants" below, Monitoring or any
Guarantor may, in the future, enter into certain transactions such as the sale
of all or substantially all of its assets or the merger or consolidation of
Monitoring with another entity that would increase the amount of Monitoring's or
such Guarantor's indebtedness or substantially reduce or eliminate Monitoring's
or such Guarantor's, as the case may be, assets, which may have an adverse
effect on Monitoring's ability to service its indebtedness, including the New
Notes.
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OPTIONAL REDEMPTION
The Notes may be redeemed, in whole or in part, at any time at the option
of Monitoring upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each Holder's registered address, at a redemption price (the
"Make-Whole Price") equal to the greater of (i) 100% of the principal amount
thereof or (ii) as determined by an Independent Investment Banker, the sum of
the present values of the Remaining Scheduled Payments discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued
interest and Liquidated Damages, if any, thereon to the date of redemption.
"Adjusted Treasury Rate" means with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.50%.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York or in
the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close.
"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if
the Senior Trustee obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such quotations.
"Independent Investment Banker" means the Reference Treasury Dealers
appointed by the Senior Trustee after consultation with Monitoring.
"Reference Treasury Dealer" means each of Bear, Stearns & Co. Inc., Morgan
Stanley & Co. Incorporated, Lehman Brothers Inc. and Salomon Brothers Inc and
their respective successors; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), Monitoring shall substitute therefor another
Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average as determined by
the Senior Trustee, of the bid and asked prices of the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Senior Trustee by such Reference Treasury Dealer at 5:00 p.m. on
the third Business Day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to each Note to be
redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due after the related redemption date but for such
redemption; provided, however, that, if such redemption date is not an interest
payment date with respect to such Note, the amount of the next succeeding
scheduled interest payment thereon will be reduced by the amount of interest
accrued thereon to such redemption date.
Unless Monitoring defaults in payment of the redemption price, on and after
the redemption date, interest will cease to accrue on the Notes or portion
thereof called for redemption.
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CERTAIN COVENANTS
Change of Control
Upon the occurrence of a Change of Control Triggering Event, each Holder of
Notes will have the right to require Monitoring to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control
Triggering Event, Monitoring will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control Triggering
Event and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by the Senior Debt Indenture and described in such
notice. Monitoring will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control Triggering Event.
On the Change of Control Payment Date, Monitoring will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Senior Trustee the Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by Monitoring. The Paying Agent will promptly mail to each Holder of
Notes so tendered the Change of Control Payment for such Notes, and the Senior
Trustee will promptly authenticate and mail (or cause to be transferred by
book-entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each such
new Note will be in a principal amount of $1,000 or an integral multiple
thereof. Monitoring will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Senior Debt Indenture are applicable. Except
as described above with respect to a Change of Control Triggering Event, the
Senior Debt Indenture does not contain provisions that permit the Holders of the
Notes to require that Monitoring repurchase or redeem the Notes in the event of
a takeover, recapitalization or similar transaction.
IN THE EVENT THAT AT ANY TIME (i) BOTH RATING AGENCIES ASSIGN THE NOTES AN
INVESTMENT GRADE RATING AND (ii) NO DEFAULT HAS OCCURRED AND IS CONTINUING UNDER
THE SENIOR DEBT INDENTURE, THE PROVISIONS OF THE SENIOR DEBT INDENTURE WITH
RESPECT TO A CHANGE OF CONTROL TRIGGERING OFFER WILL BE PERMANENTLY TERMINATED.
The Senior Credit Facility contains and future senior indebtedness may
contain prohibitions of certain events that would constitute a Change of Control
Triggering Event. In addition, the exercise by the Holders of Notes of their
right to require Monitoring to repurchase the Notes could cause a default under
such other senior indebtedness, even if the Change of Control Triggering Event
itself does not, due to the financial effect of such repurchases on Monitoring.
Finally, Monitoring's ability to pay cash to the Holders of Notes upon a
repurchase may be limited by Monitoring's then existing financial resources.
Monitoring will not be required to make a Change of Control Offer upon a
Change of Control Triggering Event if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the Senior Debt Indenture applicable to a Change of
Control Offer made by Monitoring and purchases all Notes validly tendered and
not withdrawn under such Change of Control Offer.
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Liens
The Senior Debt Indenture will provide that none of Protection One,
Monitoring or their respective Subsidiaries will, directly or indirectly,
create, incur, assume or suffer to exist any Lien of any kind on any asset now
owned or hereafter acquired to secure Debt without making, or causing such
Subsidiary to make, effective provision for securing the Notes equally and
ratably with (or prior to) such Debt or, in the event such Debt is subordinate
in right of payment to the Notes, prior to such Debt, as to such asset for so
long as such Debt will be so secured. The foregoing restrictions will not apply
to Liens in respect of Debt existing on the date of the Senior Debt Indenture or
to: (a) Liens securing only Notes; (b) Liens in favor of Protection One,
Monitoring or any of their respective Subsidiaries; (c) Liens on assets or
property existing immediately prior to the time of acquisition thereof (and not
created in anticipation of the financing of such acquisition); (d) Liens to
secure Debt incurred for the purpose of financing all or any part of the
purchase price or the cost of construction or improvement of assets or property
used in the business of Protection One, Monitoring or any of their respective
Subsidiaries and subject to such Liens, provided that (i) the principal amount
of any Debt secured by such a Lien does not exceed 100% of the direct and
indirect costs of such purchase, (ii) such Lien does not extend to or cover any
other assets or property other than such assets or property and any such
improvements, and (iii) such Debt is incurred within 180 days of such purchase,
construction or improvement; (e) Liens on assets or property of a Person
existing at the time such Person is merged with or into or consolidated with or
substantially all of the assets or property of such Person are otherwise
acquired by Protection One, Monitoring or any of their respective Subsidiaries
that were not created in anticipation of the acquisition of such Person,
provided that such Lien does not extend to or cover any property other than that
of the Person so merged, consolidated or acquired; (f) Liens in favor of a
governmental body to secure partial progress, advance or other payments pursuant
to any contract or statute of such governmental body; and (g) Liens to secure
Debt incurred to extend, renew, refinance, replace or refund (or successive
extensions, renewals, refinancings, replacements or refundings), in whole or in
part, (i) any secured Debt existing on the date of the Senior Debt Indenture, or
(ii) any Debt secured by any Lien referred to in the foregoing clauses, so long
as in each such case the Lien does not extend to any other property and the Debt
so secured is not increased other than for reasonable costs related to such
extension, renewal, refinancing, replacement or refunding.
In addition to the foregoing, Protection One, Monitoring and their
respective Subsidiaries may incur a Lien or Liens to secure Debt (excluding Debt
secured by Liens permitted under the foregoing exceptions) the aggregate amount
of which, including Attributable Debt in respect of Sale and Leaseback
Transactions, does not exceed 10% of Consolidated Net Assets. Protection One,
Monitoring and their respective Subsidiaries may also incur a Lien or Liens to
secure any Debt incurred pursuant to a Sale and Leaseback Transaction, without
securing the Notes equally and ratably with or prior to such Debt, as
applicable, provided that such Sale and Leaseback Transaction is permitted by
the provisions of the Senior Debt Indenture described below in clauses (b) and
(c) under "-- Sale and Leaseback Transactions."
Sale and Leaseback Transactions
The Senior Debt Indenture will provide that none of Protection One,
Monitoring or their respective Subsidiaries will enter into any Sale and
Leaseback Transaction (except for a period, including renewals, not exceeding 36
months) unless (a) at the time of entering into such Sale and Leaseback
Transaction, Protection One, Monitoring or such Subsidiary would be entitled to
incur Debt, in a principal amount equal to the Attributable Debt in respect of
such Sale and Leaseback Transaction, secured by a Lien, without equally and
ratably securing the Notes; (b) Protection One, Monitoring or such Subsidiary
applies, within twelve months after the sale or transfer, an amount equal to the
greater of (i) the net proceeds of the assets sold pursuant to the Sale and
Leaseback Transaction, or (ii) the fair value (in the opinion of an executive
officer of Protection One or Monitoring, as applicable) of such assets to the
acquisition of or construction of assets or property used or to be used in the
ordinary course of business of Protection One, Monitoring or their respective
Subsidiaries; or (c) Protection One, Monitoring or such Subsidiary applies,
within twelve months after the sale or transfer, an amount equal to the net
proceeds of the assets sold pursuant to the Sale and Leaseback Transaction to
the voluntary defeasance or retirement of Debt (other than Debt that is held by
Protection One, Monitoring or
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their respective Subsidiaries or Debt of Protection One or Monitoring or their
respective Subsidiaries that is subordinate in right of payment to the Notes or
the Guarantees, as applicable), which amount will not be less than the fair
value (in the opinion of an executive officer of Protection One or Monitoring,
as applicable) of such assets (adjusted to reflect an amount expended by
Protection One or Monitoring as set forth in clause (b) above) less an amount
equal to the principal amount of such Debt voluntarily defeased or retired by
Protection One, Monitoring or such Subsidiary within such twelve-month period.
Subsidiary Guarantees
(a) The Senior Debt Indenture will provide that Monitoring will not permit
any Domestic Subsidiary to issue Debt or any Subsidiary to guarantee the payment
of any Debt of Monitoring or any Guarantor (in each case, the "Guaranteed Debt;"
Monitoring or the Guarantor that is primarily liable on the Guaranteed Debt
being the "Obligor") unless: (i) if such Subsidiary is not a Subsidiary
Guarantor, such Subsidiary simultaneously executes and delivers a guarantee
pursuant to a supplemental indenture to the Senior Debt Indenture of payment of
the Notes by such Subsidiary; provided, however, such guarantee shall be
required only to the extent and for so long as such Subsidiary guarantees the
Guaranteed Debt or such Debt is outstanding and (ii) if such Debt or the
Guaranteed Debt is by its express terms subordinated in right of payment to the
Notes or the Guarantee of such Obligor, any such Debt or Guarantee of such
Subsidiary Guarantor with respect to the Guaranteed Debt shall be subordinated
in right of payment to such Subsidiary Guarantor's Guarantee with respect to the
Notes substantially to the same extent as the Debt or Guaranteed Debt is
subordinated to the Notes or the Guarantee of such Obligor.
(b) The Senior Debt Indenture will require that (i) any Subsidiary
executing a Guarantee pursuant to clause (a) above will waive and will not in
any manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement indemnity or subrogation or any other rights against Monitoring or
any other Guarantor as a result of any payment by such Guarantor under its
Guarantee and (ii) such Subsidiary shall deliver to the Senior Trustee an
opinion of counsel to the effect that (A) such Guarantee of the Notes has been
duly executed and authorized and (B) such Guarantee of the Notes constitutes a
valid, binding and enforceable obligation of such Guarantor, except insofar as
enforcement thereof may be limited by bankruptcy, insolvency or similar laws
(including, without limitation, all laws relating to fraudulent transfers) and
except insofar as enforcement thereof is subject to general principles of
equity.
(c) No Subsidiary Guarantor may consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Subsidiary
Guarantor unless (i) the Person formed by or surviving any such consolidation or
merger (if other than such Subsidiary Guarantor) assumes all the obligations of
such Subsidiary Guarantor pursuant to a supplemental indenture under the Notes
and the Senior Debt Indenture and (ii) immediately after giving effect to such
transaction no Default or Event of Default exists.
Merger, Consolidation and Sale of Assets
The Senior Debt Indenture will provide that neither Monitoring nor any
Guarantor shall consolidate with or merge into any other corporation or sell,
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, unless: (1) the corporation formed by such consolidation or into
which Monitoring or a Guarantor, as applicable, is merged or the Person which
acquires by sale, conveyance or transfer, or which leases, the properties and
assets of Monitoring or a Guarantor, substantially as an entirety (A) shall be a
corporation, partnership, limited liability company or trust organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and (B) shall expressly assume, by an
indenture supplemental thereto, executed and delivered to the Senior Trustee, in
form reasonably satisfactory to the Senior Trustee, the obligations of
Monitoring and/or any Guarantor, as applicable, for the due and punctual payment
of the principal of, premium and Liquidated Damages, if any, and interest on all
the Notes and the performance and observance of every covenant of the Senior
Debt Indenture on the part of Monitoring or the Guarantees on the part of any
Guarantor to be performed or observed; (2) immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing; and (3) Monitoring or a Guarantor, as applicable, or such Person
shall have delivered to the Senior Trustee an
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Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such supplemental
indenture comply with the "Merger, Consolidation and Sale of Assets" provisions
of the Senior Debt Indenture and that all conditions precedent provided for
relating to such transaction have been satisfied. These provisions apply only to
a merger or consolidation in which Monitoring or a Guarantor, as applicable, is
not the surviving corporation and to sales, conveyances, leases and transfers by
Monitoring and any Guarantor as transferor or lessor.
The Senior Debt Indenture will further provide that upon consolidation by
Monitoring or any Guarantor, as applicable, with any other Person or merger by
Monitoring or a Guarantor, as applicable, into any other Person or any sale,
conveyance, transfer or lease of the properties and assets of Monitoring or any
Guarantor, as applicable, substantially as an entirety to any Person in
accordance with the preceding paragraph, the successor Person formed by such
consolidation or into which Monitoring or any Guarantor, as applicable, is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, Monitoring
under the Senior Debt Indenture and any Guarantor under the Guarantees, as
applicable, with the same effect as if such successor Person had been named as
Monitoring or any Guarantor therein, respectively, and in the event of any such
conveyance or transfer, Monitoring and the Guarantor, as applicable, except in
the case of a lease, shall be discharged of all obligations and covenants under
the Senior Debt Indenture and the Notes.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the New Notes to be resold as
set forth herein will initially be issued in the form of one or more Global
Notes (the "Global Notes"). The Global Notes will be deposited on the date of
the closing of the exchange of the Old Notes for the New Notes (the "Closing
Date") with, or on behalf of the Depositary and registered in the name of Cede &
Co., as nominee of the Depositary (such nominee being referred to herein as the
"Global Note Holder").
Notes that are issued as described below under "-- Certificated Notes" will
be issued in the form of registered definitive certificates (the "Certificated
Notes"). Upon the transfer of Certificated Notes, such Certificated Notes may,
unless all Global Notes have previously been exchanged for Certificated Notes,
be exchanged for an interest in the Global Note representing the principal
amount of Notes being transferred, subject to the transfer restrictions set
forth in the Senior Debt Indenture.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Depositary's
Participants or the Depositary's Indirect Participants.
Monitoring expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants designated by the Initial Purchasers with portions of
the principal amount of the Global Notes and (ii) ownership of the Notes
evidenced by the Global Notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depositary
(with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer New Notes evidenced by the
Global Note will be limited to such extent. For certain other restrictions on
the transferability of the New Notes, see "Notice to Investors."
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Senior Debt
Indenture of any Notes evidenced by the Global Notes.
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Beneficial owners of Notes evidenced by the Global Notes will not be considered
the owners or Holders thereof under the Senior Debt Indenture for any purpose,
including with respect to the giving of any directions, instructions or
approvals to the Senior Trustee thereunder. Neither Monitoring nor the Senior
Trustee will have any responsibility or liability for any aspect of the records
of the Depositary or for maintaining, supervising or reviewing any records of
the Depositary relating to the Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Note Holder in its capacity as the registered
Holder under the Indenture. Upon the terms of the Senior Debt Indenture,
Monitoring and the Senior Trustee may treat the persons in whose names Notes,
including the Global Notes, are registered as the owners thereof for the purpose
of receiving such payments. Consequently, neither Monitoring nor the Senior
Trustee has or will have any responsibility or liability for the payment of such
amounts to beneficial owners of Notes. Monitoring believes, however, that it is
currently the policy of the Depositary to immediately credit the accounts of the
relevant Participants with such payments, in amounts proportionate to their
respective holdings of beneficial interests in the relevant security as shown on
the records of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of New Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
Certificated Notes
Subject to certain conditions, any person having a beneficial interest in a
Global Note may, upon request to the Senior Trustee, exchange such beneficial
interest for Notes in the form of Certificated Notes. Upon any such issuance,
the Senior Trustee is required to register such Certificated Notes in the name
of, and cause the same to be delivered to, such person or persons (or the
nominee of any thereof). All such Certificated Notes would be subject to the
legend requirements described herein under "Notice to Investors." In addition,
if (i) Monitoring notifies the Senior Trustee in writing that the Depositary is
no longer willing or able to act as a depositary and Monitoring is unable to
locate a qualified successor within 90 days or (ii) Monitoring, at its option,
notifies the Senior Trustee in writing that it elects to cause the issuance of
Notes in the form of Certificated Notes under the Senior Debt Indenture, then,
upon surrender by the Global Note Holder of its Global Note, Notes in such form
will be issued to each person that the Global Note Holder and the Depositary
identify as being the beneficial owner of the related Notes.
Neither Monitoring nor the Senior Trustee will be liable for any delay by
the Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and Monitoring and the Senior Trustee may conclusively rely on, and will
be protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
Same Day Settlement and Payment
The Senior Debt Indenture will require that payments in respect of the
Notes represented by the Global Note (including principal, premium, if any,
interest and Liquidated Damages, if any) be made by wire transfer of immediately
available next day funds to the accounts specified by the Global Note Holder.
With respect to Certificated Notes, Monitoring will make all payments of
principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof or, if no such account is specified, by mailing a check to each such
Holder's registered address. Monitoring expects that secondary trading in the
Certificated Notes will also be settled in immediately available funds.
EVENTS OF DEFAULT
The following will be "Events of Default" under the Senior Debt Indenture
with respect to the Notes:
(1) default in the payment of interest on the Notes when such interest
becomes due and payable, and continuance of such default for a period of 60
days; or
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(2) default in the payment of the principal of (or premium, if any,
on) the Notes at their Maturity or upon any redemption and such default
shall continue for five or more days; or
(3) default in the performance, or breach, of any covenant or warranty
in the Senior Debt Indenture (other than a default in the performance, or
breach, of a covenant or warranty which is specifically dealt with
elsewhere under this "Events of Default" section), and continuance of such
default or breach for a period of 90 days after there has been given, by
registered or certified mail, to Monitoring and any Guarantor by the Senior
Trustee or to Monitoring, any Guarantor and the Senior Trustee by the
Holders of at least 33 1/3% of all outstanding Notes, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" thereunder; or
(4) the entry of a decree or order by a court having jurisdiction in
the premises adjudging Monitoring or any Guarantor bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of Monitoring or
any Guarantor under the Federal Bankruptcy Code or any other applicable
federal or state law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of Monitoring or any
Guarantor, or of any substantial part of the property of Monitoring or any
Guarantor, or ordering the winding up or liquidation of the affairs of
Monitoring or any Guarantor, and the continuance of any such decree or
order unstayed and in effect for a period of 90 consecutive days; or
(5) the institution by Monitoring or any Guarantor of proceedings to
be adjudicated bankrupt or insolvent, or the consent by Monitoring or any
Guarantor to the institution of bankruptcy or insolvency proceedings
against either of them, or the filing by either of them of a petition or
answer or consent seeking reorganization or relief under the Federal
Bankruptcy Code or any other applicable federal or state law, or the
consent by either of them, to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of Monitoring or any Guarantor, or of any
substantial part of the property of Monitoring or any Guarantor, or the
making by either of them of an assignment for the benefit of creditors.
The failure to redeem any Notes subject to a Conditional Redemption is not
an Event of Default if any event on which such redemption is so conditioned does
not occur and is not waived before the scheduled redemption date.
If an Event of Default described in clause (1), (2) or (3) above with
respect to the Notes at the time outstanding occurs and is continuing, then in
every such case the Senior Trustee or the Holders of not less than 33 1/3% in
principal amount of the outstanding Notes may declare the principal amount of
all of the Notes to be due and payable immediately, by a notice in writing to
Monitoring and any Guarantor (and to the Senior Trustee if given by Holders),
and upon any such declaration such principal amount (or specified portion
thereof) shall become immediately due and payable. If an Event of Default
described in clause (4) or (5) above occurs and is continuing, then the
principal amount of all the Notes shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Senior
Trustee or any Holder.
At any time after a declaration of acceleration with respect to the Notes
has been made, the Holders of a majority in principal amount of the outstanding
Notes, by written notice to Monitoring or any Guarantor and the Senior Trustee,
may rescind and annul such declaration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent default or impair any right consequent thereto.
Except as otherwise provided in the Senior Debt Indenture, or any
supplement thereto, the Holders of not less than a majority in principal amount
of the outstanding Notes may on behalf of the Holders of all the Notes waive any
past default described in clause (1), (2), (3) of the first paragraph of this
section (or, in the case of a default described in clause (4) or (5) of the
first paragraph of this section, the Holders of not less than a majority in
principal amount of all outstanding Notes may waive any such past default), and
its consequences, except a default (i) in respect of the payment of the
principal of (or premium, if any, on) or
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<PAGE> 35
interest on any Note, or (ii) in respect of a covenant or provision which under
the Senior Debt Indenture cannot be modified or amended without the consent of
the Holder of each outstanding Note affected.
Upon any such waiver, any such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of the Senior Debt Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default.
During the existence of an Event of Default, the Senior Trustee is required
to exercise such rights and powers vested in it under the Senior Debt Indenture
in good faith. Subject to the provisions of the Senior Debt Indenture relating
to the duties of the Senior Trustee, in case an Event of Default shall occur and
be continuing, the Senior Trustee is not under any obligation to exercise any of
its rights or powers under the Senior Debt Indenture at the request or direction
of any of the Holders unless such Holders shall have offered to the Senior
Trustee reasonable security or indemnity. Subject to certain provisions
concerning the rights of the Senior Trustee, with respect to the Notes, the
Holders of not less than a majority in principal amount of the outstanding Notes
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Senior Trustee, or exercising any
trust or power conferred on the Senior Trustee under the Senior Debt Indenture.
Monitoring is required to deliver to the Senior Trustee, within 120 days
after the end of each fiscal year, a brief certificate of its compliance with
all of the conditions and covenants under the Senior Debt Indenture.
DEFEASANCE OR COVENANT DEFEASANCE
The Senior Debt Indenture will provide that Monitoring may, at its option
and at any time, terminate its obligations with respect to the outstanding Notes
and the obligations of the Guarantors with respect to the Guarantees
("defeasance"). Such defeasance means that Monitoring shall be deemed to have
paid and discharged the entire indebtedness represented by the outstanding
Notes, except for the following which shall survive until otherwise terminated
or discharged under the Senior Debt Indenture: (A) the rights of Holders of such
outstanding Notes to receive, solely from the trust fund described in the Senior
Debt Indenture, payments in respect of the principal of (and premium, if any,
on) and interest on such Notes when such payments are due, (B) obligations of
Monitoring to issue temporary Notes, register the transfer or exchange of any
Notes, replace mutilated, destroyed, lost or stolen Notes, maintain an office or
agency for payments in respect of the Notes and, if Monitoring acts as its own
Paying Agent, hold in trust, money to be paid to such Persons entitled to
payment, and with respect to "additional amounts," as contemplated by the Senior
Debt Indenture, if any, on such Notes as contemplated in the Senior Debt
Indenture, (C) the rights, powers, trusts, duties and immunities of the Senior
Trustee under the Senior Debt Indenture and (D) the defeasance provisions of the
Senior Debt Indenture. In addition, Monitoring may, at its option and at any
time, elect to terminate the obligations of Monitoring, POI and their respective
Subsidiaries with respect to certain covenants that are set forth in the Senior
Debt Indenture and any omission to comply with such obligations shall not
constitute a Default or an Event of Default with respect to the Notes ("covenant
defeasance").
In order to exercise either defeasance or covenant defeasance:
(1) Monitoring shall irrevocably have deposited or caused to be
deposited with the Senior Trustee, in trust, for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Notes, (A) money in an amount
(in such currency in which such Notes are then specified as payable at
Stated Maturity), or (B) U.S. Government Obligations applicable to such
Notes which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later than
one day before the due date of any payment of principal (including any
premium) and interest, if any, under such Notes, money in an amount or (C)
a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants to pay and discharge (i)
the principal of (and premium, if any, on) and interest on the outstanding
Notes on the Stated Maturity (or any Redemption Date selected by
Monitoring, if applicable) of such principal (and premium, if any) or
installment or interest and (ii) any mandatory sinking fund payments or
analogous payments applicable to the outstanding Notes on the day on which
such payments are due and payable in accordance with the terms of the
Senior Debt Indenture
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<PAGE> 36
and of such Notes; provided, however, that the Senior Trustee shall have
been irrevocably instructed to apply such money or the proceeds of such
U.S. Government Obligations to said payments with respect to such Notes.
Before such a deposit, Monitoring may give to the Senior Trustee, in
accordance with the redemption provisions in the Senior Debt Indenture, a
notice of its election to redeem all or any portion of such outstanding
Notes at a future date in accordance with the terms of the Notes and the
redemption provisions of the Senior Debt Indenture, which notice shall be
irrevocable. Such irrevocable redemption notice, if given, shall be given
effect in applying the foregoing;
(2) such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, the Senior Debt
Indenture or any other material agreement or instrument to which Monitoring
is a party or by which it is bound;
(3) in the case of a covenant defeasance, Monitoring shall have
delivered to the Senior Trustee an Opinion of Counsel to the effect that
the Holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred;
(4) such defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions or
limitations in connection therewith pursuant to the Senior Debt Indenture;
and
(5) Monitoring shall have delivered to the Senior Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent under the Senior Debt Indenture to either defeasance or covenant
defeasance, as the case may be, have been satisfied.
AMENDMENTS AND WAIVERS
The Senior Debt Indenture will provide that at any time and from time to
time, Monitoring and the Senior Trustee may, without the consent of any holder
of Notes, enter into one or more indentures supplemental thereto for certain
specified purposes, including, among other things, to (i) cure ambiguities,
defects or inconsistencies, or to make any other provisions with respect to
questions or matters arising under the Senior Debt Indenture; (ii) effect or
maintain the qualification of the Senior Debt Indenture under the TIA; (iii)
secure any Notes; (iv) add covenants for the protection of the holders of Notes;
(vi) to establish the forms or terms of Notes; (vii) make any other change that
does not adversely affect in all material respects the rights under such Senior
Debt Indenture of the holders of Notes thereunder; (viii) add any Guarantee;
(ix) evidence the acceptance of appointment by a successor trustee; and (x) to
evidence the succession of another person to Monitoring or any Guarantor and the
assumption by any such successor of the obligations of Monitoring or such
Guarantor in accordance with the Senior Debt Indenture and the Notes. Other
amendments and modifications of the Senior Debt Indenture or the Notes may be
made by Monitoring and the Senior Trustee with the consent of the holders of not
less than a majority of the aggregate principal amount of all of the then
outstanding Notes; provided, however, that no such modification or amendment
may, without the consent of the holder of each outstanding Note affected
thereby, (1) change the Stated Maturity of the principal of, or any installment
of interest on, any Note or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemption thereof, or change
any obligation of Monitoring to pay any "additional amounts" contemplated by the
Senior Debt Indenture (except as contemplated and permitted by certain
provisions of the Senior Debt Indenture), or adversely affect, after the event
giving rise to any right of repayment shall have occurred, any right of
repayment at the option of any Holder of any Note, or change any place of
payment described in the Senior Note Indenture where, or the currency in which,
any Note or any premium or the interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption or repayment at the option of
the Holder, on or after the redemption date or repayment date, as the case may
be), or adversely affect any right to convert or exchange any Notes as may be
provided pursuant to the Senior Debt Indenture, or (2) reduce the percentage in
principal amount of the outstanding Notes of any series, the consent of whose
Holders is required for any such supplemental indenture, for any waiver of
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<PAGE> 37
compliance with certain provisions of the Senior Debt Indenture or certain
defaults thereunder and their consequences provided for in the Senior Debt
Indenture.
CERTAIN DEFINITIONS
"Attributable Debt" means, as to any particular lease under which any
Person is at the time liable at any date as of which the amount thereof is to be
determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof, excluding renewals,
discounted at a rate per annum equal to the prevailing market interest rate, at
the time such lease was entered into, on United States Treasury obligations
having a maturity substantially the same as the average term of such lease, plus
3%. The net amount of rent required to be paid under any such lease for any such
period shall be the amount of the rent payable by the lessee with respect to
such period, after excluding amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water rates and similar
charges and contingent rents such as those based on sales. In the case of any
lease which is terminable by the lessee upon the payment of a penalty, such net
amount shall also include the amount of such penalty, but no rent shall be
considered as required to be paid under such lease subsequent to the first date
upon which it may be so terminated.
"Change of Control" means (i) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act), other than the Principal and its Related Parties, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and rule 13d-5 under the Exchange
Act), directly or indirectly, of more than 35% of the Voting Stock of POI or
Monitoring (measured by voting power rather than number of shares) or (ii) the
first day on which a majority of the members of the Board of Directors of POI or
Monitoring are not Continuing Directors.
"Conditional Redemption" means a redemption pursuant to a notice of
redemption that provides that it is subject to the occurrence of any event
before the date fixed for such redemption as described in such notice of
redemption.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Consolidated Net Assets" means the total assets shown on the most recent
quarterly reviewed consolidated balance sheet of Monitoring and its consolidated
subsidiaries, after deducting the amount of all current liabilities and goodwill
and trademarks.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Monitoring who (i) was a member of such Board of
Directors on the date of the Senior Debt Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Domestic Subsidiary" means a subsidiary organized under the laws of one of
the states of the United States or the District of Columbia.
"Holder" means a Person in whose name a Note is registered.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) and BBB-(or the equivalent) by Moody's Investors Service, Inc.
(or any successor to the rating agency business thereof) and Standard & Poor's
Ratings Group (or any successor to the rating agency business thereof),
respectively.
"Lien" means any mortgage, charge, security interest, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security agreement except: (a) liens for
taxes, assessments, levies and other governmental charges (i) which are not yet
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<PAGE> 38
delinquent or (ii) which are being contested in good faith by all appropriate
proceedings; (b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, brokers' or other like liens (i) which do not remain unsatisfied or
undischarged for a period of more than 90 days, or (ii) which are being
contested in good faith by all appropriate proceedings; (c) attachment or
judgment liens not giving rise to or an Event of Default and which are being
contested in good faith by appropriate proceedings; (d) pledges or deposits in
connection with workers compensation, unemployment insurance and other social
security legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements or to obtain the benefit of, or to
comply with, laws; (e) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; and (f) easements, rights of way,
restrictions, development orders, plats and other similar encumbrances.
"Maturity," when used with respect to any Notes, means the date on which
the principal of such Notes or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment or otherwise.
"Officers' Certificate" means a certificate signed by the Chief Executive
Officer, the President, the Chief Financial Officer, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
Monitoring, and delivered to the Senior Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for Monitoring, including an employee of Monitoring.
"Paying Agent" means any Person (including Monitoring acting as Paying
Agent) authorized by Monitoring to pay the principal of (and premium, if any,
on) or interest on any Notes on behalf of Monitoring.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Principal" means Western Resources, Inc.
"Rating Agencies" mean Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc. ("S&P"), and Moody's Investors Service, Inc. ("Moody's") or
any successor to the respective rating agency businesses thereof.
"Rating Category" means (i) with respect to S&P, any of the following
categories: AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor
categories); (ii) with respect to Moody's any of the following categories: Aaa,
Aa, A, Baa, Ba, B, Caa, Ca and C (or equivalent successor categories) and (iii)
the equivalent of any such category of S&P and Moody's used by another Rating
Agency. In determining whether the rating of the Notes has decreased by one or
more gradations, gradations within Rating Categories (+ and - for S&P: 1, 2 and
3 for Moody's; or the equivalent gradations for another Rating Agency) shall be
taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to
BB, as well as from BB- to B+, will constitute a decrease of one gradation).
"Rating Decline" means (i) a decrease of two or more gradations (including
gradations within Rating Categories as well as between Rating Categories) in the
rating of the Notes by either Rating Agency from the rating of the Notes by such
Rating Agency or (ii) a withdrawal of the rating of the Notes by either Rating
Agency, provided that such decrease or withdrawal occurs on, or within 90 days
after, the date of public notice of the occurrence of a Change of Control or of
the intention by the Company to effect a Change of Control (which period shall
be extended so long as the rating of the Notes is under publicly announced
consideration for possible downgrade by either Rating Agency).
"Related Party" with respect to the Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of the Principal and/or such other Persons referred to
in the immediately preceding clause (A).
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"Sale and Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than 270 days after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement is the date of the
last payment of rent or any other amount due under such arrangement prior to the
first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"Stated Maturity," when used with respect to any Notes or any installment
of principal thereof or interest thereon, means the date specified in such Notes
as the fixed date on which the principal of such Notes or such installment of
principal or interest is due and payable.
"Subsidiary" means any corporation of which at the time of determination a
Person, directly and/or indirectly through one or more Subsidiaries, owns more
than 50% of the Voting Stock.
"Subsidiary Guarantors" means each of WestSec and Westar and each other
direct and indirect Subsidiary of Monitoring that is required to execute a
Guarantee pursuant to the Senior Debt Indenture.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force at the date as of which the Senior Debt Indenture were executed, except
that any supplemental indenture executed pursuant to the Senior Debt Indenture
shall conform to the requirements of the Trust Indenture Act as in effect on the
date of execution thereof.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" means stock of the class or classes having general voting
power under ordinary circumstances to elect at least a majority of the board of
directors, managers, trustees or individuals performing similar functions of a
Person (irrespective of whether or not at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).
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<PAGE> 40
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does not
purport to be a complete analysis of all potential tax effects. The discussion
is based upon the Internal Revenue Code of 1986, as amended, Treasury
regulations, Internal Revenue Service rulings and pronouncements, and judicial
decisions now in effect, all of which are subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect a holder of the New Notes.
The description does not consider the effect of any applicable foreign, state,
local or other tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF OLD NOTES FOR NEW NOTES
The exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not constitute a sale or an exchange for federal income tax purposes.
Accordingly, such exchange should have no federal income tax consequences to
holders of Old Notes.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes pursuant to the Exchange Offer, where such Old Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired as a result of market-making activities or other trading
activities. Monitoring has agreed that, for a period of 90 days after the
Registration Statement is declared effective, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until , 1998, all dealers
effecting transactions in the New Notes may be required to deliver a Prospectus.
Monitoring and the Guarantors will not receive any proceeds from any sale
of New Notes by broker-dealers. New Notes received by broker-dealers for their
own account pursuant to the Exchange Offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such methods
of resale, at market prices prevailing at the time of resale, at prices related
to such prevailing market prices or negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Registration Statement is declared
effective, Monitoring will promptly send additional copies of this Prospectus
and any amendment or supplement to this Prospectus to any broker-dealer that
requests such documents in the Letter of Transmittal or otherwise. Monitoring
has agreed to pay all expenses incident to the Exchange Offer (including the
expenses of one counsel for the holders of the Notes) other than commissions or
concessions of any broker-dealers and will indemnify holders of the Old
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<PAGE> 41
Notes (including any broker-dealers) against certain liabilities, including
certain liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes and Guarantees will be passed upon for
Monitoring and the Guarantors by Weil, Gotshal & Manges LLP, Dallas, Texas and
New York, New York.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1996 and
1997 and the consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1997,
referenced in this Prospectus have been included herein in reliance on the
report of Arthur Andersen LLP, independent accountants, given on the authority
of that firm as experts in accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITY OTHER THAN THE
SECURITIES TO WHICH IT RELATES, OR ANY OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SECURITIES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN
THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................... i
Incorporation of Certain Documents by i
Reference................................
Forward-Looking Statements................. ii
Certain Definitions........................ ii
Prospectus Summary......................... 1
Risk Factors............................... 7
Ratio of Earnings to Combined Fixed 14
Charges..................................
The Exchange Offer......................... 15
Description of the New Notes............... 22
Certain United States Federal Income Tax 35
Considerations...........................
Plan of Distribution....................... 35
Legal Matters.............................. 36
Experts.................................... 36
</TABLE>
------------------------
UNTIL , 1998, ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW
NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
OFFER TO EXCHANGE ALL OUTSTANDING
7 3/8% SENIOR
NOTES DUE 2005
FOR
7 3/8% SENIOR
NOTES DUE 2005
---------------------
PROSPECTUS
---------------------
, 1998
------------------------------------------------------------
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<PAGE> 43
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificates of Incorporation and the Bylaws of POI, Monitoring,
Network Holdings, Network Multi-Family and Comsec and the Articles of
Incorporation and Bylaws of WestSec, provide for the indemnification of
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware (the "DGCL") and the Kansas General
Corporation Law (the "KGCL"), as applicable. The Articles of Incorporation and
Bylaws of DSC provide for the indemnification of directors and, by a majority
vote of its stockholders, officers to the fullest extent permitted by the
Maryland General Corporation Law (the "MGCL"). Pursuant to the provisions of
Section 145 of the DGCL, each of POI and Monitoring has the power to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he is or was a director, officer, employee, or agent of such company
against any and all expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such action, suit or
proceeding. The power to indemnify under the DGCL only applies if such person
acted in good faith and in a manner he reasonably believed to be in the best
interest, or not opposed to the best interest, of such company and with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. Section 17-6305 of the KGCL provides for indemnification
by a corporation of its corporate officers, directors, employees and agents or,
if serving at the request of corporation, of any other corporation, partnership,
joint venture, trust or other enterprise. The KGCL provides that a corporation
may indemnify such persons who have been, are, or may become parties to an
action, suit or proceeding due to their status as directors, officers, employees
or agents of the corporation. Further, the KGCL grants authority to a
corporation to implement its own broader indemnification policy. Section 2-418
of the MGCL permits a corporation to indemnify any director or officer of such
corporation made party to any proceeding by reason of service in that capacity
unless it is established that (i) the act of such person was material to the
matter giving rise to the proceedings and was committed in bad faith or was the
result of active and deliberate dishonesty, (ii) such person actually received
an improper personal benefit, or (iii) such person had reasonable cause to
believe the act or omission was unlawful.
Indemnification is not available if such person has been adjudged to have
been liable to Monitoring, unless and only to the extent that the Court of
Chancery or the court in such action determines that, despite the adjudication
of liability, but in view of all of the circumstances, the person is reasonably
and fairly entitled to indemnification for such expenses as the court shall deem
proper. The statutes also expressly provide that the power to indemnify
authorized thereby is not exclusive of any rights granted under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise.
The above discussion of the Certificates of Incorporation and Bylaws of POI
and Monitoring, the Articles of Incorporation and Bylaws of WestSec and Westar,
Section 145 of the DGCL and Section 17-6305 of the KGCL is not intended to be
exhaustive and is qualified in its entirety by reference thereto.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of POI,
Monitoring, WestSec and Westar pursuant to the foregoing provisions, or
otherwise, POI, Monitoring, WestSec and Westar have been advised that in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment of expenses incurred or paid by a director, officer or controlling
person thereof in the successful defense of any action, suit or proceeding) is
asserted by a director, officer or controlling person in connection with the
securities being registered, POI, Monitoring, WestSec and Westar will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-1
<PAGE> 44
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.1 -- Certificate of Incorporation of POI, as amended
(incorporated by reference to the Form 10-Q filed for the
fiscal quarter ended June 30, 1998).
3.2 -- Bylaws of POI (incorporated by reference to the Form 10-Q
filed for the fiscal quarter ended June 30, 1998).
3.3 -- Certificate of Incorporation of Monitoring, as amended
(incorporated by reference to the Form 10-Q filed for the
fiscal quarter ended June 30, 1998).
3.4 -- Bylaws of Monitoring (incorporated by reference to the
Form 10-Q filed for the fiscal quarter ended June 30,
1998).
3.5 -- Articles of Incorporation of WestSec, as amended.*
3.6 -- Bylaws of WestSec.*
3.7 -- Articles of Incorporation of Westar, as amended.*
3.8 -- Bylaws of Westar.*
3.9 -- Certificate of Incorporation of Network Holdings, as
amended.**
3.10 -- Bylaws of Network Holdings.**
3.11 -- Certificate of Incorporation of Network Multi-Family, as
amended.**
3.12 -- Bylaws of Network Multi-Family.**
3.13 -- Articles of Incorporation of DSC, as amended.**
3.14 -- Bylaws of DSC.**
3.15 -- Certificate of Incorporation of Comsec, as amended.**
3.16 -- Bylaws of Comsec**
4.1 -- Indenture, dated as of August 17, 1998, among Monitoring,
as issuer, the Guarantors named therein and The Bank of
New York, as trustee.*
4.2 -- Supplement to Indenture, among Monitoring, as issuer, the
Guarantors named therein and The Bank of New York, as
trustee.**
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the validity
of the securities registered hereby.**
10.1 -- Purchase Agreement, dated as of August 12, 1998, among
Monitoring, as issuer, the Guarantors named therein and
the Initial Purchasers.*
10.2 -- Registration Rights Agreement, dated as of August 17,
1998, among Monitoring, the Guarantors named therein and
the Initial Purchasers.*
12.1 -- Statement regarding computation of ratio of earnings to
fixed charges (incorporated by reference to the Amendment
No. 1 to Form S-3 of POI and Monitoring filed on May 5,
1998, Registration No. 333-50383).
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion to be filed as Exhibit 5.1 to the Registration
Statement).
23.2 -- Consent of Arthur Andersen LLP, independent auditors.*
24.1 -- Powers of Attorney of directors and executive officers of
the Co-Registrants (included on the signature pages
hereto).
25.1 -- Statement of Eligibility and Qualification of The Bank of
New York, as trustee, under the Indenture listed as
Exhibit 4.1 hereto on Form T-1.**
99.1 -- Form of Letter of Transmittal.*
99.2 -- Form of Notice of Guaranteed Delivery.*
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment.
II-2
<PAGE> 45
ITEM 22. UNDERTAKINGS.
(a) The undersigned Co-Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) The undersigned Co-Registrants hereby undertake to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the
request.
(5) The undersigned Co-Registrants hereby undertake to supply by means
of a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.
II-3
<PAGE> 46
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each
Co-Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on September 21, 1998.
PROTECTION ONE, INC.
PROTECTION ONE ALARM MONITORING, INC.
By: /s/ JOHN W. HESSE
-------------------------------------
John W. Hesse
Executive Vice President and Chief
Executive Officer
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of James M. Mackenzie, Jr. and John W.
Hesse, or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full Power of Substitution and Resubstitution, for such person
and in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of Protection One Alarm Monitoring, Inc.
and the Guarantors named therein under the Securities Act of 1933, as amended,
including, without limitation the generality of the foregoing, to sign the
Registration Statement in the name and on behalf of Protection One, Inc. and
Protection One Alarm Monitoring, Inc., or on behalf of the undersigned as a
director or officer of Protection One, Inc. and Protection One Alarm Monitoring,
Inc., and any and all amendments or supplements to the Registration Statement,
including any and all stickers and post-effective amendments to the Registration
Statement, and to sign any and all additional Registration Statements relating
to the same offering of Securities as the Registration Statement that are filed
pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission and any applicable
securities exchange or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes or substitute, may lawfully
do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES M. MACKENZIE, JR. President, Chief Executive September 21, 1998
- ----------------------------------------------------- Officer and Director
James M. Mackenzie, Jr. (Principal Executive
Officer)
/s/ JOHN W. HESSE Executive Vice President, September 21, 1998
- ----------------------------------------------------- Chief Financial Officer
John W. Hesse and Secretary (Principal
Financial and Accounting
Officer)
/s/ PETER C. BROWN Director September 21, 1998
- -----------------------------------------------------
Peter C. Brown
</TABLE>
II-4
<PAGE> 47
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ROBERT M. CHEFITZ Director September 21, 1998
- -----------------------------------------------------
Robert M. Chefitz
/s/ HOWARD A. CHRISTENSEN Director September 21, 1998
- -----------------------------------------------------
Howard A. Christensen
/s/ BEN M. ENIS Director September 21, 1998
- -----------------------------------------------------
Ben M. Enis
/s/ JOSEPH J. GARDNER Director September 21, 1998
- -----------------------------------------------------
Joseph J. Gardner
/s/ WILLIAM J. GREMP Director September 21, 1998
- -----------------------------------------------------
William J. Gremp
/s/ STEVEN L. KITCHEN Director September 21, 1998
- -----------------------------------------------------
Steven L. Kitchen
/s/ CARL M. KOUPAL, JR. Director September 21, 1998
- -----------------------------------------------------
Carl M. Koupal, Jr.
/s/ JOHN C. NETTELS, JR. Director September 21, 1998
- -----------------------------------------------------
John C. Nettels, Jr.
/s/ JANE DRESNER SADAKA Director September 21, 1998
- -----------------------------------------------------
Jane Dresner Sadaka
/s/ JAMES Q. WILSON Director September 21, 1998
- -----------------------------------------------------
James Q. Wilson
</TABLE>
II-5
<PAGE> 48
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on September 21, 1998.
WESTSEC, INC.
By: /s/ JOHN W. HESSE
-------------------------------------
John W. Hesse
Treasurer and Secretary
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of James M. Mackenzie, Jr. and John W.
Hesse, or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full Power of Substitution and Resubstitution, for such person
and in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of Protection One Alarm Monitoring, Inc.
and the Guarantors named therein under the Securities Act of 1933, as amended,
including, without limitation the generality of the foregoing, to sign the
Registration Statement in the name and on behalf of WestSec, Inc., or on behalf
of the undersigned as a director or officer of WestSec, Inc., and any and all
amendments or supplements to the Registration Statement, including any and all
stickers and post-effective amendments to the Registration Statement, and to
sign any and all additional Registration Statements relating to the same
offering of Securities as the Registration Statement that are filed pursuant to
Rule 462 under the Securities Act of 1933, as amended, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEVEN A. MILLSTEIN President and Director September 21, 1998
- ----------------------------------------------------- (Principal Executive
Steven A. Millstein Officer)
/s/ JOHN W. HESSE Treasurer, Secretary and September 21, 1998
- ----------------------------------------------------- Director (Principal
John W. Hesse Financial and Accounting
Officer)
/s/ JOHN E. MACK, III Director September 21, 1998
- -----------------------------------------------------
John E. Mack, III
</TABLE>
II-6
<PAGE> 49
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on September 21, 1998.
WESTAR SECURITY, INC.
By: /s/ JOHN W. HESSE
----------------------------------
John W. Hesse
Treasurer and Secretary
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of James M. Mackenzie, Jr. and John W.
Hesse, or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full Power of Substitution and Resubstitution, for such person
and in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of Protection One Alarm Monitoring, Inc.
and the Guarantors named therein under the Securities Act of 1933, as amended,
including, without limitation the generality of the foregoing, to sign the
Registration Statement in the name and on behalf of Westar Security, Inc., or on
behalf of the undersigned as a director or officer of Westar Security, Inc., and
any and all amendments or supplements to the Registration Statement, including
any and all stickers and post-effective amendments to the Registration
Statement, and to sign any and all additional Registration Statements relating
to the same offering of Securities as the Registration Statement that are filed
pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission and any applicable
securities exchange or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes or substitute, may lawfully
do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEVEN A. MILLSTEIN President and Director September 21, 1998
- ----------------------------------------------------- (Principal Executive
Steven A. Millstein Officer)
/s/ JOHN W. HESSE Treasurer, Secretary and September 21, 1998
- ----------------------------------------------------- Director (Principal
John W. Hesse Financial and Accounting
Officer)
/s/ JOHN E MACK, III Director September 21, 1998
- -----------------------------------------------------
John E Mack, III
</TABLE>
II-7
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each
Co-Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on September 21, 1998.
NETWORK HOLDINGS, INC.
NETWORK MULTI-FAMILY
SECURITY CORPORATION
By: /s/ JOHN W. HESSE
----------------------------------
John W. Hesse
Assistant Secretary
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of James M. Mackenzie, Jr. and John W.
Hesse, or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full Power of Substitution and Resubstitution, for such person
and in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of Protection One Alarm Monitoring, Inc.
and the Guarantors named therein under the Securities Act of 1933, as amended,
including, without limitation the generality of the foregoing, to sign the
Registration Statement in the name and on behalf of Network Holdings, Inc. and
Network Multi-Family Security Corporation, or on behalf of the undersigned as a
director or officer of Network Holdings, Inc. and Network Multi-Family Security
Corporation, and any and all amendments or supplements to the Registration
Statement, including any and all stickers and post-effective amendments to the
Registration Statement, and to sign any and all additional Registration
Statements relating to the same offering of Securities as the Registration
Statement that are filed pursuant to Rule 462 under the Securities Act of 1933,
as amended, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting unto
said attorneys-in-fact and agents, each acting alone, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes or substitute, may lawfully
do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEVE V. WILLIAMS President and Director September 21, 1998
- ----------------------------------------------------- (Principal Executive
Steve V. Williams Officer)
/s/ JOHN W. HESSE Assistant Secretary and September 21, 1998
- ----------------------------------------------------- Director (Principal
John W. Hesse Financial and Accounting
Officer)
/s/ JOHN E. MACK, III Director September 21, 1998
- -----------------------------------------------------
John E. Mack, III
</TABLE>
II-8
<PAGE> 51
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on September 21, 1998.
DSC ENTERPRISES, INC.
By: /s/ JOHN W. HESSE
----------------------------------
John W. Hesse
Treasurer and Secretary
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of James M. Mackenzie, Jr. and John W.
Hesse, or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full Power of Substitution and Resubstitution, for such person
and in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of Protection One Alarm Monitoring, Inc.
and the Guarantors named therein under the Securities Act of 1933, as amended,
including, without limitation the generality of the foregoing, to sign the
Registration Statement in the name and on behalf of DSC Enterprises, Inc., or on
behalf of the undersigned as a director or officer of DSC Enterprises, Inc., and
any and all amendments or supplements to the Registration Statement, including
any and all stickers and post-effective amendments to the Registration
Statement, and to sign any and all additional Registration Statements relating
to the same offering of Securities as the Registration Statement that are filed
pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission and any applicable
securities exchange or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes or substitute, may lawfully
do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEVEN A. MILLSTEIN President and Director September 21, 1998
- ----------------------------------------------------- (Principal Executive
Steven A. Millstein Officer)
/s/ JOHN W. HESSE Treasurer, Secretary and September 21, 1998
- ----------------------------------------------------- Director (Principal
John W. Hesse Financial and Accounting
Officer)
/s/ JOHN E. MACK, III Vice President and Director September 21, 1998
- -----------------------------------------------------
John E. Mack, III
</TABLE>
II-9
<PAGE> 52
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on September 21, 1998.
COMSEC/NARRAGANSETT SECURITY, INC.
By: /s/ JOHN W. HESSE
------------------------------------
John W. Hesse
Treasurer and Secretary
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of James M. Mackenzie, Jr. and John W.
Hesse, or any of them, each acting alone, his true and lawful attorney-in-fact
and agent, with full Power of Substitution and Resubstitution, for such person
and in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of Protection One Alarm Monitoring, Inc.
and the Guarantors named therein under the Securities Act of 1933, as amended,
including, without limitation the generality of the foregoing, to sign the
Registration Statement in the name and on behalf of Comsec/Narragansett
Security, Inc. or on behalf of the undersigned as a director or officer of
Comsec/Narragansett Security, Inc., and any and all amendments or supplements to
the Registration Statement, including any and all stickers and post-effective
amendments to the Registration Statement, and to sign any and all additional
Registration Statements relating to the same offering of Securities as the
Registration Statement that are filed pursuant to Rule 462 under the Securities
Act of 1933, as amended, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and any applicable securities exchange or securities self-regulatory
body, granting unto said attorneys-in-fact and agents, each acting alone, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS K. RANKIN President September 21, 1998
- -----------------------------------------------------
Thomas K. Rankin
/s/ JOHN E. MACK, III Vice President and Director September 21, 1998
- -----------------------------------------------------
John E. Mack, III
/s/ JOHN W. HESSE Secretary, Treasurer and September 21, 1998
- ----------------------------------------------------- Director
John W. Hesse
/s/ STEVEN A. MILLSTEIN Director September 21, 1998
- -----------------------------------------------------
Steven A. Millstein
</TABLE>
II-10
<PAGE> 53
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.5 -- Articles of Incorporation of WestSec, as amended.
3.6 -- Bylaws of WestSec.
3.7 -- Articles of Incorporation of Westar, as amended.
3.8 -- Bylaws of Westar.
4.1 -- Indenture, dated as of August 17, 1998, among Monitoring,
as issuer, the Guarantors named therein and The Bank of
New York, as trustee.
10.1 -- Purchase Agreement, dated as of August 12, 1998, among
Monitoring, as issuer, the Guarantors named therein and
the Initial Purchasers.
10.2 -- Registration Rights Agreement, dated as of August 17,
1998, among Monitoring, the Guarantors named therein and
the Initial Purchasers.
23.2 -- Consent of Arthur Andersen LLP, independent auditors.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
</TABLE>
<PAGE> 1
EXHIBIT 3.5
ARTICLES OF INCORPORATION
OF
WestSec, Inc.
The undersigned sole incorporator hereby undertakes to form and
establish a corporation FOR PROFIT under the laws of the State of Kansas.
FIRST: The name of the Corporation is WestSec, Inc.
SECOND: The location of its registered office in this state is 818
Kansas Avenue, Topeka, Shawnee County, Kansas, 66612.
THIRD: The name and address of its resident agent in this state is
Stacy F. Kramer, 818 Kansas Avenue, Topeka, Shawnee County, Kansas 66612.
FOURTH: This Corporation is organized FOR PROFIT and the nature of its
business is to engage in any lawful act or activity for which corporations may
be organized under the Kansas General Corporation Code. Provided however, this
Corporation may not engage in the business of an electric or retail natural gas
utility.
FIFTH: The Corporation is authorized to issue only one class of common
stock. The total number of shares of stock which the Corporation shall have
authority to issue shall be ONE THOUSAND (1,000) Shares of NO PAR VALUE COMMON
STOCK. Such shares may be issued for such consideration as is determined from
time to time by the Board of Directors of the Corporation.
SIXTH: The business and affairs of the Corporation shall be managed by
its Board of Directors. The powers of the Incorporator are to terminate upon the
filing of the ARTICLES OF INCORPORATION with the Secretary of State. The name
and mailing address of the person who is to serve as sole Director until the
-1-
<PAGE> 2
first meeting of Stockholders or until his successor is duly elected and
qualified is:
Mark A. Ruelle
818 South Kansas Avenue
Topeka, Kansas 66601
The number of Directors, if more than one, shall be fixed by, or in the
manner provided in, the BYLAWS of the Corporation. Directors need not be
Stockholders of the Corporation.
SEVENTH: The name and mailing address of the sole incorporator is:
Richard D. Terrill
818 South Kansas Avenue
Topeka, Kansas 66601
EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and its Directors and Stockholders, it is
further provided:
a. In furtherance, and not in limitation of the powers conferred by the
laws of the State of Kansas, the Board of Directors is expressly authorized and
empowered:
(1) To make, alter, amend or repeal the Bylaws in any manner not
inconsistent with the laws of the State of Kansas or these Articles of
Incorporation, subject to the power of the Stockholders to amend, alter or
repeal the Bylaws made by the Board of Directors or to limit or restrict the
power of the Board of Directors so to make, alter, amend or repeal the Bylaws;
(2) Without the assent or vote of the Stockholders, to authorize and
issue obligations of the Corporation, secured or unsecured, to include therein
such provisions as to redeemability, convertibility or otherwise, as the Board
of Directors in its sole discretion may determine, and to authorize
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<PAGE> 3
the mortgaging or pledging, as security therefor, of any property of the
Corporation, real or personal, including after-acquired property;
(3) To determine the manner in which the votes of Stockholders for the
election of Directors shall be evidenced, which need not be by written ballot.
b. Any Director or any Officer elected or appointed by the Stockholders
or by the Board of Directors may be removed at any time in such manner as shall
be provided in the Bylaws of the Corporation.
c. The holders of this Corporation's Common Stock shall not have
preemptive rights.
d. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them or between this Corporation
and its Stockholders or any class of them, any court of competent jurisdiction
within the State of Kansas, on the application in a summary way of this
Corporation or of any creditor or Stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
K.S.A. 17-6901 or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions of
K.S.A. 17-6808, may order a meeting of the creditors or class of creditors, or
of the Stockholders or class of Stockholders of this Corporation, as the case
may be, to be summoned in such manner as said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, or of the Stockholders or class of Stockholders of this Corporation,
as the case may be, agree to any compromise or arrangement and to any
reorganization of this Corporation as consequence of such compromise or
arrangement, said reorganization, if sanctioned by the court to which said
application has been made, shall be binding on all the creditors or class of
creditors, or on all the Stockholders or
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<PAGE> 4
class of Stockholders of this Corporation, as the case may be, and also on this
Corporation.
NINTH:
1. Elimination of Certain Liability of Directors.
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under the provisions of K.S.A. 17-6424 and amendments
thereto, or (iv) for any transaction from which the director derived an improper
personal benefit.
2. Indemnification and Insurance.
(a) Right to Indemnification.
Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, 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 or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Kansas General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide
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<PAGE> 5
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and administrators:
provided, however, that, except as provided in paragraph (b) hereof, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this Section shall be
a contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition: provided, however, that, if the Kansas General corporation Law
requires, the payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
-5-
<PAGE> 6
(b) Right of Claimant to Bring Suit.
If a claim under paragraph (a) of this Section is not paid in full by
the Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Kansas
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Kansas General Corporation Law,
nor an actual determination by the Corporation (including its Board of
Directors, independent, legal counsel, or its stockholders) that the claimant
has not met such applicable standard or conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
(c) Non-Exclusivity of Rights.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article shall not be exclusive of any other right which any person may have or
hereafter acquire under any statue, provision of the Articles of Incorporation,
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<PAGE> 7
by-law, agreement, vote of stockholders or disinterested directors or otherwise
and the Corporation is specifically authorized to provide indemnification to its
directors and officers providing broader coverage than that afforded by the
Kansas General Corporation Law through indemnification agreements.
(d) Insurance.
The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Kansas General Corporation Law.
TENTH: To the extent permitted by the Kansas General Corporation Code,
any action which may be taken at any annual or special meeting of either
stockholders or directors may be taken without a meeting, without prior notice
and without a vote if a consent in writing, setting forth the action taken is
signed by (i) all of the holders of the Corporation's issued and outstanding
shares in the case of the Stockholders or (ii) all of the duly elected and
serving Directors, in the case of the Directors.
IN WITNESS WHEREOF, I have hereunto subscribed my name as sole
incorporator this 13th day of December, 1996.
/s/ RICHARD D. TERRILL
----------------------------------
Richard D. Terrill
-7-
<PAGE> 8
STATE OF KANSAS )
) ss:
COUNTY OF SHAWNEE )
BE IT REMEMBERED, that on this 13th day of December, 1996, before me,
the undersigned, a Notary Public in and for the County and State aforesaid, came
Richard D. Terrill who personally is known to me to be the same person who
executed the foregoing ARTICLES OF INCORPORATION and duly acknowledged the
execution of the same as his free and voluntary act and deed.
IN WITNESS WHEREOF, I have hereto set my hand affixed my notarial seal
the day and year last above written.
/s/ RITA J. PETTY
-----------------------------------
Notary Public
My Appointment expires:
-8-
<PAGE> 1
EXHIBIT 3.6
WestSec, Inc.
-------------
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1. The annual meeting of the stockholders of the Company
beginning with the year 1997, shall be held on the first Tuesday of May in each
year (or if said day be a legal holiday, then on the next succeeding day not a
holiday), at 11:00 A.M., at the principal office of the Company in the City of
Topeka, Kansas, or such other place in the State of Kansas as the Board of
Directors may designate for the purpose of electing Directors and transacting
such other business as may properly be brought before the meeting.
Section 2. Special meetings of the stockholders may be held upon call
of the Board of Directors or the Chairman of the Board or the President, at such
time and at such place within or without the State of Kansas as may be stated in
the call and notice.
Section 3. Notice stating the place, day and hour of every meeting of
the stockholders, and in the case of a special meeting further stating the
purpose for which such meeting is called, shall be mailed at least ten days
before the meeting to each stockholder of record who shall be entitled to vote
thereat, at the last known post office address of each such stockholder as it
appears upon the books of the Company. Such further notice shall be given by
mail, publication or otherwise, as may be required by law. Any meeting may be
held without notice if all of the stockholders entitled to vote are present or
represented at the meeting, or all of the stockholders entitled to notice of the
meeting sign a waiver thereof in writing.
Section 4. The holders of record of a majority of the shares of the
capital stock of the Company issued and outstanding, entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders, and the vote of a majority of such quorum shall be
necessary for the transaction of any business, unless otherwise provided by law,
by the Articles of Incorporation or by the By-laws. If at any meeting there
shall be no quorum, the holders of record, entitled to vote, of a majority of
such shares of stock so present or represented may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall have been obtained, when any business may be transacted which might have
been transacted at the meeting as first convened had there been a quorum.
Section 5. Meetings of the stockholders shall be presided over by the
Chairman of the Board or, if he is not present, by the President or, in his
absence, by a
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<PAGE> 2
Vice President. In the event that none of such officers be present, then the
meeting shall be presided over by a chairman to be chosen at the meeting. The
Secretary of the Company or, if he is not present, an Assistant Secretary of the
Company or, if neither the Secretary nor an Assistant Secretary is present, a
secretary to be chosen at the meeting shall act as secretary of the meeting.
Section 6. At all meetings of the stockholders every holder of record
of the shares of the capital stock of the Company, entitled to vote thereat, may
vote thereat either in person or by proxy.
Section 7. The Board of Directors shall have power to close the stock
transfer books of the Company for a period not exceeding fifty days preceding
the date of - -
(a) Any meeting of the stockholders;
(b) Any payment of any dividends;
(c) Any allotment of rights;
(d) Any effective date of change or
conversion or exchange of capital stock;
or, in lieu of closing the stock transfer books, the Board of Directors may fix
in advance a date not exceeding fifty days preceding the effective date of any
of the above enumerated transactions, and in such case only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled to
receive notice of and to vote at such meeting, or to receive payment of such
dividend, or to receive allotment of rights, or to exercise rights of change,
conversion or exchange of capital stock, as the case may be, or to participate
in any of the above transactions, notwithstanding any transfer of any stock on
the books of the Company after such record date fixed as aforesaid.
ARTICLE II
DIRECTORS
Section 1. Subject to the provisions of the Articles of Incorporation,
the Directors shall be elected at the regular annual meeting of stockholders,
but if such election of Directors is not held on the day of the annual meeting,
the Directors shall cause the election to be held as soon thereafter as
conveniently may be.
A majority of the members of the Board shall constitute a quorum for
the filling of vacancies of the Board of Directors and the transaction of
business, but if at any meeting of the Board there shall be less than a quorum
present, a majority of the Directors present may adjourn the meeting from time
to time without notice, other than announcement of the meeting, until a quorum
shall have been obtained, when any
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<PAGE> 3
business may be transacted which might have been transacted at the meeting as
first convened had there been a quorum. The acts of a majority of the Directors
present at any meeting at which there is a quorum shall, except as otherwise
provided by law, by the Articles of Incorporation or the By-Laws, be the acts of
the Board.
Section 2. Vacancies in the Board of Directors, caused by death,
resignation or otherwise, may be filled at any meeting of the Board of Directors
and the directors so elected shall hold office until the next annual meeting of
the stockholders and until their successors are elected and qualified.
Section 3. Meetings of the Board of Directors shall be held at such
place within or without the State of Kansas as may from time to time be fixed by
resolution of the Board or as may be specified in the call of any meeting.
Regular meetings of the Board shall be held at such time as may from time to
time be fixed by resolution of the Board, and notice of such meetings need not
be given. Special meetings of the Board may be held at any time upon call of the
Chairman of the Board or the President or a Vice President, by oral, telegraphic
or written notice, duly served on or sent or mailed to each director. Members of
the Board may participate in any meeting of such Board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute presence in person at the meeting. A meeting of the
Board may be held without notice immediately before or after the annual meeting
of the stockholders at the same place at which such meeting is held. Any meeting
may be held without notice if all of the directors are present at the meeting,
or if all of the directors sign a waiver thereof in writing. Any action required
or permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the board consent thereto in writing.
Section 4. Meetings of the Board of Directors shall be presided over
by the Chairman of the Board, or, if he is not present, by the President or, if
he is absent, by a Vice President. In the event none of such officers are
present, then the meeting shall be presided over by a chairman to be chosen at
the meeting. The Secretary of the Company or, if he is not present, an Assistant
Secretary of the Company or, if neither the Secretary nor an Assistant Secretary
is present, a secretary to be chosen at the meeting shall act as secretary of
the meeting.
Section 5. Each director of the Company who is not a salaried officer
or salaried employee of the Company shall be entitled to receive such
remuneration for serving as a director and as a member of any committee of the
Board as may be fixed from time to time by the Board of Directors.
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<PAGE> 4
ARTICLE III
OFFICERS
Section 1. The Board of Directors, as soon as may be after its
election held in each year, shall choose one of its number President of the
Company and shall appoint one or more Vice Presidents, a Secretary and a
Treasurer of the Company and from time to time may appoint such Assistant
Secretaries, Assistant Treasurers, and other officers and agents of the Company
as it may deem proper. The offices of Secretary and Treasurer may be held by the
same person, and a Vice President of the Company may also be either the
Secretary or the Treasurer.
Section 2. The term of office of all officers shall be one year or
until the respective successors are chosen or appointed, but any officer or
agent may be removed, with or without cause, at any time by the affirmative vote
of a majority of the members of the Board then in office.
Section 3. Subject to such limitations as the Board of Directors may
from time to time prescribe, the officers of the Company shall each have such
powers and duties as generally pertain to their respective offices, as well as
such powers and duties as from time to time may be conferred by the Board of
Directors. The Treasurer, the Assistant Treasurers and any other officers or
employees of the Company may be required to give bond for the faithful discharge
of their duties, in such sum and of such character as the Board may from time to
time prescribe.
Section 4. The salaries of all officers and agents of the Company
shall be fixed by the Board of Directors, or pursuant to such authority as the
Board may from time to time prescribe.
ARTICLE IV
CERTIFICATES OF STOCK
Section 1. The interest of each shareholder in the Company shall be
evidenced by a certificate or certificates for shares of stock of the Company in
such form as the Board of Directors may from time to time prescribe.
Certificates for shares of stock of the Company shall be signed by the Chairman
of the Board or the President or any Vice President and the Treasurer or any
Assistant Treasurer of this corporation and sealed with its corporate seal, or
when the same bear the facsimile signature of the Chairman of the Board or the
President or any Vice President and of the Treasurer or any Assistant Treasurer
of the corporation and its facsimile seal and shall be countersigned and
registered in such manner, if any, as the Board may by resolution, prescribe.
-4-
<PAGE> 5
Section 2. The shares of stock of the Company shall be transferable
only on the books of the Company by the holders thereof in person or by duly
authorized attorney, upon surrender for cancellation of certificates for a like
number of shares of the same class of stock, with duly executed assignment and
power of transfer endorsed thereon or attached thereto and such proof of the
authenticity of the signatures as the Company or its agents may reasonably
require.
Section 3. No certificate for shares of stock of the Company shall be
issued in place of any certificate alleged to have been lost, stolen or
destroyed, except upon production of such evidence of the loss, theft, or
destruction, and upon indemnification of the Company and its agents to such
extent and in such manner as the Board of Directors may from time to time
prescribe.
ARTICLE V
CHECKS, NOTES, ETC.
All checks and drafts on the Company's bank accounts and all bills of
exchange and promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed by such officer or
officers or agent or agents as shall be thereunto authorized from time to time
by the Board of Directors; provided that checks drawn on the Company's dividend,
general and special accounts may bear the facsimile signature, affixed thereto
by a mechanical device, of such officer or agent as the Board of Directors shall
authorize.
ARTICLE VI
FISCAL YEAR
The Fiscal year of the Company shall begin on the first day of January in
each year and shall end on the thirty-first day of December following.
ARTICLE VII
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the Company
and the words "Corporate Seal Kansas".
-5-
<PAGE> 6
ARTICLE VIII
AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors at any special or regular meeting of the Board
of Directors or by consent if all of the Directors shall have consented to any
such alterations, amendments, actions to repeal or the adoption of new or
substituted Bylaws.
-6-
<PAGE> 1
EXHIBIT 3.7
ARTICLES OF INCORPORATION
OF
ASTRA SERVICES, INC.
The undersigned sole incorporator hereby undertakes to form and
establish a corporation FOR PROFIT under the laws of the State of Kansas.
FIRST: The name of the Corporation is ASTRA SERVICES, INC.
SECOND: The location of its registered office in this state is 818
Kansas Avenue, Topeka, Shawnee County, Kansas, 66612.
THIRD: The name and address of its resident agent in this state is
Stacy F. Kramer, 818 Kansas Avenue, Topeka, Shawnee County, Kansas 66612.
FOURTH: This Corporation is organized FOR PROFIT and the nature of its
business is to engage in any lawful act or activity for which corporations may
be organized under the Kansas General Corporation Code. Provided however, this
Corporation may not engage in the business of an electric or retail natural gas
utility.
FIFTH: The Corporation is authorized to issue only one class of common
stock. The total number of shares of stock which the Corporation shall have
authority to issue shall be ONE THOUSAND (1,000) Shares of NO PAR VALUE COMMON
STOCK. Such shares may be issued for such consideration as is determined from
time to time by the Board of Directors of the Corporation.
SIXTH: The business and affairs of the Corporation shall be managed by
its Board of Directors. The powers of the Incorporator are to terminate upon the
filing of the ARTICLES OF INCORPORATION with the Secretary of State. The name
and mailing address of the person who is to serve as sole Director until the
first meeting of Stockholders or until his successor is duly elected and
qualified is:
<PAGE> 2
Richard D. Terrill
6315 South Pointe Drive
Auburn, Kansas 66402
The number of Directors, if more than one, shall be fixed by, or in the
manner provided in, the BYLAWS of the Corporation. Directors need not be
Stockholders of the Corporation.
SEVENTH: The name and mailing address of the sole incorporator is:
Stacy F. Kramer
3039 SW Staffordshire Road
Topeka, Kansas 66614
EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and its Directors and Stockholders, it is
further provided:
a. In furtherance, and not in limitation of the powers conferred by the
laws of the State of Kansas, the Board of Directors is expressly authorized and
empowered:
(1) To make, alter, amend or repeal the Bylaws in any manner not
inconsistent with the laws of the State of Kansas or these Articles of
Incorporation, subject to the power of the Stockholders to amend, alter or
repeal the Bylaws made by the Board of Directors or to limit or restrict the
power of the Board of Directors so to make, alter, amend or repeal the Bylaws;
(2) Without the assent or vote of the Stockholders, to authorize and
issue obligations of the Corporation, secured or unsecured, to include therein
such provisions as to redeemability, convertibility or otherwise, as the Board
of Directors in its sole discretion may determine, and to authorize the
mortgaging or pledging, as security therefor, of any property of the
Corporation, real or personal, including after-acquired property;
(3) To determine the manner in which the votes of Stockholders for the
election of Directors shall be evidenced, which need not be by written ballot.
<PAGE> 3
b. Any Director or any Officer elected or appointed by the Stockholders
or by the Board of Directors may be removed at any time in such manner as shall
be provided in the Bylaws of the Corporation.
c. The holders of this Corporation's Common Stock shall not have
preemptive rights.
d. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them or between this Corporation
and its Stockholders or any class of them, any court of competent jurisdiction
within the State of Kansas, on the application in a summary way of this
Corporation or of any creditor or Stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
K.S.A. 17-6901 or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions of
K.S.A. 17-6808, may order a meeting of the creditors or class of creditors, or
of the Stockholders or class of Stockholders of this Corporation, as the case
may be, to be summoned in such manner as said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, or of the Stockholders or class of Stockholders of this Corporation,
as the case may be, agree to any compromise or arrangement and to any
reorganization of this Corporation as consequence of such compromise or
arrangement, said reorganization, if sanctioned by the court to which said
application has been made, shall be binding on all the creditors or class of
creditors, or on all the Stockholders or class of Stockholders of this
Corporation, as the case may be, and also on this Corporation.
NINTH: A Director of this Corporation shall have no personal liability
to the Corporation or its Stockholders for monetary damages for breach of
fiduciary duty as a Director except to the extent that K.S.A. 17-6002(b)(8) (or
any successor provision of the Kansas General Corporation Code), as amended from
time to time, expressly provides that the liability of a Director may not be
eliminated or limited.
<PAGE> 4
TENTH: To the extent permitted by the Kansas General Corporation Code,
any action which may be taken at any annual or special meeting of either
stockholders or directors may be taken without a meeting, without prior notice
and without a vote if a consent in writing, setting forth the action taken is
signed by (i) all of the holders of the Corporation's issued and outstanding
shares in the case of the Stockholders or (ii) all of the duly elected and
serving Directors, in the case of the Directors.
IN WITNESS WHEREOF, I have hereunto subscribed my name as sole
incorporator this 19th day of April, 1995.
/s/ STACY F. KRAMER
----------------------------------
Stacy F. Kramer
STATE OF KANSAS )
) ss:
COUNTY OF SHAWNEE )
BE IT REMEMBERED, that on this 19th of April, 1995, before me, the
undersigned, a Notary Public in and for the County and State aforesaid, came
Stacy F. Kramer who personally is known to me to be the same person who executed
the foregoing ARTICLES OF INCORPORATION and duly acknowledged the execution of
the same as her free and voluntary act and deed.
IN WITNESS WHEREOF, I have hereto set my hand affixed my notarial seal
the day and year last above written.
/s/ REGINA I. DeGARMO
-----------------------------------
Notary Public
My Appointment expires:
<PAGE> 5
CERTIFICATE OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
ASTRA SERVICES, INC.
We, Steven A. Millstein, President, and Robert J. Knott, Secretary of
the above named corporation, a corporation organized and existing under the laws
of the State of Kansas, do hereby certify that a unanimous written consent of
the Board of Directors of said corporation, was adopted setting forth the
following amendment to the Articles of Incorporation and declaring their
advisability:
Resolved, That the following amendment of the Company's
Articles of Incorporation be, and it hereby is proposed and
declared advisable:
The following paragraph be included as a replacement for the
existing paragraph of Article First of the Articles of
Incorporation and read as follows:
The name of the corporation is Westar Consumer Services, Inc.
We further certify that thereafter, pursuant to said resolution, and in
accordance with the by-laws of the corporation and the laws of the State of
Kansas, the Board of Directors called a meeting of stockholders for
consideration of the proposed amendments, and thereafter, pursuant to notice and
in accordance with the statutes of the State of Kansas, the stockholders
convened and considered the proposed amendments.
We further certify that at the meeting a majority of the stockholders
entitled to vote voted in favor of the proposed amendments.
We further certify that the amendments were duly adopted in accordance
with the provision of K.S.A. 17-6602, as amended.
We further certify that the capital of said corporation will not be
reduced under or by reason of said amendments.
<PAGE> 6
IN WITNESS WHEREOF, we have hereunto set our hands and affixed the seal
of said corporation the 29th day of November, 1995.
/s/ STEVEN A. MILLSTEIN
---------------------------------------
Steven A. Millstein
President
/s/ Robert J. Knott
---------------------------------------
Robert J. Knott
Secretary
STATE OF KANSAS )
)
COUNTY OF SHAWNEE )
Be it remembered that before me, a Notary Public in and for the
aforesaid county and state, personally appeared Steven A. Millstein, President
and Robert J. Knott, Secretary of the corporation named in this document, who
are known to me to be the same persons who executed the foregoing certificate
and duly acknowledge the execution of the same this 29th day of November, 1995.
/s/ Tracy E. Hill
---------------------------------------
Notary Public
2
<PAGE> 7
CERTIFICATE OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
WESTAR CONSUMER SERVICES, INC.
We, Steven A. Millstein, President, and Marilyn K. Dalton, Secretary of
the above named corporation, a corporation organized and existing under the laws
of the State of Kansas, do hereby certify that a unanimous written consent of
the Board of Directors of said corporation, was adopted setting forth the
following amendment to the Articles of Incorporation and declaring their
advisability
Resolved, that the following amendment of the Company's
Articles of Incorporation be, and hereby is, proposed and
declared advisable
Article First of the Articles of Incorporation be amended in
its entirety to read as follows:
The name of the corporation is Westar Security, Inc.
We further certify that thereafter, pursuant to said resolution, and in
accordance with the by-laws of the corporation and the laws of the State of
Kansas, the Board of Directors called a meeting of shareholders for
consideration of the proposed amendments, and thereafter, pursuant to notice and
in accordance with the statutes of the State of Kansas, the shareholders
convened and considered the proposed amendments.
We further certify that at the meeting a majority of the shareholders
entitled to vote voted in favor of the proposed amendments.
We further certify that the amendments were duly adopted in accordance
with the provision of K.S.A. 17-6602, as amended.
We further certify that the capital of said corporation will not be
reduced under or by reason of said amendments.
<PAGE> 8
IN WITNESS WHEREOF, we have hereunto set our hands and affixed the seal
of said corporation the 22nd day of July, 1996.
/s/ STEVEN A. MILLSTEIN
---------------------------------------
Steven A. Millstein
President
/s/ MARILYN K. DALTON
---------------------------------------
Marilyn K. Dalton
Secretary
STATE OF KANSAS )
)
COUNTY OF SHAWNEE )
Be it remembered that before me, a Notary Public in and for the
aforesaid county and state, personally appeared Steven A. Millstein, President
and Marilyn K. Dalton, Secretary of the corporation named in this document, who
are known to me to be the same persons who executed the foregoing certificate
and duly acknowledge the execution of the same this 22nd day of July, 1996.
/s/ Tracy E. Hill
---------------------------------------
Notary Public
2
<PAGE> 9
CERTIFICATE OF OWNERSHIP AND MERGER
OF
CENTENNIAL SECURITY HOLDINGS, INC.
WITH AND INTO
WESTAR SECURITY, INC.
(UNDER K.S.A. 17-6703 OF THE KANSAS GENERAL
CORPORATION CODE AND SECTION 253 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE)
--------------------------------------------------------------
WESTAR SECURITY, INC. hereby certifies that:
(1) The name and state of incorporation of each of the constituent
corporations are:
(a) Centennial Security Holdings, Inc., a Delaware
corporation and a wholly-owned subsidiary of Westar
Security, Inc. ("Subsidiary"), and
(b) Westar Security, Inc., a Kansas corporation ("Parent"
or the "Surviving Corporation").
(2) Parent owns one hundred percent (100%) of the issued and
outstanding shares of capital stock of Subsidiary.
(3) Pursuant to K.S.A. 17-6703 of the Kansas General Corporation Code
and Section 253 of the General Corporation Law of the State of Delaware, the
Board of Directors of Parent adopted resolutions authorizing the merger of
Subsidiary with and into Parent by unanimous written consent. A copy of such
resolutions dated as of March 27, 1998 is attached as Exhibit A hereto.
(4) The name of the surviving corporation is Westar Security, Inc.
(5) The Certificate of Incorporation of Westar Security, Inc. shall be
the Certificate of Incorporation of the surviving corporation.
(6) The Surviving Corporation hereby agrees that it may be served with
process in the State of Delaware in any proceeding for enforcement of any
obligation of Centennial Security Holdings, Inc., as well as for enforcement of
any obligation of the Surviving Corporation arising from the merger, including
any suit or other proceeding to enforce the right of any stockholders as
determined in appraisal procedures pursuant to Section 262 of
<PAGE> 10
the DGCL, and shall irrevocably appoint the Secretary of State of Delaware as
its agent to accept service of process in any such suit or other proceedings. A
copy of such service of process shall be mailed to Protection One, Inc., 4221 W.
John Carpenter Freeway, Irving, Texas 75063-2924, Attn: Legal Department.
(7) The effective date of the merger shall be 4:00 p.m. Central
Standard Time, on March 31, 1998.
2
<PAGE> 11
IN WITNESS WHEREOF, Parent has caused this certificate to be signed by
Steve Millstein, its President, on the 27th day of March, 1998.
WESTAR SECURITY, INC.
By: /s/ STEVEN A. MILLSTEIN
-----------------------------------
Steven A. Millstein, President
ATTEST:
By: /s/ JOHN HESSE
-----------------------------------
John Hesse, Secretary
STATE OF TEXAS )
)
COUNTY OF DALLAS )
Before me, a Notary Public in and for the aforesaid county and state,
personally appeared Steven A. Millstein and John Hesse, President and Secretary,
respectively, of Westar Security, Inc., a Kansas corporation, who are known to
me to be the same persons who executed the foregoing Certificate and duly
acknowledge the execution of the same this 27th day of March, 1998.
/s/ WENDY WILKES
---------------------------------------
Notary Public
Commission expires:
10-11-2000
---------------------------------------
3
<PAGE> 12
EXHIBIT A
RESOLUTIONS ADOPTED BY
THE BOARD OF DIRECTORS OF WESTAR SECURITY, INC.
AS OF MARCH 27, 1998
BE IT RESOLVED, that the Board of Directors of Westar Security, Inc., a
Kansas corporation (the "Corporation"), in its best business judgment deems it
advisable and in the best interests of the Corporation and its sole shareholder
that Centennial Security Holdings, Inc., a Delaware corporation ("Subsidiary")
and a wholly-owned subsidiary of the Corporation, shall be merged with and into
the Corporation (the "Merger"), and hereby approves the Merger in all respects.
RESOLVED FURTHER, that Subsidiary shall be merged with and into the
Corporation pursuant to the provisions of K.S.A. 17-6703 of the Kansas General
Corporation Code ("KGCC") Section 253 of the Delaware General Corporation Law
(the "DGCL"), and that in the Merger the Corporation shall be the surviving
corporation.
RESOLVED FURTHER, that the effective date (the "Effective Date") of the
Merger shall be 4:00 p.m., Central Standard Time, on March 31, 1998.
RESOLVED FURTHER, that in accordance with the KGCC and the DGCL, on the
Effective Date of the Merger the separate existence of Subsidiary shall cease,
and the Corporation and Subsidiary shall then and thereafter together comprise a
single corporation, which shall be the Corporation; the Corporation shall have
all the rights and privileges, immunities and powers and shall be subject to all
of the duties and liabilities of a corporation organized under the KGCC; the
Corporation shall thereupon and thereafter possess all the rights, privileges
and franchises of the Corporation and Subsidiary; all property (real, personal
and mixed), all debts due on whatever account, all claims and all other
interests of or belonging to or due to Subsidiary shall be taken and deemed to
be transferred to and vested in the Corporation without further act or deed; the
Corporation shall thenceforth be responsible and liable for all liabilities and
obligations of Subsidiary; any claim existing or action or proceeding pending by
or against Subsidiary may be prosecuted as if the Merger had not taken place, or
the Corporation may be substituted in the place of Subsidiary; and neither the
rights of creditors nor any liens upon the property of the Corporation or
Subsidiary shall be impaired by the Merger.
<PAGE> 13
RESOLVED FURTHER, that each outstanding share of the capital stock of
the Corporation shall continue to be an outstanding share of capital stock of
the Corporation after the Effective Date of the Merger.
RESOLVED FURTHER, that all of the outstanding shares of capital stock
of Subsidiary owned by the Corporation on the Effective Date of the Merger
shall, by virtue of the Merger, be canceled and retired; all certificates
representing such share shall be canceled; and no cash, securities or other
property shall be issued in respect of such shares by reason of the Merger.
RESOLVED FURTHER, that no changes in the Articles of Incorporation, the
By-laws, the directors or the officers of the Corporation shall be effected by
the Merger.
RESOLVED FURTHER, the officers of the Corporation are hereby authorized
in the name and on behalf of the Corporation to execute and file with the
Secretary of State of Kansas and the Secretary of State of Delaware appropriate
Articles of Merger or other statement for the purpose of effectuating the Merger
in accordance with the preceding resolutions.
RESOLVED FURTHER, that the proper officers of the Corporation are
hereby authorized and directed in the name and on behalf of the Corporation to
execute, acknowledge, certify, deliver, file, record and accept all such further
instruments and documents and to do or cause to be done any and all other acts
which in their judgment may be necessary or appropriate in order to effectuate
the Merger in accordance with the preceding resolutions and the applicable
provisions of the KGCC and the DGCL.
2
<PAGE> 1
EXHIBIT 3.8
BYLAWS
OF
WESTAR SECURITY, INC.
ARTICLE I. OFFICES
The principal office of the Corporation in the State of Kansas shall be
located in the City of Topeka, County of Shawnee. The Corporation may have such
other offices either within or without the State of Kansas as the Board of
Directors may designate or as the business of the Corporation may require from
time to time.
ARTICLE II. SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the shareholders shall
be held on the first Tuesday in the month of May in each year, beginning with
the year 1996, at the hour of 10 o'clock, a.m., for the purpose of electing
Directors and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday in the
State of Kansas, such meeting shall be held on the next succeeding business day.
If the election of Directors shall not be held on the day designated herein for
any annual meeting of the shareholders, or at any adjournment thereof, the Board
of Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as conveniently may be.
SECTION 2. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors, and shall be called by the
President at the request of the holders of not less than twenty-five percent
(25%) of all the outstanding shares of the Corporation entitled to vote at the
meeting.
<PAGE> 2
SECTION 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Kansas, unless otherwise prescribed
by statute, as the place of meeting for any annual meeting or for any special
meeting called by the Board of Directors. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any place, either
within or without the State of Kansas, unless otherwise prescribed by statute,
as the place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the principal
office of the Corporation in the State of Kansas.
SECTION 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall, unless otherwise prescribed by statute,
be delivered not less than ten (10) nor more than sixty (60) days before the
date of the meeting, either personally or by mail, by or at the direction of the
President, or the Secretary, or the persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the Corporation, with postage thereon prepaid.
SECTION 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining Stockholders entitled to notice of or to vote at any
meeting of Stockholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, forty-five (45) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to
<PAGE> 3
notice of or to vote at a meeting of shareholders, such books shall
be closed for at least ten (10) days immediately preceding such meeting. In lieu
of closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders, such date in
any case to be not more than forty-five (45) days and, in case of a meeting of
shareholders, not less than ten (10) days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
SECTION 6. Voting Lists. The Officer or agent having charge of the
stock transfer books for shares of the Corporation shall make a complete list of
the shareholders entitled to vote at each meeting of shareholders or any
adjournment thereof, arranged in alphabetical order, with the address of and the
number of shares held by each. Such list shall be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting for the purposes thereof.
SECTION 7. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or
<PAGE> 4
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. The shareholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
SECTION 8. Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
twelve (12) months from the date of its execution, unless otherwise provided in
the proxy.
SECTION 9. Voting of Shares. Each outstanding share entitled to vote
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of shareholders.
SECTION 10. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
Bylaws of such corporation may prescribe, or, in the absence of such provisions,
as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
<PAGE> 5
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation shall not be
voted, directly or indirectly, at any meeting, and shall not be counted in
determining the total number of outstanding shares at any given time.
SECTION 11. Informal Action by Shareholders. Unless otherwise provided
by law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
ARTICLE III. BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of its Board of Directors.
SECTION 2. Number, Tenure and Qualifications. The number of Directors
of the Corporation shall be determined from time to time by a majority of the
Directors who may be duly elected, qualified and serving from time to time. Each
Director shall hold office until the next meeting of shareholders and until his
successor shall have been elected and qualified.
SECTION 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place for the holding of
additional regular meetings without other notice than such resolution.
<PAGE> 6
SECTION 4. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the President or the Chairman of the Board
of Directors. The person or persons authorized to call special meetings of the
Board of Directors may fix the place for holding any special meeting of the
Board of Directors called by them.
SECTION 5. Notice. Notice of any special meeting shall be given at
least two (2) days previously thereto by written notice delivered personally,
mailed to each Director at his business address, by telegram, or by electronic
facsimile. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid. If notice
is given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. If notice is given by electronic
facsimile, such notice shall be deemed to be delivered when the facsimile is
electronically confirmed. Any Director may waive notice of any meeting. The
attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting, except where a Director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 6. Quorum. A majority of the incumbent Directors shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors, but if less than such majority is present at a meeting, the
majority of the Directors present may adjourn the meeting from time to time
without further notice.
SECTION 7. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. Action Without a Meeting. Any action that may be taken by
the Board of Directors at a meeting may be taken
<PAGE> 7
without a meeting if a consent in writing, setting forth the action so to be
taken, shall be signed by all of the Directors and filed with the minutes of the
Board of Directors.
SECTION 9. Vacancies. Any vacancy occurring on the Board of Directors
may be filled by the affirmative vote of a majority of the remaining Directors
though less than a quorum of the Board of Directors, unless otherwise provided
by law. A Director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of an
increase in the number of Directors may be filled by election by the Board of
Directors for a term of office continuing only until the next election of
Directors by the Stockholders. If the Corporation has a single Director and a
vacancy occurs, the vacancy will be filled by the Stockholders at a special
meeting called for such purpose.
SECTION 10. Compensation. By resolution of the Board of Directors, each
Director may be paid his expenses, if any, of attendance at each meeting of the
Board of Directors, and may be paid a stated salary as Director or a fixed sum
for attendance at each meeting of the Board of Directors or both. No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
SECTION 11. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken at such
meeting unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the Secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
<PAGE> 8
ARTICLE IV. OFFICERS
SECTION 1. Number. The Officers of this Corporation shall be a
President, a Secretary and a Treasurer (one person may serve as a
President/Secretary/Treasurer), each of whom shall be elected by the Board of
Directors. Such other officers, including a Vice-President, and assistant
officers as may be deemed necessary may be elected or appointed by the Board of
Directors.
SECTION 2. Election and Term of Office. The Officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified or until his death or until he shall
resign or shall have been removed in the manner hereinafter provided.
SECTION 3. Removal. Any Officer or agent may be removed by the Board of
Directors whenever, in its judgment, the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. President. The President shall be the principal executive
officer of the Corporation, be subject to the control of the Board of Directors,
shall in general supervise and control all of the business affairs of the
Corporation. He shall, when present, preside at all meetings of the shareholders
and of the Board of Directors. He may sign, with the Secretary or any other
proper officer of the Corporation thereunto authorized by the
<PAGE> 9
Board of Directors, certificates for shares of the corporation, any deeds,
mortgages, bonds, contracts, or other instruments which the Board of Directors
has authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 6. Vice-President. In the absence of the President, or in the
event of his death, inability or refusal to act, the Vice-President shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The
Vice-President shall perform such other duties as from time to time may be
assigned by the President or by the Board of Directors.
SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the Board of Directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records of the Corporation; (d) keep a register of
the post office address of each Stockholder which shall be furnished to the
Secretary by such shareholder; (e) sign with the President certificates for
shares of the Corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the Corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned by the President or by the Board of Directors.
<PAGE> 10
SECTION 8. Treasurer. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the Corporation; (b)
receive and give receipts for monies due and payable to the Corporation from any
source whatsoever, and deposit all such monies in the name of the Corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with the provisions of Article V of these Bylaws; and (c) in general
perform all of the duties incident to the office of the Treasurer and such other
duties as from time to time may be assigned by the President or by the Board of
Directors. If required by the Board of Directors, the Treasurer shall give a
bond for the faithful discharge of duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
SECTION 9. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances. If the Board takes
no action to authorize an officer to enter into or execute contracts, the
President, or in his absence, any Vice President or the Treasurer shall have
authority to enter into and execute contracts and other instruments in the name
of and on behalf of the Corporation.
SECTION 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board
<PAGE> 11
of Directors. Such authority may be general or confined to specific instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the Board of
Directors so to do. All certificates for shares shall be consecutively numbered
or otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered in the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in case
of a lost, destroyed or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the
<PAGE> 12
Corporation by the holder of record thereof or by his legal representative, who
shall furnish proper evidence of authority to transfer, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation, and on surrender for cancellation of the
certificate for such shares. The person in whose name shares stand on the books
of the Corporation shall be deemed by the Corporation to be the owner thereof
for all purposes.
SECTION 3. Preemptive Rights. The holders of the common stock of this
Corporation shall not have preemptive rights.
ARTICLE VII. FISCAL YEAR
The fiscal year of the Corporation shall be the calendar year.
ARTICLE VIII. DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE IX. CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of this
Corporation and the words "Corporate Seal Kansas".
ARTICLE X. WAIVER OF NOTICE
SECTION 1. Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or Director of the Corporation under the
provisions of these Bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Kansas General Corporation Code, a
waiver thereof in writing, signed by the person or persons entitled to
<PAGE> 13
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
SECTION 2. Notwithstanding the provision for waiver of notice in
Section 1 hereof, corporate action may be effected through a formal consent to
the transaction of business signed by the Directors of this Corporation.
ARTICLE XI. AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors at any special or regular meeting of the Board
of Directors or by consent if all of the Directors shall have consented to any
such alterations, amendments, actions to repeal or the adoption of new or
substituted Bylaws.
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
===============================================================================
PROTECTION ONE ALARM MONITORING, INC.
as Issuer
PROTECTION ONE, INC.,
WESTSEC, INC., and
WESTAR SECURITY, INC.,
as Guarantors
SERIES A AND SERIES B
7 3/8% SENIOR NOTES DUE 2005
-------------------------
INDENTURE
Dated as of August 17, 1998
-------------------------
THE BANK OF NEW YORK
Trustee
-------------------------
===============================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1).................................................. 7.10
(a)(2).................................................. 7.10
(a)(3).................................................. N.A.
(a)(4).................................................. N.A.
(a)(5).................................................. 7.10
(b)..................................................... 7.10
(c)..................................................... N.A.
311 (a)..................................................... 7.11
(b)..................................................... 7.11
(c)..................................................... N.A.
312 (a)..................................................... 2.05
(b)..................................................... 11.03
(c)..................................................... 11.03
313 (a)..................................................... 7.06
(b)(1).................................................. 10.03
(b)(2).................................................. 7.07
(c)..................................................... 7.06; 11.02
(d)..................................................... 7.06
314 (a)..................................................... 4.03; 11.02
(b)..................................................... 10.02
(c)(1).................................................. 11.04
(c)(2).................................................. 11.04
(c)(3).................................................. N.A.
(e)..................................................... 11.05
(f)..................................................... N.A.
315 (a)..................................................... 7.01
(b)..................................................... 7.05, 11.02
(c)..................................................... 7.01
(d)..................................................... 7.01
(e)..................................................... 6.11
316 (a) (last sentence)..................................... 2.09
(a)(1)(A)............................................... 6.05
(a)(1)(B)............................................... 6.04
(a)(2).................................................. N.A.
(b)..................................................... 6.07
(c)..................................................... 2.12
317 (a)(1).................................................. 6.08
(a)(2).................................................. 6.09
(b)..................................................... 2.04
318 (a)..................................................... 11.01
(b)..................................................... N.A.
(c)..................................................... 11.01
</TABLE>
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions................................................5
Section 1.02. Other Definitions.........................................10
Section 1.03. Incorporation by Reference of Trust Indenture Act.........11
Section 1.04. Rules of Construction.....................................11
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating...........................................11
Section 2.02. Execution and Authentication..............................12
Section 2.03. Regulation, Registration of Transfer and Exchange.........13
Section 2.04. Paying Agent to Hold Money in Trust.......................13
Section 2.05. Transfer and Exchange.....................................13
Section 2.06. Replacement Notes.........................................24
Section 2.07. Outstanding Notes.........................................24
Section 2.08. Treasury Notes............................................25
Section 2.09. Temporary Notes...........................................25
Section 2.10. Cancellation..............................................25
Section 2.11. Defaulted Interest........................................25
Section 2.12. CUSIP Numbers.............................................26
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee........................................26
Section 3.02. Selection of Notes to Be Redeemed.........................26
Section 3.03. Notice of Redemption......................................26
Section 3.04. Deposit of Redemption Price...............................27
Section 3.05. Notes Redeemed in Part....................................28
Section 3.06. Optional Redemption.......................................28
Section 3.07. Mandatory Redemption......................................28
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes..........................................28
Section 4.02. Maintenance of Office or Agency...........................28
Section 4.03. Compliance Certificate....................................29
Section 4.04. Taxes.....................................................29
Section 4.05. Stay, Extension and Usury Laws............................29
Section 4.06. Liens.....................................................29
Section 4.07. Sale and Leaseback Transactions...........................30
</TABLE>
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Section 4.08. Corporate Existence.......................................31
Section 4.09. Offer to Repurchase Upon Change of Control................31
Section 4.10. Money for Payments to Be Held in Trust....................32
Section 4.11. Waiver of Certain Covenants...............................33
Section 4.12. Statement by Officers as to Default.......................33
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets..................33
Section 5.02. Successor Person Substituted..............................34
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.........................................34
Section 6.02. Acceleration..............................................35
Section 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee...................................................35
Section 6.04. Trustee May File Proofs of Claim..........................36
Section 6.05. Trustee May Enforce Claims Without Possession of Notes....37
Section 6.06. Application of Money Collected............................37
Section 6.07. Limitation on Suits.......................................37
Section 6.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest......................................38
Section 6.09. Restoration of Rights and Remedies........................38
Section 6.10. Rights and Remedies Cumulative............................38
Section 6.11. Delay or Omission Not Waiver..............................39
Section 6.12. Control by Holders........................................39
Section 6.13. Waiver of Past Defaults...................................39
ARTICLE 7.
TRUSTEE
Section 7.01. Notice of Defaults........................................40
Section 7.02. Certain Rights of Trustee.................................41
Section 7.03. Trustee Not Responsible for Recitals or Issuance of
Notes.....................................................42
Section 7.04. May Hold Notes............................................42
Section 7.05. Money Held in Trust.......................................42
Section 7.06. Compensation and Reimbursement............................42
Section 7.07. Corporate Trustee Required; Eligibility; Conflicting
Interest..................................................43
Section 7.08. Resignation and Removal; Appointment of Successor.........43
Section 7.09. Acceptance of Appointment by Successor....................44
Section 7.10. Merger, Conversion, Consolidation or Succession to
Business..................................................45
Section 7.11. Appointment of Authenticating Agent.......................45
ARTICLE 8.
DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Defeasance or Covenant Defeasance........46
</TABLE>
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<TABLE>
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Section 8.02. Defeasance and Discharge..................................47
Section 8.03. Covenant Defeasance.......................................47
Section 8.04. Conditions to Defeasance or Covenant Defeasance...........47
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions.....................48
Section 8.06. Repayment to Company......................................49
Section 8.07. Reinstatement.............................................49
ARTICLE 9.
SUPPLEMENTAL INDENTURE
Section 9.01. Supplemental Indentures Without Consent of Holders........49
Section 9.02. Supplemental Indentures with Consent of Holders...........50
Section 9.03. Execution of Supplemental Indentures......................51
Section 9.04. Effect of Supplemental Indentures.........................51
Section 9.05. Conformity with Trust Indenture Act.......................51
Section 9.06. Reference in Notes to Supplemental Indentures.............51
ARTICLE 10.
NOTE GUARANTEES
Section 10.01. Note Guarantee............................................52
Section 10.02. Obligations Unconditional.................................54
Section 10.03. Release of Note Guarantees................................54
Section 10.04. Notice to Trustee.........................................54
Section 10.05. This Article not to Prevent Events of Default.............54
Section 10.06. Execution and Delivery of Note Guarantee..................54
Section 10.07. Subsidiary Guarantees.....................................55
ARTICLE 11.
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge................................56
Section 11.02. Application of Trust Money................................57
Section 11.03. Repayment of Trust Money..................................57
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls..............................57
Section 12.02. Notices...................................................57
ARTICLE 13.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 13.01. Disclosure of Names and Addresses of Holders..............58
Section 13.02. Reports by Trustee........................................59
Section 13.03. Reports by Company........................................59
Section 13.04. Communication by Holders of Notes with Other Holders of
Notes.....................................................60
Section 13.05. Certificate and Opinion as to Conditions Precedent........60
</TABLE>
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Section 13.06. Statements Required in Certificate or Opinion.............60
Section 13.07. Rules by Trustee and Agents...............................61
Section 13.08. No Personal Liability of Directors, Officers, Employees
and Stockholders..........................................61
Section 13.09. Governing Law.............................................61
Section 13.10. No Adverse Interpretation of Other Agreements.............61
Section 13.11. Successors................................................61
Section 13.12. Severability..............................................61
Section 13.13. Counterpart Originals.....................................61
Section 13.14. Table of Contents, Headings, etc..........................62
Section 13.15. Acts of Holders...........................................62
Section 13.16. Legal Holidays............................................63
Section 13.17. Benefits of Indenture.....................................63
</TABLE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF NOTE GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
<PAGE> 7
INDENTURE dated as of August 17, 1998 among Protection One Alarm
Monitoring, Inc., a Delaware corporation (the "Company"), the Guarantors and The
Bank of New York, a New York banking corporation, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 73/8% Senior Notes due 2005 (the "Initial Notes") and the 73/8% Senior Notes
due 2005 to be issued in connection with Exchange Offer (the "Exchange Notes"
and, together with the Initial Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article 1 have the meanings
assigned to them in this Article 1 and include the plural as well as
the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section 311, shall have the
meanings assigned to them in the rules of the SEC adopted under the
Trust Indenture Act;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted at the date of
such computation; and
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning
specified in Section 13.15.
"144A Global Note" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i) Debt
of any other Person existing at the time such other Person is merged with or
into or became a Subsidiary of such specified Person, including, without
limitation, Debt incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person
and (ii) Debt encumbering any assets acquired by such specified Person.
<PAGE> 8
"Adjusted Treasury Rate" means with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.50%.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Attributable Debt" means, as to any particular lease under which any
Person is at the time liable at any date as of which the amount thereof is to be
determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof, excluding renewals,
discounted at a rate per annum equal to the prevailing market interest rate, at
the time such lease was entered into, on United States Treasury obligations
having a maturity substantially the same as the average term of such lease, plus
3%. The net amount of rent required to be paid under any such lease for any such
period shall be the amount of the rent payable by the lessee with respect to
such period, after excluding amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water rates and similar
charges and contingent rents such as those based on sales. In the case of any
lease which is terminable by the lessee upon the payment of a penalty, such net
amount shall also include the amount of such penalty, but no rent shall be
considered as required to be paid under such lease subsequent to the first date
upon which it may be so terminated.
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Notes.
"Authorized Newspaper" means a newspaper, in the English language,
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays, and of general circulation in The City of New
York. Where successive publications are required to be made in Authorized
Newspapers, the successive publications may be made in the same or in different
newspapers in The City of New York meeting the foregoing requirements and in
each case on any Business Day.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means either the board of directors of the
Company, or any duly authorized committee of that Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors (or a committee of the Board of Directors empowered to
adopt such resolution) and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
2
<PAGE> 9
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
or in the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"Cedel" means Cedel Bank, SA, or its successor.
"Change of Control" means (i) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act), other than the Principal and its Related Parties, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and rule 13d-5 under the Exchange
Act), directly or indirectly, of more than 35% of the Voting Stock of POI or the
Company (measured by voting power rather than number of shares) or (ii) the
first day on which a majority of the members of the Board of Directors of POI or
the Company are not Continuing Directors.
"Change of Control Triggering Event" means the occurrence of both a
Change of Control and a Rating Decline.
"Company" means Protection One Alarm Monitoring, Inc., and any and
all successors thereto.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chief Executive Officer, its President,
its Chief Financial Officer, any Vice President, its Treasurer or any Assistant
Treasurer, its Secretary or any Assistant Secretary and delivered to the
Trustee.
"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Notes.
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if
the Trustee obtains fewer than three such Reference Treasury Dealer Quotations,
the average of all such Quotations.
3
<PAGE> 10
"Conditional Redemption" means a redemption pursuant to a notice of
redemption that provides that such redemption is subject to the occurrence of
any event before the date fixed for such redemption as described in such notice
of redemption.
"Consolidated Net Assets" means the total assets shown on the most
recent quarterly reviewed consolidated balance sheet of the Company and its
consolidated subsidiaries, after deducting the amount of all current liabilities
and goodwill and trademarks.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 11.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Debt" means notes, bonds, debenture or other similar evidence of
indebtedness for money borrowed.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Domestic Subsidiary" means a subsidiary organized under the laws of
one of the states of the United States or the District of Columbia.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
4
<PAGE> 11
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the
United States Code, as amended from time to time.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantors" means Protection One, Inc., a Delaware corporation
("POI"), the Subsidiary Guarantors, Westar Security, Inc., a Kansas corporation
and WestSec, Inc., a Kansas corporation, and each other Person that executes a
Note Guarantee in accordance with the provisions of this Indenture, and their
respective successors and assigns.
"Holder" means a Person in whose name a Note is registered.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Independent Investment Banker" means the Reference Treasury Dealers
appointed by the Trustee after consultation with the Company.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investment Grade Rating" means a rating equal to or higher than Baa3
(or the equivalent) and BBB- (or the equivalent) by Moody's Investors Service,
Inc. (or any successor to the rating agency
5
<PAGE> 12
business thereof) and Standard & Poor's Ratings Group (or any successor to the
rating agency business thereof), respectively.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means any mortgage, charge, security interest, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security agreement except: (a) liens for
taxes, assessments, levies and other governmental charges (i) which are not yet
delinquent or (ii) which are being contested in good faith by all appropriate
proceedings; (b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, brokers' or other like liens (i) which do not remain unsatisfied or
undischarged for a period of more than 90 days or (ii) which are being contested
in good faith by all appropriate proceedings; (c) attachment or judgment liens
not giving rise to or an Event of Default and which are being contested in good
faith by appropriate proceedings; (d) pledges or deposits in connection with
workers compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements or to obtain the benefit of, or to
comply with, laws; (e) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; and (f) easements, rights of way,
restrictions, development orders, plats and other similar encumbrances.
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 2 of the Registration Rights Agreement.
"Maturity," when used with respect to any Notes, means the date on
which the principal of such Notes or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment or otherwise.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Guarantee" means, with respect to each Guarantor, the
unconditional Guarantee of the Notes by such Guarantor, pursuant to Article 10.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Debt.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice President of such Person.
"Officers' Certificate" means a certificate signed by the Chief
Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company, and delivered to the Trustee.
6
<PAGE> 13
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, including an employee of the Company.
"Outstanding", when used with respect to Notes, means, as of the date
of determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment, money in
the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes;
(iii) Notes with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in this Indenture;
and
(iv) Mutilated, destroyed, lost or stolen Notes which have
become or are about to become due and payable which have been paid
pursuant to this Indenture or in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to this Indenture,
other than any such Notes in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Notes are
held by a bona fide purchaser in whose hands the Notes are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount (or principal amount at maturity) of Outstanding Notes have
given any request, demand, authorization, direction, notice, consent or waiver
under this Indenture, and for the purpose of making the calculations required by
TIA Section 313, Notes owned by the Company or any other obligor under the Notes
or any Affiliate of the Company or such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in making such calculation or in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
which the Trustee knows to be so owned shall be so disregarded. Notes so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Notes and that the pledgee is not the Company or any
other obligor upon the Notes or any Affiliate of the Company or such other
obligor.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).
"Paying Agent" means any Person (including the Company acting as
Paying Agent) authorized by the Company to pay the principal of, premium or
Liquidated Damages, if any, or interest on any Notes on behalf of the Company.
"Person" means any individual, corporation, partnership, limited
liability company joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof.
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<PAGE> 14
"Place of Payment" means, when used with respect to the Notes the
place or places where the principal, premium, if any, and interest on such Notes
are payable as specified as contemplated by Article 2.
"Principal" means Western Resources, Inc.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Protection One, Inc." a Delaware corporation ("POI").
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Rating Agencies" mean Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc. ("S&P"), and Moody's Investors Service, Inc. ("Moody's") or
any successor to the respective rating agency businesses thereof.
"Rating Category" means (i) with respect to S&P, any of the following
categories: AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor
categories); (ii) with respect to Moody's any of the following categories: Aaa,
Aa, A, Baa, Ba, B, Caa, Ca and C (or equivalent successor categories) and (iii)
the equivalent of any such category of S&P and Moody's used by another Rating
Agency. In determining whether the rating of the Notes has decreased by one or
more gradations, gradations within Rating Categories (+ and - for S&P: 1, 2 and
3 for Moody's; or the equivalent gradations for another Rating Agency) shall be
taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to
BB, as well as from BB- to B+, will constitute a decrease of one gradation).
"Rating Decline" means (i) a decrease of two or more gradations
(including gradations within Rating Categories as well as between Rating
Categories) in the rating of the Notes by either Rating Agency from the rating
of the Notes by such Rating Agency or (ii) a withdrawal of the rating of the
Notes by either Rating Agency, provided that such decrease or withdrawal occurs
on, or within 90 days after, the date of public notice of the occurrence of a
Change of Control or of the intention by the Company to effect a Change of
Control (which period shall be extended so long as the rating of the Notes is
under publicly announced consideration for possible downgrade by either Rating
Agency).
"Reference Treasury Dealer" means each of Bear, Stearns & Co. Inc.,
Morgan Stanley & Co. Incorporated, Lehman Brothers Inc. and Salomon Brothers Inc
and their respective successors; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average as determined by
the Trustee, of the bid and asked prices of the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 17, 1998, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
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<PAGE> 15
"Related Party" with respect to the Principal means (A) any
controlling stockholder, 80% (or more) owned Subsidiary of such Principal or (B)
any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of the Principal and/or such other Persons
referred to in the immediately preceding clause (A).
"Remaining Scheduled Payments" means, with respect to each Note to be
redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due after the related redemption date but for such
redemption; provided, however, that, if such redemption date is not an interest
payment date with respect to such Note, the amount of the next succeeding
scheduled interest payment thereon will be reduced by the amount of interest
accrued thereon to such redemption date.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"Sale and Leaseback Transaction" of any Person means an arrangement
with any lender or investor or to which such lender or investor is a party
providing for the leasing by such Person of any property or asset of such Person
which has been or is being sold or transferred by such Person more than 270 days
after the acquisition thereof or the completion of construction or commencement
of operation thereof to such lender or investor or to any Person to whom funds
have been or are to be advanced by such lender or investor on the security of
such property or asset. The stated maturity of such arrangement is the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration" means the Shelf Registration as defined in the
Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the Commission.
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<PAGE> 16
"Stated Maturity," when used with respect to any Notes or any
installment of principal thereof or interest thereon, means the date specified
in such Notes as the fixed date on which the principal of such Notes or such
installment of principal or interest is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which at the time of determination the
Person, directly and/or indirectly through one or more Subsidiaries, owns more
than 50% of the shares of Voting Stock.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force at the date of this Indenture, except that any supplemental
indenture executed pursuant to this Indenture shall conform to the requirements
of the Trust Indenture Act as in effect on the date of execution thereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent Global Note
substantially in the form of Exhibit A attached hereto that bears the Global
Note Legend and that has the "Schedule of Exchanges of Interests in the Global
Note" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Notes that do
not bear the Private Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" means stock of the class or classes having general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers, trustees or individuals performing similar
functions of a Person (irrespective of whether or not at the time stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency).
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Authentication Order"....................................... 2.02
"Bankruptcy Law"............................................. 4.01
"Change of Control Offer".................................... 4.10
"Change of Control Payment".................................. 4.10
"Change of Control Payment Date"............................. 4.10
"Covenant Defeasance"........................................ 8.03
"Event of Default"........................................... 6.01
"Guaranteed Debt"............................................ 10.04
"Defeasance"................................................. 8.02
"Obligor".................................................... 10.04
"Registrar".................................................. 2.03
</TABLE>
10
<PAGE> 17
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Security Register........................................... 3.03
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes and the Note Guarantees;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Note Guarantees means the Company and
the Guarantors, respectively, and any successor obligor upon the Notes and the
Note Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law,
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<PAGE> 18
stock exchange rule or usage. Each Note shall be dated the of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. Notes issued in global form shall be substantially
in the form of Exhibit A attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in Global Notes that are held by Participants through
Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
Any Officer shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
The Trustee shall have the right to decline to authenticate and
deliver any Notes under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if
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<PAGE> 19
the Trustee in good faith shall determine that such action would expose the
Trustee to personal liability to existing Holders.
Section 2.03. Regulation, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register for the Notes (the registers maintained in the Corporate
Trust Office of the Trustee and in any other office or agency of the Company in
a Place of Payment being herein sometimes collectively referred to as the
"Security Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Notes, of
transfers of Notes, for payment of Notes. The Security Register shall be in
written form or any other form capable of being converted into written form
within a reasonable time. At all reasonable times, the Security Register shall
be open to inspection by the Trustee. The Trustee is hereby initially appointed
as security registrar (the "Registrar") for the purpose of registering the Notes
and transfers of the Notes as herein provided.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a
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<PAGE> 20
Global Note or any portion thereof, pursuant to this Section 2.06 or Section
2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and
shall be, a Global Note. A Global Note may not be exchanged for another Note
other than as provided in this Section 2.06(a), however, beneficial interests in
a Global Note may be transferred and exchanged as provided in Section 2.06(b),
(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend. Beneficial
interests in any Unrestricted Global Note may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above, the
transferor of such beneficial interest must deliver to the Registrar
either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or (B)
(1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2)
instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note shall
be registered to effect the transfer or exchange referred to in (1) above.
Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the
Holder of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
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<PAGE> 21
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted Global
Note. A beneficial interest in any Restricted Global Note may be exchanged
by any holder thereof for a beneficial interest in an Unrestricted Global
Note or transferred to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1)
a broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as defined
in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
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<PAGE> 22
If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the aggregate principal amount of beneficial
interests transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive
Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall
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<PAGE> 23
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note
issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c) shall be registered in such name or names
and in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from
the Depositary and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such
Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section
2.06(c)(i) shall bear the Private Placement Legend and shall be subject to
all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in
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<PAGE> 24
Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Global Note to be reduced accordingly
pursuant to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to
this Section 2.06(c)(iii) shall be registered in such name or names and in
such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from
the Depositary and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such
Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear
the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the form
of Exhibit C hereto, including the certifications in item (2)(b)
thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144 under
the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in reliance on
an exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D) above,
a certificate to the effect set forth in Exhibit B hereto, including
the certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement under
the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
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the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes
to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item
(4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs
in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes
and increase or cause to be increased the aggregate principal amount of
the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.
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If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of Definitive Notes so
transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes.
Any Restricted Definitive Note may be transferred to and registered in the
name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
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(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Notes proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(d)
thereof; or
(2) if the Holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD,
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PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR
OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS
ACQUIRED THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A) (1), (2), (3) OR (7) OR REGULATION D UNDER THE
SECURITIES ACT (AN "IAI"), AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR
ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES
ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED
FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000,
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO
THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this
Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR
THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT
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THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE
REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT
TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a Holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, 3.07, 4.10 and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (C) to register
the transfer of or to exchange a Note between a record date and the next
succeeding interest payment date.
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(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of
and interest on such Notes and for all other purposes, and none of the
Trustee, any Agent or the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
Each Holder of a Note agrees to indemnify the Company and the Trustee
against any liability that may result from the transfer, exchange or assignment
of such Holder's Note in violation of any provision of this Indenture and/or
applicable United States federal or state securities law.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Note (including any transfers between or among Depositary participants or
beneficial owners of interests in any Global Note) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
Section 2.06. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.07. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
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If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.08. Treasury Notes.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.09. Temporary Notes.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
Section 2.10. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
Section 2.11. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
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Section 2.12. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the "CUSIP" numbers.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, such election to be set forth in a
Board Resolution, it shall furnish to the Trustee, at least 30 days but not more
than 60 days before a redemption date, an Officers' Certificate setting forth
(i) the clause of this Indenture pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the principal amount of Notes to be redeemed and
(iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes (including CUSIP numbers, if
any) to be redeemed and shall state:
(a) the redemption date;
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(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.04. Deposit of Redemption Price.
Prior to the redemption date and subject to the satisfaction of any
conditions of a Conditional Redemption, the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Trustee or
the Paying Agent shall promptly return to the Company any money deposited with
the Trustee or the Paying Agent by the Company in excess of the amounts
necessary to pay the redemption price of, and accrued interest on, all Notes to
be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and premium, if any, shall, until paid,
bear interest from the redemption date at the rate of interest set forth in the
Note.
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Section 3.05. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.06. Optional Redemption.
(a) The Company has the option to redeem the Notes, in whole or in
part, at the redemption price equal to the greater of (i) 100% of the principal
amount of the Notes to be redeemed or (ii) as determined by an Independent
Investment Banker, the sum of the present values of the Remaining Scheduled
Payments discounted to the redemption date on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus, in each case, accrued interest and Liquidated Damages, if any, on the
Notes to be redeemed to the date of redemption.
(b) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
Section 3.07. Mandatory Redemption.
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail
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to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 4.03. Compliance Certificate.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year, beginning June 30, 1999, a brief certificate from the
principal executive officer, principal financial officer or principal accounting
officer as to his or her knowledge of the Company's compliance with all
conditions and covenants under this Indenture. For purposes of this Section
4.03, such compliance shall be determined without regard to any period of grace
or requirement of notice under this Indenture.
Section 4.04. Taxes.
The Company and the Guarantors shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Significant Subsidiary or upon the income, profits or property of the Company,
the Guarantors or any of their respective Significant Subsidiary; provided,
however, that the Company or the Guarantors shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings.
Section 4.05. Stay, Extension and Usury Laws.
The Company and each of the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
Section 4.06. Liens.
The Company, POI and their respective Subsidiaries shall not,
directly or indirectly, create, incur, assume or suffer to exist any Lien of any
kind on any asset now owned or hereafter acquired to secure Debt without making,
or causing such Subsidiary to make, effective provision for securing the Notes
or the Note Guarantee of any Guarantor, as applicable, equally and ratably with
(or prior to) such Debt or, in the event such Debt is subordinate in right of
payment to the Notes, prior to such Debt, as to such asset for so long as such
Debt will be so secured. The foregoing restrictions will not apply to Liens in
respect of
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Debt existing on the date of this Indenture or to: (a) Liens securing only Notes
or Note Guarantees; (b) Liens in favor of the Company, POI or any of their
respective Subsidiaries; (c) Liens on assets or property existing immediately
prior to the time of acquisition thereof (and not created in anticipation of the
financing of such acquisition); (d) Liens to secure Debt incurred for the
purpose of financing all or any part of the purchase price or the cost of
construction or improvement of assets or property used in the business of the
Company, POI or any of their respective Subsidiaries and subject to such Liens,
provided that (i) the principal amount of any Debt secured by such a Lien does
not exceed 100% of the direct and indirect costs of such purchase, (ii) such
Lien does not extend to or cover any other assets or property other than such
assets or property and any such improvements, and (iii) such Debt is incurred
within 180 days of such purchase, construction or improvement; (e) Liens on
assets or property of a Person existing at the time such Person is merged with
or into or consolidated with or substantially all of the assets or property of
such Person are otherwise acquired by the Company, POI or any of their
respective Subsidiaries that were not created in anticipation of the acquisition
of such Person, provided that such Lien does not extend to or cover any property
other than that of the Person so merged, consolidated or acquired; (f) Liens in
favor of a governmental body to secure partial progress, advance or other
payments pursuant to any contract or statute of such governmental body; and (g)
Liens to secure Debt incurred to extend, renew, refinance, replace or refund (or
successive extensions, renewals, refinancings, replacements or refundings), in
whole or in part, (i) any secured Debt existing on the date of this Indenture,
or (ii) any Debt secured by any Lien referred to in the foregoing clauses, so
long as in each such case the Lien does not extend to any other property and the
Debt so secured is not increased other than for reasonable costs related to such
extension, renewal, refinancing, replacement or refunding.
In addition to the foregoing, the Company, POI and their respective
Subsidiaries may incur a Lien or Liens to secure Debt (excluding Debt secured by
Liens permitted under the foregoing exceptions) the aggregate amount of which,
including Attributable Debt in respect of Sale and Leaseback Transactions, does
not exceed 10% of Consolidated Net Assets. The Company, POI and their respective
Subsidiaries may also incur a Lien or Liens to secure any Debt incurred pursuant
to a Sale and Leaseback Transaction, without securing the Notes equally and
ratably with or prior to such Debt, as applicable, provided that such Sale and
Leaseback Transaction is permitted by the provisions of this Indenture described
below in clauses (b) and (c) of Section 4.08 hereof.
Section 4.07. Sale and Leaseback Transactions.
The Company, POI or their respective Subsidiaries shall not enter
into any Sale and Leaseback Transaction (except for a period, including
renewals, not exceeding 36 months) unless (a) at the time of entering into such
Sale and Leaseback Transaction, the Company, POI or such Subsidiary would be
entitled to incur Debt, in a principal amount equal to the Attributable Debt in
respect of such Sale and Leaseback Transaction, secured by a Lien, without
equally and ratably securing the Notes; (b) the Company, POI or such Subsidiary
applies, within twelve months after the sale or transfer, an amount equal to the
greater of (i) the net proceeds of the assets sold pursuant to the Sale and
Leaseback Transaction, or (ii) the fair value (in the opinion of an executive
officer of the Company or POI, as applicable) of such assets to the acquisition
of or construction of assets or property used or to be used in the ordinary
course of business of the Company, POI or their respective Subsidiaries; or (c)
the Company, POI or such Subsidiary applies, within twelve months after the sale
or transfer, an amount equal to the net proceeds of the assets sold pursuant to
the Sale and Leaseback Transaction to the voluntary defeasance or retirement of
Debt (other than Debt that is held by the Company, POI or their respective
Subsidiaries or Debt of the Company, POI or their respective Subsidiaries that
is subordinate in right of payment to the Notes or the Note Guarantees, as
applicable), which amount will not be less than the fair value (in the opinion
of an executive officer of the Company or POI, as applicable) of such assets
(adjusted to reflect an amount
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expended by the Company or POI as set forth in clause (b) above) less an amount
equal to the principal amount of such Debt voluntarily defeased or retired by
the Company, POI or such Subsidiary within such twelve-month period.
Section 4.08. Corporate Existence.
Subject to Article 5 hereof, each of the Company and POI shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company, POI or any such Subsidiary and (ii) the rights (charter and statutory),
licenses and franchises of the Company, POI and their respective Subsidiaries;
provided, however, that the Company and POI shall not be required to preserve
any such right, license or franchise, or the corporate, partnership or other
existence of any of their respective Subsidiaries (other than the Company), if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and POI and their
respective Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Notes. The foregoing does
not prohibit any mergers or consolidations between Subsidiaries or between the
Company and POI and one or more of their respective Subsidiaries so long as any
such merger or consolidation involving the Company or POI complies with Article
5.
Section 4.09. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control Triggering Event,
each Holder of Notes will have the right to require the Company to repurchase
all or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Notes pursuant to the offer described below (the "Change of Control
Offer") at an offer price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase (the "Change of Control Payment"). Within ten
days following any Change of Control Triggering Event, the Company shall mail a
notice to each Holder describing the transaction or transactions that constitute
the Change of Control Triggering Event and offering to repurchase Notes on the
date specified in such notice, which date shall be no earlier than 30 days and
no later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"), pursuant to the procedures required by this Indenture
and described in such notice. The Company will comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of Control Triggering
Event.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book-entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
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(c) Notwithstanding anything to the contrary in this Section 4.10,
the Company shall not be required to make a Change of Control Offer upon a
Change of Control Triggering Event if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.10 and all other provisions of this
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
(d) IN THE EVENT THAT AT ANY TIME (i) BOTH RATING AGENCIES ASSIGN
THE NOTES AN INVESTMENT GRADE RATING AND (ii) NO DEFAULT HAS OCCURRED AND IS
CONTINUING UNDER THIS INDENTURE, THE PROVISIONS OF THIS INDENTURE WITH RESPECT
TO A CHANGE OF CONTROL TRIGGERING OFFER WILL BE PERMANENTLY TERMINATED.
Section 4.10. Money for Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any Notes, it will, on or before each due date of the principal,
premium, Liquidated Damages, if any, or interest on any of the Notes, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum (except
as otherwise specified in this Indenture) sufficient to pay the principal,
premium, Liquidated Damages, if any, or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Notes, it will, prior to or on each due date of the principal, premium, if any,
or interest on any Notes, deposit with a Paying Agent a sum sufficient to pay
the principal, premium, Liquidated Damages, if any, or interest so becoming due,
such sum to be held in trust for the benefit of the Persons entitled to such
principal, premium, Liquidated Damages, if any, or interest, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.
The Company will cause each Paying Agent (other than the Trustee) for
the Notes to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section 4.10, that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal, premium, Liquidated Damages, if any, and interest on
Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Notes) in the making of
any payment of principal, premium, if any, or interest on the
Notes; and
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which sums were held by the Company or such
Paying Agent; and,
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upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such sums.
Except as otherwise provided in this Indenture, any money deposited
with the Trustee or any Paying Agent, or then held by the Company, in trust for
the payment of the principal, premium, Liquidated Damages, if any, or interest
on any Note and remaining unclaimed for two years after such principal, premium,
if any, or interest has become due and payable shall be paid to the Company on
Company Request, or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Note shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in an
Authorized Newspaper, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
Section 4.11. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition which affects such series set forth in Sections
4.04 and 4.06 to 4.09 inclusive, if before the time for such compliance the
Holders of at least a majority in principal amount of all Outstanding Notes, Act
of such Holders, waive such compliance in such instance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
Section 4.12. Statement by Officers as to Default.
The Company shall deliver to the Trustee, as soon as possible and in
any event within five days after the Company becomes aware of the occurrence of
any Event of Default or an event which, with notice or the lapse of time or
both, would constitute an Event of Default, an Officers' Certificate setting
forth the details of such Event of Default or default and the action which the
Company proposes to take with respect thereto.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company and the Guarantors shall not consolidate with or merge
into any other corporation or sell, convey, transfer or lease its properties and
assets substantially as an entirety to any Person, unless: (1) the corporation
formed by such consolidation or into which the Company or a Guarantor, as
applicable, is merged or the Person which acquires by sale, conveyance or
transfer, or which leases, the properties and assets of the Company or a
Guarantor, substantially as an entirety (A) shall be a corporation, partnership,
limited liability company or trust organized and validly existing under the laws
of the United States of America, any state thereof or the District of Columbia
and (B) shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form reasonably satisfactory to the Trustee,
the obligations of the Company and/or any Guarantor, as applicable, for the due
and punctual payment of the principal of, premium and Liquidated Damages, if
any, and interest on all Outstanding Notes and the
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performance and observance of every covenant of this Indenture on the part of
the Company or the Note Guarantees on the part of any Guarantor to be performed
or observed; (2) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and (3) the Company
or a Guarantor, as applicable, or such Person shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, transfer or lease and such supplemental
indenture comply with this Section 5.01 and that all conditions precedent
provided for relating to such transaction have been satisfied. These provisions
apply only to a merger or consolidation in which the Company or a Guarantor, as
applicable, is not the surviving corporation and to sales, conveyances, leases
and transfers by the Company or any Guarantor as transferor or lessor.
Section 5.02. Successor Person Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company or any Guarantor in accordance with Section 5.01 hereof, the
successor Person formed by such consolidation or into or with which the Company
or such Guarantor is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted for
(so that from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Indenture referring to
the "Company" or the "Guarantors" shall refer instead to the successor Person
and not to the Company or such Guarantor), and may exercise every right and
power of the Company under this Indenture and any Guarantor under the Note
Guarantees, as applicable, with the same effect as if such successor Person had
been named as the Company or a Guarantor herein, respectively, and in the event
of any such conveyance or transfer, the Company and the Guarantors, as
applicable, except in the case of a lease, shall be discharged of all
obligations and covenants under the Indenture, the Notes and the Note
Guarantees.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest on the Notes
when such interest becomes due and payable, and continuance of such default for
a period of 60 days; or
(b) the Company defaults in the payment of the principal of (or
premium, if any, on) the Notes at their Maturity or upon any redemption and such
default shall continue for five or more days; or
(c) the Company defaults in the performance, or breach, of any
covenant or warranty in this Indenture (other than a default in the performance,
or breach, of a covenant or warranty which is specifically dealt with elsewhere
under this Section 6.01, and continuance of such default or breach for a period
of 90 days after there has been given, by registered or certified mail, to the
Company or any Guarantor by the Trustee or to the Company, any Guarantor or the
Trustee by the Holders of at least 33 1/3% of all outstanding Notes, a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" thereunder; or
(d) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company or any Guarantor bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or any Guarantor under
any Bankruptcy Law or any other applicable federal or state law, or appointing a
receiver, liquidator,
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assignee, trustee, sequestrator (or other similar official) of the Company or
any Guarantor, or of any substantial part of the property of the Company or any
Guarantor, or ordering the winding up or liquidation of the affairs of the
Company or any Guarantor, and the continuance of any such decree or order
unstayed and in effect for a period of 90 consecutive days; or
(e) the institution by the Company or any Guarantor of proceedings
to be adjudicated bankrupt or insolvent, or the consent by the Company or any
Guarantor to the institution of bankruptcy or insolvency proceedings against
either of them, or the filing by either of them of a petition or answer or
consent seeking reorganization or relief under any Bankruptcy Law or any other
applicable federal or state law, or the consent by either of them, to the filing
of any such petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or any
Guarantor, or of any substantial part of the property of the Company or any
Guarantor, or the making by either of them of an assignment for the benefit of
creditors.
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against POI or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments exceeds $5.0 million; or
(g) except as permitted by this Indenture, any Note Guarantee is
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Guarantor, or any Person
acting on behalf of any Guarantor, shall deny or disaffirm its obligations under
such Guarantor's Note Guarantee.
Section 6.02. Acceleration.
If an Event of Default (other than specified in clause (d) or (e) of
Section 6.01 hereof with respect to the Company or any Guarantor) described in
clause (a), (b), (c), (f) or (g) above with respect to the Notes at the time
outstanding occurs and is continuing, then in every such case the Trustee or
the Holders of not less than 33 1/3% in principal amount of the outstanding
Notes may declare the principal amount of all of the Notes to be due and
payable immediately, by a notice in writing to the Company and any Guarantor
(and to the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified portion thereof) shall become immediately due
and payable. If an Event of Default described in clause (d) or (e) above occurs
and is continuing, then the principal amount of all the Notes shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
At any time after a declaration of acceleration with respect to the
Notes has been made, the Holders of a majority in principal amount of the
Outstanding Notes, by written notice to the Company or any Guarantors and the
Trustee, may rescind and annul such declaration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of principal or
interest that has become due solely because of acceleration.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
Section 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
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(1) default is made in the payment of any
installment of interest on any Note when such interest becomes
due and payable and such default continues for a period of 60
days, or
(2) default is made in the payment of the principal
and premium, if any, on any Note at the Maturity thereof, which
default continues for five or more days, then the Company will,
upon demand of the Trustee, pay to the Trustee for the benefit
of the Holders of such Notes, the whole amount then due and
payable on such Notes for principal, premium, if any, and
interest, and interest on any overdue principal and premium, if
any, and to the extent that payment of such interest is lawful
on any overdue interest, at the rate or rates prescribed
therefor in the Notes and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Notes, wherever situated.
If an Event of Default with respect to the Notes occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Notes by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
Section 6.04. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of
the Notes and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.06.
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Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 6.05. Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
Section 6.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article 6 shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium,
if any, or interest, upon presentation of the Notes and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under
Section 7.06;
Second: To the payment of the amounts then due and unpaid for
principal, premium, if any, and interest on the Notes in respect of which
or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Notes for principal, premium, if any, and interest,
respectively; and
Third: The balance, if any, to the Person or Persons entitled
thereto including, without limitation, the Company.
Section 6.07. Limitation on Suits.
No Holder of any Note shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Notes;
(2) the Holders of not less than 33-1/3% in principal amount of
the Outstanding Notes in the case of any Event of Default described in
clause (a), (b), (c), (f) or (g) of Section 6.01, or, in the case of any
Event of Default described in clause (d) or (e) of Section 6.01, the
Holders of not less than 33-1/3% in principal amount of all Outstanding
Notes, shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
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(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of at
least a majority or more in principal amount (or principal amount at
maturity, as applicable) of the Outstanding Notes in the case of any Event
of Default described in clause (a), (b), (c), (f) or (g) of Section 6.01,
or, in the case of any Event of Default described in clause (d) or (e) of
Section 6.01, by the Holders of a majority or more in principal amount (or
principal amount at maturity, as applicable) of all Outstanding Notes;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders of Notes, in the case of any Event of Default described
in clause (a), (b), (d) (f) or (g) of Section 6.01, or of Holders of all
Notes in the case of any Event of Default described in clause (d) or (e)
of Section 6.01, or to obtain or to seek to obtain priority or preference
over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and
ratable benefit of all Holders of Notes, in the case of any Event of
Default described in clause (a), (b), (d), (f) or (g) of Section 6.01, or
of Holders of all Notes in the case of any Event of Default described in
clause (d) or (d) of Section 6.01.
Section 6.08. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including Article 8) and in such Note, of the
principal, premium, if any, and interest on, such Note on the Stated Maturity
(or, in the case of redemption, on the redemption date in accordance with
Article 3) and to institute suit for the enforcement of any such payment, and
such rights shall not be impaired without the consent of such Holder.
Section 6.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders of
Notes shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
Section 6.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in Section 2.07, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders of
Notes is intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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Section 6.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article 6 or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 6.12. Control by Holders.
The Holders of not less than a majority in principal amount (or
principal amount at maturity, as applicable) of the Outstanding Notes shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee, relating to or arising under clause (a), (b), (c), (f) or (g) of
Section 6.01, and, with respect to all Notes, the Holders of not less than a
majority in principal amount of all Outstanding Notes shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, not relating to or arising under clause (a), (b), (c), (f) or (g) of
Section 6.01, provided that in each case
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it
in personal liability or be unjustly prejudicial to the Holders of Notes
not consenting.
Section 6.13. Waiver of Past Defaults.
Subject to Section 6.02, the Holders of not less than a majority in
principal amount of the Outstanding Notes of any series may on behalf of the
Holders of all the Notes waive any past default described in clause (a), (b),
(c), (f) or (f) of Section 6.01 (or, in the case of a default described in
clause (d) or (e) of Section 6.01, the Holders of not less than a majority in
principal amount of all Outstanding Notes may waive any such past default), and
its consequences, except a default
(1) in respect of the payment of the principal, premium, if
any, or interest on any Note or any related coupon, or
(2) in respect of a covenant or provision hereof which under
Article 9 cannot be modified or amended without the consent of the Holder
of each Outstanding Note affected.
Upon any such waiver, any such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
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ARTICLE 7.
TRUSTEE
Section 7.01. Notice of Defaults.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture; but
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Notes of any series, determined as provided herein relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture with respect to the Notes of such
series.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Within 90 days after the occurrence of any Default hereunder with
respect to the Notes, the Trustee shall transmit in the manner and to the extent
provided in TIA Section 313(c), notice of such Default hereunder known to the
Trustee, unless such Default shall have been cured or waived; provided, however,
that, except in the case of a Default in the payment of the principal, premium,
if any, or interest on any of such Notes, the Trustee shall be protected in
withholding such notice if and so long as the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders of Notes
of such
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series and any related coupons; provided, further, that in the case of any
Default of the character specified in Section 6.01(c) with respect to the Notes,
no such notice to Holders shall be given until at least 30 days after the
occurrence thereof.
Section 7.02. Certain Rights of Trustee.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document reasonably believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board of Directors may be sufficiently evidenced by
a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Notes pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(8) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Indenture;
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(9) the Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee
has actual knowledge thereof or unless written notice of any event which
is in fact such a Default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the Notes and this
Indenture; and
(10) the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to
be indemnified, are extended to, and shall be enforceable by, the Trustee
in each of its capacities hereunder, and to each agent, custodian and
other Person employed to act hereunder.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 7.03. Trustee Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Notes, except that the
Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Notes and perform its obligations hereunder and that
the statements made by it in a Statement of Eligibility and Qualification on
Form T-1 supplied to the Company are true and accurate, subject to the
qualifications set forth therein. Neither the Trustee nor any Authenticating
Agent shall be accountable for the use or application by the Company of Notes or
the proceeds thereof.
Section 7.04. May Hold Notes.
The Trustee, any Authenticating Agent, any Paying Agent, any
Registrar or any other agent of the Company or of the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Notes and, subject to
TIA Sections 310(b) and 311, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Registrar or such other agent.
Section 7.05. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 7.06. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time such compensation
as the Company and the Trustee shall from time to time agree in writing
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
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(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its negligence
or bad faith; and
(3) to indemnify the Trustee and any predecessor Trustee for,
and to hold it harmless against, any loss, liability or expense, including
taxes (other than taxes based upon, measured by, or determined by the
income of the Trustee), incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
The obligations of the Company under this Section 7.06 to compensate
the Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Company, the Trustee shall have a claim prior to the Notes upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal, premium, if any, or interest on
particular Notes.
Section 7.07. Corporate Trustee Required; Eligibility; Conflicting Interest.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1). Each successor trustee
shall have a combined capital and surplus of at least $50,000,000. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of federal, state, territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section 7.07,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.07, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article 7.
Section 7.08. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article 7 shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 7.09.
(b) The Trustee may resign at any time with respect to the Notes by
giving written notice thereof to the Company. If the instrument of acceptance by
a successor Trustee required by Section 7.09 shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation
removal, the resigning removed Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Notes.
(c) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Note for at least six months,
or
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(2) the Trustee shall cease to be eligible under Section
7.07(a) and shall fail to resign after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Note for at
least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation.
then, in any such case, (i) the Company, by a Board Resolution, may remove
the Trustee with respect to all Notes, or (ii) subject to TIA Section
315(e), any Holder who has been a bona fide Holder of a Note for at least
six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the
Trustee with respect to the Notes and the appointment of a successor
Trustee or Trustees.
The Company also may remove the Trustee with or without cause if the
Company so notifies the Trustee three months in advance and if no Default occurs
during the three-month period.
If the instrument of acceptance by a successor Trustee required by
Section 7.09 shall not have been delivered to the Trustee within 30 days after
receipt of a notice of removal, the removed Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Notes.
(d) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Notes, the Company, by a Board Resolution, shall promptly appoint
a successor Trustee or Trustees with respect to the Notes. If no successor
Trustee with respect to the Notes shall have been so appointed by the Company or
the Holders and accepted appointment in the manner hereinafter provided, any
Holder who has been a bona fide Holder of a Note for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Notes.
(e) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Notes and each appointment of a
successor Trustee with respect to the Notes to the Holders of Notes in the
manner provided for in Section 13.02. Each notice shall include the name of the
successor Trustee with respect to the Notes and the address of its Corporate
Trust Office.
Section 7.09. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to the Notes, the Company, the retiring Trustee and each successor
Trustee with respect to the Notes shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Notes to which the appointment of such successor Trustee relates; and upon the
execution and delivery of such supplemental indenture to resignation or removal
of the retiring Trustee shall become effective to the extent provided therein
and each such successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Notes; but, on request of the Company or
any successor Trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Notes.
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(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in paragraph (a) of this Section 7.09.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article 7.
Section 7.10. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes; and in case at that
time any of the Notes shall not have been authenticated, any successor Trustee
may authenticate such Notes either in the name of any predecessor hereunder or
in the name of the successor Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Trustee shall have; provided, however, that
the right to adopt the certificate of authentication of any predecessor Trustee
or to authenticate Notes in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
Section 7.11. Appointment of Authenticating Agent.
At any time when any of the Notes remain Outstanding, the Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Notes which shall be authorized to act on behalf of the Trustee to authenticate
Notes of such series and the Trustee shall give written notice of such
appointment to all Holders of Notes with respect to which such Authenticating
Agent will serve, in the manner provided for in Section 13.06. Notes so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Any such appointment shall be evidenced by an instrument in writing
signed by a Responsible Officer of the Trustee, and a copy of such instrument
shall be promptly furnished to the Company. Wherever reference is made in this
Indenture to the authentication and delivery of Notes by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any state thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal or state authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining authority, then for the
purposes of this Section 7.11, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 7.11, it shall resign immediately in the manner and
with the effect specified in this Section 7.11.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 611, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 611, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
written notice of such appointment to all Holders of Notes with respect to which
such Authenticating Agent will serve, in the manner provided for in Section
13.02. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section 7.11.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 7.11, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 7.06.
If an appointment with respect to one or more series is made pursuant
to this Section 7.11, the Notes of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Notes referred to in the within-mentioned
Indenture.
Dated:
The Bank of New York
By
-----------------------------
as Authenticating Agent
By
-----------------------------
Authorized Signatory
ARTICLE 8.
DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
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Section 8.02. Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from its obligations with respect to all
Outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, "Defeasance"). For this purpose, Defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Outstanding Notes, which shall thereafter be deemed to be Outstanding
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes, the Note Guarantees and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of such Outstanding Notes to receive, solely from the trust fund
described in Section 8.04 hereof, and as more fully set forth in such Section,
payments in respect of the principal of (and premium, if any, on) and interest
and Liquidated Damages, if any on such Notes when such payments are due, (b) the
Company's obligations with respect to such Notes under Article 2 and Section
4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith and (d)
this Article Eight.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their respective obligations under the covenants contained in
Sections 4.07, 4.08, and 4.10 hereof with respect to the outstanding Notes on
and after the date the conditions set forth in Section 8.04 are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company and
the Guarantors may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(c), (f) and (g) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either defeasance or covenant defeasance:
(a) the Company shall irrevocably deposit or cause to be deposited
with the Trustee, in trust, for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefit of
the Holders of such Notes, (A) money in an amount (in such currency in which
such Notes
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are then specified as payable at Stated Maturity), or (B) Government Obligations
applicable to such Notes which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment of principal (including
any premium) and interest, if any, under such Notes, money in an amount or (C) a
combination thereof, sufficient, in the opinion of a nationally recognized firm
of independent public accountants to pay and discharge (i) the principal of (and
premium, if any, on) and interest on the outstanding Notes on the Stated
Maturity (or any Redemption Date selected by the Company, if applicable) of such
principal (and premium, if any) or installment or interest and (ii) any
mandatory sinking fund payments or analogous payments applicable to the
outstanding Notes on the day on which such payments are due and payable in
accordance with the terms of the Indenture and of such Notes; provided, however,
that the Trustee shall have been irrevocably instructed to apply such money or
the proceeds of such Government Obligations to said payments with respect to
such Notes. Before such a deposit, the Company may give to the Trustee, in
accordance with the redemption provisions in the Indenture, a notice of its
election to redeem all or any portion of such outstanding Notes at a future date
in accordance with the terms of the Notes and the redemption provisions of the
Indenture, which notice shall be irrevocable. Such irrevocable redemption
notice, if given, shall be given effect in applying the foregoing;
(b) such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company is a party or by
which it is bound;
(c) in the case of a covenant defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the Holders of
the outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such covenant defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such covenant defeasance had not occurred;
(d) such defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions or limitations in
connection therewith pursuant to this Indenture; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent under this Indenture to either defeasance or covenant defeasance, as
the case may be, have been satisfied.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium and Liquidated Damages, if
any, and interest, but such money need not be segregated from other funds except
to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
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Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Defeasance or Covenant
Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest or Liquidated Damages, if any, on any Note and remaining
unclaimed for two years after such principal, and premium, if any, or interest
or Liquidated Damages, if any, has become due and payable shall be paid to the
Company on its request or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Note shall thereafter look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Guarantors' obligations under this
Indenture, the Notes and the Note Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium, if
any, or interest or Liquidated Damages, if any, on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
SUPPLEMENTAL INDENTURE
Section 9.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by
or pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Company and the Trustee, for any of the following purposes:
(1) to cure ambiguities, defects or inconsistencies, or to make
any other provisions with respect to questions or matters arising under
this Indenture;
(2) to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
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<PAGE> 56
(3) to secure the Notes; or
(4) to add to the covenants of the Company or any Guarantor for
the benefit of the Holders of the Notes; or
(5) to make any other change to the provisions of this
Indenture that does not adversely affect in all material respects the
rights of Holders of the Notes hereunder;
(6) to add any additional Note Guarantees;
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes and to add to
or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by
more than one Trustee, pursuant to the requirements of Section 7.09(b); or
(8) to evidence the succession of another Person to the Company
or any Guarantor and the assumption by any such successor of the
obligations of the Company or Guarantor, as applicable, contained herein
and in the Notes; or
(9) to add any additional Events of Default; or
(10) to change or eliminate any of the provisions of this
Indenture; provided, however that any such change or elimination shall
become effective only when there is no Note Outstanding created prior to
the execution of such supplemental indenture which is entitled to the
benefit of such provision; or
(11) to make any other provisions with respect to matters or
questions arising under this Indenture; provided, however, that such
action shall not adversely affect the interests of the Holders of Notes in
any material respect; or
(12) to supplement any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the defeasance
and discharge of the Notes pursuant to Sections 11.01, 8.02 and 8.03;
provided that any such action shall not adversely affect the interests of
the Holders of Notes in any material respect; or
(13) to provide for uncertificated Notes in addition to or in
place of certificated Notes.
Section 9.02. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of all Outstanding Notes by Act of said Holders delivered to
the Company and the Trustee, the Company, when authorized by or pursuant to a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture which affect
such Notes or of modifying in any manner the rights of the Holders of Notes
under this Indenture; provided, however, that no such supplemental indenture,
modification or amendment shall, without the consent of the Holder of each
Outstanding Note affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Note or reduce the principal amount
thereof or the rate of interest thereon or any premium payable
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upon the redemption thereof, or adversely affect, after giving effect or
after the event giving rise to any right of repayment shall have occurred,
any right of repayment at the option of any Holder of any Note, or impair
the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption or
repayment at the option of the Holder, on or after the Redemption Date or
Repayment Date, as the case may be), or adversely affect any right to
exchange any Note as may be provided pursuant to Article 2 herein, or
(2) reduce the percent in principal amount of the Outstanding
Notes, the consent of whose Holders is required for any such supplemental
indenture, for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture, or reduce the requirements of Section 13.04 for
quorum or voting.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided, that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
cancelled and of no further effect.
It shall not be necessary for any Act of Holders under this Section
9.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
Section 9.03. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article 9 or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article
9, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article 9
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 9 may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes
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so modified as to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Notes.
ARTICLE 10.
NOTE GUARANTEES
Section 10.01. Note Guarantee.
Subject to the provisions of this Article 10, each Guarantor hereby,
jointly and severally, fully, unconditionally and irrevocably Guarantees to each
Holder of Notes hereunder and to the Trustee on behalf of the Holders: (i) the
due and punctual payment of the principal of and interest on each Note, when and
as the same shall become due and payable, whether at maturity, by acceleration
or otherwise, the due and punctual payment of interest on the overdue principal
of and interest, if any, on the Notes, to the extent lawful, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms of such Note and this Indenture
and (ii) in the case of any extension of time of payment or renewal of any Notes
or any of such other obligations, that the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
at maturity, by acceleration or otherwise, subject, however, in the case of
clauses (i) and (ii) above, to the limitations set forth in the next succeeding
paragraph.
Each Note Guarantee shall rank equally and pari passu with all other
unsecured and unsubordinated debt of the issuer of such Note Guarantee.
Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the Guarantee by such
Guarantor pursuant to its Note Guarantee not constitute a fraudulent transfer or
conveyance for purposes of the United States Bankruptcy Code, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
Federal or state law. To effectuate the foregoing intention, the Holders and
such Guarantor hereby irrevocably agree that the obligations of such Guarantor
under its Note Guarantee shall be limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of such Guarantor
(including, but not limited to, the Guarantor Senior Indebtedness of such
Guarantor) and after giving effect to any collections from or payments made by
or on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Note Guarantee or pursuant to the following paragraph,
result in the obligations of such Guarantor under its Note Guarantee not
constituting such fraudulent transfer or conveyance.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under its Note
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Notes or any other Guarantor's obligations with
respect to its Note Guarantee. "Adjusted Net Assets" of such Guarantor at any
date shall mean the lesser of the amount by which (x) the fair value of the
property of such Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding liabilities under the Note Guarantee, of such Guarantor at such date
and (y) the present fair salable value of the assets of such Guarantor at such
date exceeds the amount that will be required to pay the probable liability of
such Guarantor on its debts (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date and after
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giving effect to any collection from any Subsidiary of such Guarantor in respect
of the obligations of such Subsidiary under the Note Guarantee of such
Guarantor), excluding debt in respect of its Note Guarantee, as they become
absolute and matured.
Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any requirement that the Trustee or any of the Holders protect,
secure, perfect or insure any security interest in or other Lien upon any
property subject thereto or exhaust any right or take any action against the
Issuer or any other Person, any right to require a proceeding first against the
Company, the benefit of discussion, protest or notice with respect to any such
Note or the debt evidenced thereby and all demands whatsoever (except as
specified above), and covenants that this Note Guarantee will not be discharged
as to any such Note except by payment in full of the principal thereof and
interest thereon and as provided in Section 11.01. The maturity of the
obligations Guaranteed hereby may be accelerated as provided in Article 6 for
the purposes of this Article 10. In the event of any declaration of acceleration
of such obligations as provided in Article 6, such obligations (whether or not
due and payable) shall forthwith become due and payable by the Guarantors for
the purpose of this Article 10. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article 6, the
Trustee shall promptly make a demand for payment on the Notes under the Note
Guarantee provided for in this Article 10.
The obligations of each Guarantor under this Note Guarantee are
independent of the obligations Guaranteed by such Guarantor hereunder, and a
separate action or actions may be brought and prosecuted by the Trustee on
behalf of, or by, the Holders, subject to the terms and conditions set forth in
this Indenture, against a Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Company or whether the Company is
joined in any such action or actions.
If the Trustee or the Holder is required by any court or otherwise to
return to the Company or any Guarantor, or any custodian, receiver, liquidator,
trustee, sequestrator or other similar official acting in relation to the
Company or such Guarantor, any amount paid to the Trustee or such Holder in
respect of a Note, this Note Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each of the Guarantors further
agrees, to the fullest extent that it may lawfully do so, that, as between it,
on the one hand, and the Holders and the Trustee, on the other hand, the
maturity of the obligations Guaranteed hereby may be accelerated as provided in
Article 6 hereof for the purposes of this Note Guarantee, notwithstanding any
stay, injunction or other prohibition extant under any applicable bankruptcy law
preventing such acceleration in respect of the obligations Guaranteed hereby.
Each of the Guarantors hereby irrevocably waives any claim or other
rights which it may now or hereafter acquire against the Company or any other
Guarantor that arise from the existence, payment, performance or enforcement of
its obligations under this Note Guarantee and this Indenture, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of the Holders
against the Company or any Guarantor or any collateral which any such Holder or
the Trustee on behalf of such Holder hereafter acquires, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Company or a Guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim or
other rights. If any amount shall be paid to a Guarantor in violation of the
preceding sentence and the principal of and accrued interest on the Notes shall
not have been paid in full, such amount shall be deemed to have been paid to
such Guarantor for the benefit of, and held in trust for the benefit of, the
Holders, and shall forthwith be paid to the Trustee for the benefit of the
Holders to be credited and applied upon the principal of and accrued interest on
the Notes. Each of the Guarantors acknowledges that it will receive direct and
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indirect benefits from the issuance of the Notes pursuant to this Indenture and
that the waivers set forth in this Section 10.01 are knowingly made in
contemplation of such benefits.
The Note Guarantee set forth in this Section 10.01 shall not be valid
or become obligatory for any purpose with respect to a Note until the
certificate of authentication on such Note shall have been signed by or on
behalf of the Trustee.
Section 10.02. Obligations Unconditional.
Nothing contained in this Article 10 or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as among any Guarantor and the
Holders of the Notes, the obligation of such Guarantor, which is absolute and
unconditional, upon failure by the Company to pay to the Holders of the Notes
the principal of and interest on the Notes as and when the same shall become due
and payable in accordance with their terms, or is intended to or shall affect
the relative rights of the Holders and creditors of such Guarantor, nor shall
anything herein or therein prevent any Holder or the Trustee on their behalf
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture.
Without limiting the foregoing, nothing contained in this Article 10
will restrict the right of the Trustee or the Holders to take any action to
declare the Note Guarantee to be due and payable prior to the maturity of any
Notes pursuant to Section 6.01 or to pursue any rights or remedies hereunder.
Section 10.03. Release of Note Guarantees.
Upon the sale by the Company or any Subsidiary of all or
substantially all of the assets of any Subsidiary Guarantor or all of the
Capital Stock of any Subsidiary Guarantor that does not otherwise violate this
Indenture, such Guarantor (in the event of a sale or other disposition of all of
the Capital Stock of such Subsidiary Guarantor) or the corporation acquiring
such assets (in the event of a sale or other disposition of all or substantially
all of the assets of such Subsidiary Guarantor) shall be automatically and
unconditionally released and discharged of its Note Guarantee obligations.
Section 10.04. Notice to Trustee.
A Guarantor shall give prompt written notice to the Trustee of any
fact known to such Guarantor which would prohibit the making of any payment to
or by the Trustee in respect of the Note Guarantee pursuant to the provisions of
this Article 10.
Section 10.05. This Article not to Prevent Events of Default.
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article 10 will not be construed
as preventing the occurrence of an Event of Default.
Section 10.06. Execution and Delivery of Note Guarantee.
To evidence its Note Guarantee set forth in Section 10.01, each
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form included in Exhibit E shall be endorsed by an Officer of such Guarantor
on each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by its President or one of its
Vice Presidents.
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Each Guarantor hereby agrees that its Note Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
10.04 hereof, the Company shall cause such Subsidiaries to execute supplemental
indentures to this Indenture and Note Guarantees in accordance with Section
10.04 hereof and this Article 10, to the extent applicable.
Section 10.07. Subsidiary Guarantees.
(a) The Company shall not permit any Domestic Subsidiary to issue
Debt or any Subsidiary to Guarantee the payment of any Debt of the Company or
any Guarantor (in each case, the "Guaranteed Debt;" The Company or the Guarantor
that is primarily liable on the Guaranteed Debt being the "Obligor") unless: (i)
if such Subsidiary is not a Guarantor, such Subsidiary simultaneously executes
and delivers a Note Guarantee pursuant to a supplemental indenture to this
Indenture of payment of the Notes by such Subsidiary; provided, however, such
Note Guarantee shall be required only to the extent and for so long as such
Subsidiary Guarantees the Guaranteed Debt or such Debt is outstanding and (ii)
if such Debt or the Guaranteed Debt is by its express terms subordinated in
right of payment to the Notes or the Note Guarantee of such Obligor, any such
Debt or Guarantee of such Guarantor with respect to the Guaranteed Debt shall be
subordinated in right of payment to such Guarantor's Guarantee with respect to
the Notes substantially to the same extent as the Debt or Guaranteed Debt is
subordinated to the Notes or the Note Guarantee of such Obligor, as applicable.
(b) any such Subsidiary executing a Notes Guarantee pursuant to
clause (a) above will waive and will not in any manner whatsoever claim or take
the benefit or advantage of, any rights of reimbursement indemnity or
subrogation or any other rights against the Company or any other Guarantor as a
result of any payment by such Guarantor under its Note Guarantee and shall
deliver to the Trustee an opinion of counsel to the effect that (i) such Note
Guarantee has been duly executed and authorized and (ii) such Note Guarantee
constitutes a valid, binding and enforceable obligation of such Guarantor,
except insofar as enforcement thereof may be limited by bankruptcy, insolvency
or similar laws (including, without limitation, all laws relating to fraudulent
transfers) and except insofar as enforcement thereof is subject to general
principles of equity.
(c) No Subsidiary Guarantor may consolidate with or merge with or
into (whether or not such Subsidiary Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Subsidiary
Guarantor unless (i) the Person formed by or surviving any such consolidation or
merger (if other than such Subsidiary Guarantor) assumes all the obligations of
such Subsidiary Guarantor pursuant to a supplemental indenture under the Notes
and this Indenture and (ii) immediately after giving effect to such transaction
no Default or Event of Default shall have occurred.
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ARTICLE 11.
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge.
This Indenture shall upon Company Request cease to be of further
effect with respect to any Notes (except as to any surviving rights of
registration of transfer or exchange of Notes herein expressly provided for) and
the Trustee shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture as to such Notes when
(1) either
(A) all Notes theretofore authenticated and delivered (other
than (i) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.07, and (ii) Notes for
whose payment money has theretofore been deposited in trust with the
Trustee or any Paying Agent or segregated and held in trust by the Company
and thereafter repaid to the Company, as provided in Section 4.10) have
been delivered to the Trustee for cancellation; or
(B) all Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense,
of the Company, and the Company,
in the case of (i), (ii) or (iii) above, has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust for the
purpose an amount, in U.S. dollars or in U.S. Government Obligations,
sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal,
premium, if any, and interest to the date of such deposit (in the case of
Notes which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture as to such series have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 7.06, the obligations of
the Trustee to any Authenticating Agent under Section 7.11 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section 11.01, the obligations of the Trustee under Section 11.02 and the
last paragraph of Section 4.10 shall survive.
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Section 11.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 4.10, all
money deposited with the Trustee pursuant to Section 11.01 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal, premium, if any,
and interest for whose payment such money has been deposited with the Trustee,
but such money need not be segregated from other funds except to the extent
required by law.
Section 11.03. Repayment of Trust Money.
The Trustee and the Paying Agent shall promptly turn over to the
Company upon request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon
request any money held by them for the payment of principal or interest that
remains unclaimed for two years. After payment to the Company, Holders entitled
to the money must look to the Company for payment as unsecured general creditors
unless an abandoned property law designates another person.
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
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If to the Company and/or any Guarantor:
Protection One Alarm Monitoring, Inc.
6225 North Highway 161, Suite 400
Irving, Texas 75038
Telecopier No.: (972) 916-6156
Attention: General Counsel
With a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Telecopier No.: (214) 746-7777
Attention: Jeremy Dickens, Esq.
If to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Telecopier No.: (212) 815-5195
Attention: Corporate Trust Administration
The Company, any Guarantor or the Trustee, by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing and mailed, first-class postage prepaid or transmitted via
facsimile, to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid or
transmitted via facsimile, to the Company addressed to it at the address
of its principal office specified in the first paragraph of this Indenture
or at any other address previously furnished in writing to the Trustee by
the Company.
ARTICLE 13.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 13.01. Disclosure of Names and Addresses of Holders.
Every Holder of Notes, by receiving and holding the same, agrees with
the Company and the Trustee that none of the Company or the Trustee or any agent
of either of them shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders in accordance with
TIA Section 312, regardless of the source from which such information was
derived, and
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that the Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under TIA Section 312(b).
Section 13.02. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the first
May 15 after the first issuance of Notes pursuant to this Indenture, the Trustee
shall transmit to the Holders of Notes, in the manner and to the extent provided
in TIA Section 313(c), a brief report dated as of such May 15 if required by TIA
Section 313(a).
Section 13.03. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may from time to time by rules
and regulations prescribe) which the Company may be required to file with
the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act; or,
if the Company is not required to file information, documents or reports
pursuant to either of such Sections, then it shall file with the Trustee
and the SEC, in accordance with rules and regulations prescribed from time
to time by the SEC, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules
and regulations;
(2) file with the Trustee and the SEC, in accordance with rules
and regulations prescribed from time to time by the SEC, such additional
information, documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit to all Holders, in the manner and to the extent
provided in TIA Section 313(c), within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section 12.03 as may be required by rules and regulations prescribed
from time to time by the SEC.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Where this Indenture provides for notice of any event to Holders of
Notes by the Company or the Trustee, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each such Holder affected by such event, at his
address as it appears in the Security Register within the time prescribed for
the giving of such notice. In any case where notice to Holders of Notes is given
by mail, neither the failure to mail such notice, nor any defect in any
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<PAGE> 66
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders of Notes given as provided. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice.
In case, by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impractical to mail
notice of any event to Holders of Notes when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be sufficient
giving of such notice for every purpose hereunder.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
Section 13.04. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
Section 13.05. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 13.06. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 13.07. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 13.08. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or such Guarantor under the Notes,
the Note Guarantees, this Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes.
Section 13.09. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 13.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 13.11. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors. All agreements of each Guarantor in this Indenture shall bind
its successors, except as otherwise provided in Section 10.05.
Section 13.12. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 13.13. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
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Section 13.14. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
Section 13.15. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of the Outstanding Notes may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agents duly appointed in writing. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
or record or both are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments and any such record
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments
or so voting at any such meeting. Proof of execution of any such instrument or
of a writing appointing any such agent, or of the holding by any Person of a
Note, shall be sufficient for any purpose of this Indenture and conclusive in
favor of the Trustee and the Company, if made in the manner provided in this
Section 11.14. The record of any meeting of Holders of Notes shall be proved in
the manner provided in Section 12.06.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Notes held by any
Person, and the date of holding the same, shall be proved by the Security
Register.
(d) If the Company shall solicit from the Holders of Notes any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 60 days
prior to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Notes have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other Act,
and for that purpose the Outstanding Notes shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.
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(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
Section 13.16. Legal Holidays.
In any case where any interest payment date, redemption date, or
Stated Maturity or Maturity of any Note shall not be a Business Day at any Place
of Payment, then (notwithstanding any other provision of this Indenture or of
any Note) payment of interest or principal, premium, if any, need not be made at
such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect as if made
on the interest payment date or redemption date or at the Stated Maturity or
Maturity; provided, however that no interest shall accrue for the period from
and after such interest payment date, redemption date, Stated Maturity or
Maturity, as the case may be.
Section 13.17. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto, any Authenticating Agent, any
Paying Agent, any Registrar and their successors hereunder and the Holders of
Noes, any benefit or any legal or equitable right, remedy or claim under this
Indenture.
[Signatures on following page]
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SIGNATURES
Dated as of August 17, 1998
PROTECTION ONE ALARM MONITORING, INC.
By: /s/ JOHN W. HESSE
------------------------------------
Name: John W. Hesse
Title: Chief Financial Officer, Vice
President and Secretary
PROTECTION ONE, INC.
By: /s/ JOHN W. HESSE
------------------------------------
Name: John W. Hesse
Title: Chief Financial Officer, Vice
President and Secretary
WESTAR SECURITY, INC.
By: /s/ JOHN W. HESSE
------------------------------------
Name: John W. Hesse
Title: Secretary and Treasurer
WESTSEC, INC
By: /s/ JOHN W. HESSE
------------------------------------
Name: John W. Hesse
Title: Secretary and Treasurer
THE BANK OF NEW YORK
/s/ WALTER N. GITLIN
- ------------------------------------
Name: Walter N. Gitlin
Title: Vice President
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<PAGE> 71
[Face of Note]
===============================================================================
CUSIP NO. 743659AM6
7 3/8% Series [A/B] Senior Notes due 2005
No. ___ $____________
PROTECTION ONE ALARM MONITORING, INC.
promises to pay to
-----------------------------------------------------------
or registered assigns,
the principal sum of
--------------------------------------------------------
Dollars on August 15, 2005.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
PROTECTION ONE ALARM MONITORING, INC.
By:
------------------------------------
Name:
Title:
This is one of the [Global] Notes referred to
in the within-mentioned Indenture:
Dated: _______________, ____
THE BANK OF NEW YORK
as Trustee
By: __________________________________
Authorized Signatory
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<PAGE> 72
===============================================================================
[Back of Note]
7 3/8% Series [A/B] Senior Notes due 2005
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
[THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER: REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT HAS ACQUIRED THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR
(7) OR REGULATION D UNDER THE SECURITIES ACT (AN "IAI"), AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF
ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT."]
2
<PAGE> 73
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Protection One Alarm Monitoring, Inc., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at 7 3/8% per annum from August 17, 1998 until maturity and shall pay
the Liquidated Damages payable pursuant to Section 2 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually in arrears on February 15 and August 15 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date"). Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be August 15, 1999. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate that is 1% per annum in excess of the rate then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages, if any, (without regard to any applicable grace periods)
from time to time on demand at the same rate to the extent lawful. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on February 1 or August 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.11 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium and Liquidated Damages, if any, and
interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check mailed
to the Holders at their addresses set forth in the register of Holders, and
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest, premium and Liquidated
Damages, if any, on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of August 17, 1998 ("Indenture") among the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $250.0 million
in aggregate principal amount.
3
<PAGE> 74
5. OPTIONAL REDEMPTION.
(a) The Company has the option to redeem the Notes, in whole or in
part, at a redemption price equal to the greater of (i) 100% of the principal
amount of the Notes to be redeemed or (ii) as determined by an Independent
Investment Banker, the sum of the present values of the Remaining Scheduled
Payments on the Notes to be redeemed discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate, plus, in each case, accrued interest and Liquidated
Damages, if any, on the Notes to be redeemed to the date of redemption.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER; CHANGE OF CONTROL.
If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 10 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
In the event that at any time (i) both rating agencies assign the
Notes an investment grade rating and (ii) no default has occurred and is
continuing under this Indenture, the provisions of this Indenture with respect
to a Change of Control triggering offer will be permanently terminated.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. SUPPLEMENTAL INDENTURES. Subject to certain exceptions, the
Indenture, the Note Guarantees or the Notes may be amended or supplemented with
the consent of the Holders of at least a
4
<PAGE> 75
majority in principal amount of the then outstanding Notes voting as a single
class, and any existing default or compliance with any provision of the
Indenture, the Note Guarantees or the Notes may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Notes
voting as a single class. Without the consent of any Holder of a Note, the
Indenture, the Note Guarantees or the Notes may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's or Guarantor's obligations to Holders of the Notes in case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act, or to allow any Guarantor to execute a
supplemental indenture to the Indenture and/or a Note Guarantee with respect to
the Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) defaults in
the payment of interest or Liquidated Damages on the Notes when such interest
becomes due and payable, and continuance of such default for a period of 60
days; (ii) defaults in the payment of the principal of (or premium, if any, on)
the Notes at their Maturity or upon any redemption and such default shall
continue for five or more days; (iii) defaults in the performance, or breach, of
any covenant or warranty in the Indenture, and continuance of such default or
breach for a period of 90 days after there has been given, by registered or
certified mail, to the Company or any Guarantor by the Trustee or to the
Company, any Guarantor and the Trustee by the Holders of at least 331/3% of all
outstanding Notes, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" thereunder; (iv) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Company or any Guarantor bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company or any
Guarantor under any Bankruptcy Law or any other applicable federal or state law,
or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or any Guarantor, or of any substantial part of
the property of the Company or any Guarantor, or ordering the winding up or
liquidation of the affairs of the Company or any Guarantor, and the continuance
of any such decree or order unstayed and in effect for a period of 90
consecutive days; (v) the institution by the Company or any Guarantor of
proceedings to be adjudicated bankrupt or insolvent, or the consent by the
Company or any Guarantor to the institution of bankruptcy or insolvency
proceedings against either of them, or the filing by either of them of a
petition or answer or consent seeking reorganization or relief under any
Bankruptcy Law or any another applicable federal or state law, or the consent by
either of them to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or any Guarantor, or of any substantial part of the
property of the Company or any Guarantor, or the making of either of them of an
assignment for the benefit of creditors; and (vi) a final judgment or final
judgments for the payment of money are entered by a court or courts of competent
jurisdiction against POI or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
and such judgment or judgments remain undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate of all such undischarged judgments exceeds $5.0 million; or (vii)
except as permitted by this Indenture, any Note Guarantee is held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor, or any Person acting on behalf
of any Guarantor, shall deny or disaffirm its obligations under such Guarantor's
Note Guarantee. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable. Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture.
5
<PAGE> 76
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal, interest or Liquidated Damages, if any) if
it determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest or
Liquidated Damages, if any, on, or the principal of, the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, the Note Guarantees, the Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of August 17, 1998, among the Company and the parties named
on the signature pages thereof.
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. GOVERNING LAW. The internal law of the State of New York shall
govern and be used to construe this Indenture, the Notes and the Note Guarantees
without giving effect to applicable principles of conflicts of law to the extent
that the application of the laws of another jurisdiction would be required
thereby.
6
<PAGE> 77
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Protection One Alarm Monitoring, Inc.
6225 North Highway 161, Suite 400
Irving, Texas 75038
Attention: General Counsel
7
<PAGE> 78
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
---------------------------------
(Insert assignee's legal name)
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
------------------------
Your Signature:
----------------------
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*:
------------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
8
<PAGE> 79
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 of the Indenture, check the following box: [ ]
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 of the Indenture, state the amount you elect to
have purchased:
$
----------------
Date:
Your Signature:
----------------------
(Sign exactly as your name appears
on the face of this Note)
Tax Identification No.:
--------------
Signature Guarantee*:
--------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
9
<PAGE> 80
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease in Amount of increase in at maturity of Signature of
Principal Amount Principal Amount this Global Note authorized officer of
at maturity of at maturity of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
---------------- ---------------- ---------------- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
10
<PAGE> 81
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Protection One Alarm Monitoring, Inc.
6225 North Highway 161, Suite 400
Irving, Texas 75038
[Registrar address block]
Re: 7 3/8% Senior Notes due 2005
Reference is hereby made to the Indenture, dated as of August 17,
1998 (the "Indenture"), among Protection One Alarm Monitoring, Inc., as issuer
(the "Company"), the Guarantors and The Bank of New York, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
___________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
REGULATION S. The Transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a person in
the United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act and, (iii) the transaction is
not part of a plan or scheme to evade the registration requirements of the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on Transfer
B-1
<PAGE> 82
enumerated in the Private Placement Legend printed on the Regulation S Global
Note and/or the Definitive Note and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in
compliance with the prospectus delivery requirements of the Securities
Act;
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule
904, and the Transferor hereby further certifies that it has not engaged
in any general solicitation within the meaning of Regulation D under the
Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) if such
Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $250,000, an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached
to this certification), to the effect that such Transfer is in compliance
with the Securities Act. Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI
Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note
B-2
<PAGE> 83
will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
--------------------------------------
[Insert Name of Transferor]
By:
----------------------------------
Name:
Title:
Dated:
-----------------
B-3
<PAGE> 84
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ___________), or
(ii) [ ] Regulation S Global Note (CUSIP ___________), or
(iii) [ ] IAI Global Note (CUSIP ___________); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ___________), or
(ii) [ ] Regulation S Global Note (CUSIP ___________), or
(iii) [ ] IAI Global Note (CUSIP ___________); or
(iv) [ ] Unrestricted Global Note (CUSIP ___________); or
(b) [ ] a Restricted Definitive Note.
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE> 85
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Protection One Alarm Monitoring, Inc.
6225 North Highway 161, Suite 400
Irving, Texas 75038
[Registrar address block]
Re: 7 3/8% Senior Notes due 200_
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of August 17,
1998 (the "Indenture"), among Protection One Alarm Monitoring, Inc., as issuer
(the "Company"), the Guarantors and The Bank of New York, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
__________________________, (the "Owner") owns and proposes to
exchange the Note[s] or interest in such Note[s] specified herein, in the
principal amount of $____________ in such Note[s] or interests (the "Exchange").
In connection with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in
C-1
<PAGE> 86
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest is
being acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] "144A Global Note," "Regulation S Global Note," IAI
Global Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
C-2
<PAGE> 87
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
--------------------------------------
[Insert Name of Transferor]
By:
----------------------------------
Name:
Title:
Dated:
-----------------
C-3
<PAGE> 88
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Protection One Alarm Monitoring, Inc.
6225 North Highway 161, Suite 400
Irving, Texas 75038
[Registrar address block]
Re: 7 3/8% Senior Notes due 200
Reference is hereby made to the Indenture, dated as of August 17,
1998 (the "Indenture"), among Protection One Alarm Monitoring, Inc., as issuer
(the "Company"), the Guarantors and The Bank of New York, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the
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foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
--------------------------------------
[Insert Name of Accredited Investor]
By:
----------------------------------
Name:
Title:
Dated:
-----------------
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EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of August 17, 1998 (the "Indenture") among
Protection One, Inc., a Delaware corporation, the Guarantors listed on Schedule
I thereto and The Bank of New York, as trustee (the "Trustee"), (a) the due and
punctual payment of the principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Notes (as defined in the Indenture), whether
at maturity, by acceleration, redemption or otherwise, the due and punctual
payment of interest and Liquidated Damages, if any, on overdue principal and
premium, and, to the extent permitted by law, interest and Liquidated Damages,
if any, and the due and punctual performance of all other obligations of the
Company to the Holders or the Trustee all in accordance with the terms of the
Indenture and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. The
obligations of the Guarantors to the Holders of Notes and to the Trustee
pursuant to the Note Guarantee and the Indenture are expressly set forth in
Article 10 of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Note Guarantee. Each Holder of a Note, by accepting the
same, (a) agrees to and shall be bound by such provisions and (b) appoints the
Trustee attorney-in-fact of such Holder for such purpose.
PROTECTION ONE, INC.
By:
----------------------------------
Name:
Title:
WESTAR SECURITY, INC.
By:
----------------------------------
Name:
Title:
WESTSEC, INC.
By:
----------------------------------
Name:
Title:
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<PAGE> 91
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of ____________________ (or its permitted successor), the Company,
the other Guarantors (as defined in the Indenture referred to herein) and The
Bank of New York, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of August 17, 1998 providing
for the issuance of an aggregate principal amount of up to $250,000,000 of its
7 3/8% Senior Notes due 2005 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Guarantors named in the Indenture, to
jointly and severally Guarantee to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and
assigns, the Notes or the obligations of the Company hereunder or
thereunder, that:
(i) the principal of and interest and Liquidated Damages,
if any, on the Notes will be promptly paid in full when due, whether
at maturity, by acceleration, redemption or otherwise, and interest
and Liquidated Damages, if any, on the overdue principal of and
interest on the Notes, if any, if lawful, and all other obligations
of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and
(ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will
be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same
immediately.
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<PAGE> 92
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or
the Indenture, the absence of any action to enforce the same, any waiver
or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence, presentment,
demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, protest, notice and all demands whatsoever.
(d) This Note Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and the
Indenture, and the Guaranteeing Subsidiary accepts all obligations of a
Guarantor under the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any Custodian,
Trustee, liquidator or other similar official acting in relation to either
the Company or the Guarantors, any amount paid by either to the Trustee or
such Holder, this Note Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any
right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 of the
Indenture for the purposes of this Note Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article 6
of the Indenture, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Note Guarantee.
(h) The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Guarantee.
(i) Pursuant to Section 10.02 of the Indenture, after giving
effect to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or
fraudulent conveyance laws, and after giving effect to any collections
from, rights to receive contribution from or payments made by or on behalf
of any other Guarantor in respect of the obligations of such other
Guarantor under Article 10 of the Indenture, this new Note Guarantee shall
be limited to the maximum amount permissible such that the obligations of
such Guarantor under this Note Guarantee will not constitute a fraudulent
transfer or conveyance.
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that
the Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
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<PAGE> 93
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such Guarantor
except in accordance with Article 5 of the Indenture.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of the Indenture to be
performed by the Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Note Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Note Guarantees so issued shall in all
respects have the same legal rank and benefit under the Indenture as the Note
Guarantees theretofore and thereafter issued in accordance with the terms of the
Indenture as though all of such Note Guarantees had been issued at the date of
the execution hereof.
(c) Except as set forth in Articles 4 and 5 and Section 10.05 of
Article 10 of the Indenture, and notwithstanding clauses (a) and (b) above,
nothing contained in the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.
(5) RELEASES.
(a) In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all to the capital stock of any Guarantor, in each case to
a Person that is not (either before or after giving effect to such transaction)
a Subsidiary of the Company, then such Guarantor (in the event of a sale or
other disposition, by way of merger, consolidation or otherwise, of all of the
capital stock of such Guarantor) or the corporation acquiring the property (in
the event of a sale or other disposition of all or substantially all of the
assets of such Guarantor) will be released and relieved of any obligations under
its Note Guarantee. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of the
Indenture, the Trustee shall execute any documents reasonably required in order
to evidence the release of any Guarantor from its obligations under its Note
Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under the Indenture
as provided in Article 10 of the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
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<PAGE> 94
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
8. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
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<PAGE> 95
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, ____
[GUARANTEEING SUBSIDIARY]
By:
-------------------------------
Name:
Title:
THE BANK OF NEW YORK
as Trustee
By:
-------------------------------
Name:
Title:
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<PAGE> 96
SCHEDULE I
SCHEDULE OF GUARANTORS
The following schedule lists each Guarantor under the Indenture as of
the Issue Date:
Protection One, Inc.
Westar Security, Inc.
WestSec, Inc.
F-6
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
===============================================================================
PROTECTION ONE ALARM MONITORING, INC.
AND
THE GUARANTORS NAMED ON THE SIGNATURE PAGES HERETO
- -------------------------------------------------------------------------------
$250,000,000
7 3/8% Senior Notes due 2005
- -------------------------------------------------------------------------------
--------------
PURCHASE AGREEMENT
Dated August 12, 1998
--------------
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
===============================================================================
<PAGE> 2
PROTECTION ONE ALARM MONITORING, INC.
$250,000,000 Principal Amount of
7 3/8% Senior Notes due 2005
PURCHASE AGREEMENT
August 12, 1998
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
c\o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
Protection One Alarm Monitoring, Inc. (the "Company") proposes
to issue and sell to Bear, Stearns & Co. Inc., Lehman Brothers Inc., Morgan
Stanley & Co. Incorporated and Salomon Brothers Inc (collectively, the "Initial
Purchasers") an aggregate of $250,000,000 in aggregate principal amount of
7 3/8% Senior Notes due 2005 (the "Initial Notes"), subject to the terms and
conditions set forth herein. The Initial Notes will be issued pursuant to an
Indenture (the "Indenture"), to be dated the Closing Dated (as defined), among
the Company, the Guarantors (as defined) and The Bank of New York, as trustee
(the "Trustee"). The Notes (as defined) will be fully and unconditionally
guaranteed (the "Guarantees") as to payment of principal, interest, Liquidated
Damages (as defined) and premium, if any, on an unsecured senior basis, jointly
and severally, by each entity listed on Exhibit A hereto (collectively, the
"Guarantors"). Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Indenture.
The net proceeds to the Company from the sale to the Initial
Purchasers of the Initial Notes (the "Proceeds") will be used by the Company:
(i) to repay a portion of the Senior Credit Facility (as defined) and (ii) for
general purposes and working capital.
1. ISSUANCE OF SECURITIES. The Company proposes, upon the
terms and subject to the conditions set forth herein, to issue and sell to the
Initial Purchasers an aggregate of $250,000,000 in aggregate principal amount of
Initial Notes. The Initial Notes and the Exchange Notes (as defined) issuable in
exchange therefor are collectively referred to herein as the "Notes."
Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act of 1933, as amended (the "Act"), the Initial Notes (and all securities
issued in exchange therefor or in substitution thereof) shall bear the following
legend:
<PAGE> 3
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER: REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT
HAS ACQUIRED THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) (1),
(2), (3) OR (7) OR REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"),
AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND."
"AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED
STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING
THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING."
2. OFFERING. The Initial Notes will be offered and sold to the
Initial Purchasers pursuant to an exemption from the registration requirements
under the Act. The Company has prepared a preliminary offering memorandum, dated
August 3, 1998 (the "Preliminary Offering Memorandum"), and
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<PAGE> 4
a final offering memorandum, dated August 12, 1998 (the "Offering Memorandum"),
relating to the Company, the Guarantors and their respective subsidiaries and
the Initial Notes.
The Initial Purchasers have advised the Company that the
Initial Purchasers will make offers (the "Exempt Resales") of the Initial Notes
on the terms set forth in the Offering Memorandum, as amended or supplemented,
solely to persons whom the Initial Purchasers reasonably believe to be
"qualified institutional buyers," as defined in Rule 144A under the Act
("QIBs"). The QIBs are referred to herein as the "Eligible Purchasers." The
Initial Purchasers will offer the Initial Notes to such Eligible Purchasers
initially at a price equal to 99.778% of the principal amount thereof. Such
price may be changed at any time without notice.
Holders (including subsequent transferees) of Initial Notes
will have the registration rights set forth in the registration rights agreement
relating thereto (the "Registration Rights Agreement"), to be dated the Closing
Date, for so long as such Initial Notes constitute "Transfer Restricted
Securities" (as defined in the Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement, the Company and the Guarantors will agree to file
with the Securities and Exchange Commission (the "Commission"), under
circumstances set forth therein, (i) a registration statement under the Act (the
"Exchange Offer Registration Statement"), relating to the 73/8% Exchange Senior
Notes due 2005 (the "Exchange Notes") to be offered in exchange for the Initial
Notes (the "Exchange Offer") or (ii) a shelf registration statement pursuant to
Rule 415 under the Act (each of the "Shelf Registration Statement" and the
Exchange Offer Registration Statement, being referred to as a "Registration
Statements"), relating to the resale by certain holders of the Initial Notes,
and to use their best efforts to cause such Registration Statements to be
declared effective and to consummate the Exchange Offer. This Agreement, the
Notes, the Guarantees, the Indenture and the Registration Rights Agreement are
hereinafter referred to collectively as the "Operative Documents."
3. DELIVERY AND PAYMENT. On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to its terms
and conditions, the Company agrees to issue and sell to the Initial Purchasers,
and each Initial Purchaser agrees, severally and not jointly, to purchase from
the Company, the principal amount of Initial Notes set forth opposite its name
on Schedule I hereto. The purchase price for the Initial Notes will be $999.778
per $1,000 principal amount of Initial Note.
Delivery of the Initial Notes shall be made, against payment
of the purchase therefor, at the offices of Weil, Gotshal & Manges LLP, 100
Crescent Court, Suite 1300, Dallas, Texas 75201-6950 or such other location as
may be mutually acceptable. Such delivery and payment shall be made at 9:00
a.m., Dallas time or 10:00 a.m. New York City time on August 17, 1998 or at such
other time as shall be agreed upon by the Initial Purchasers and the Company.
The time and date of such delivery and payment are herein called the "Closing
Date."
On the Closing date, one or more Initial Notes in definitive
form, registered in the name of Cede & Co., as nominee of The Depository Trust
Company ("DTC"), having an aggregate amount corresponding to the aggregate
amount of the Initial Notes sold pursuant to the Exempt Resales to Eligible
Purchasers (the "Global Notes") shall be delivered by the Company to the Initial
Purchasers (or as the Initial Purchasers may direct), against payment by the
Initial Purchasers of the purchase price therefor, by wire transfer of same day
funds, to an account designated by the Company; provided, however, that the
Company shall give at least two business days' prior written notice to the
Initial Purchasers of the information required to effect such wire transfer. The
Global Notes shall be made available to the Initial
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<PAGE> 5
Purchasers for inspection not later than 10:00 a.m., New York City time, on the
business day immediately preceding the Closing Date.
4. CERTAIN COVENANTS OF THE COMPANY AND THE GUARANTORS. Each
of the Company and the Guarantors, jointly and severally, covenant and agree:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing,
(i) of the issuance by any state securities commission of any stop
order suspending the qualification or exemption from qualification of
any Notes for offering or sale in any jurisdiction, or the initiation
of any proceeding for such purpose by any state securities commission
or other regulatory authority and (ii) of the happening of any event
known to the Company or the Guarantors on or before the Closing Date
which in the judgement of the Company and the Guarantors would require
the making of any change in the Offering Memorandum or in the
information incorporated by reference therein so that as therefore
delivered to purchasers the Offering Memorandum will not include any
untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Company
and the Guarantors shall use their respective reasonable best efforts
to prevent the issuance of any stop order or order suspending the
qualification or exemption of any Notes under any state securities or
Blue Sky laws and, if at any time any state securities commission or
other regulatory authority shall issue an order suspending the
qualification or exemption of any Notes or the Guarantees under any
state securities or Blue Sky laws, the Company and the Guarantors shall
use their respective reasonable best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time, and on request
to prepare and furnish to the Initial Purchasers and to dealers and
other persons designated by the Initial Purchasers such amendments or
supplements (including appropriate filings under the Exchange Act) to
the Offering Memorandum as may be necessary to any such change,
provided that the Company shall be so obligated subsequent to the time
of purchase only so long as the Company is notified of unsold
allotments (failure by the Initial Purchasers to so notify the Company
cancels the Company's obligation under this Section 4(a)).
(b) To as soon as practicable, make generally available to its
security holders an earnings statement (as contemplated by Rule 158
under the Act) covering a period of twelve months after the effective
date (as the term "effective date" is defined in Rule 158) of the
Offering Memorandum.
(c) To furnish such proper information as may be required and
otherwise to cooperate in qualifying the Initial Notes for sale under
the laws of such jurisdictions as the Initial Purchasers may designate
and in determining their eligibility for investment under the laws of
such jurisdiction; provided that the Company and the Guarantors shall
not hereby be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction.
(d) To deliver to the Initial Purchasers without charge as
soon as practicable after the execution and delivery of this Agreement
and thereafter from time to time to furnish to the Initial Purchasers,
without charge, as many copies of the Offering Memorandum in final form
and any documents incorporated by reference therein at or after the
date thereof, as the Initial Purchasers may reasonably request in
connection with Exempt Resales.
(e) To pay the reasonable fees and expenses of counsel for the
Initial Purchasers, and to reimburse the Initial Purchasers for their
reasonable out-of-pocket expenses incurred in
4
<PAGE> 6
contemplation of the performance of this Agreement, in the event that
the Initial Notes are not delivered to and taken up and paid for by the
Initial Purchasers hereunder for any reason whatsoever except the
failure or refusal of any Initial Purchaser to take up and pay for the
Initial Notes for some reason not permitted by the terms of this
Agreement, the Initial Purchasers agreeing to pay the fees and expenses
of counsel for the Initial Purchasers in any other event. To pay all
expenses, fees and taxes (other than transfer taxes and fees and
disbursements of counsel for the Initial Purchasers, except as set
forth under the preceding sentence or (iv) below) in connection with
(i) the preparation of the Preliminary Offering Memorandum and the
Offering Memorandum, any documents incorporated by reference therein at
or after the date thereof and any amendments or supplements thereto,
and the printing and furnishing of copies of each thereof to the
Initial Purchasers and to dealers, (ii) the issue, sale and delivery of
the Initial Notes, (iii) the printing and reproduction of this
Agreement and the opinions and letters referred to in Section
5(e),(f),(g) and (i) hereof, (iv) the qualification of the Initial
Notes for sale and determination of their eligibility for investment
under state laws as aforesaid, including the legal fees (not to exceed
$3,000) and all filing fees and disbursements of counsel for the
Initial Purchasers and all other filing fees, and the printing and
furnishing of copies of the "Blue Sky Memorandum" and the "Legal
Investment Survey" to the Initial Purchasers and to dealers, (v) the
rating of the Initial Notes by national rating agencies and (vi) the
performance of the other obligations of the Company and the Guarantors
hereunder.
(f) To use the proceeds from the sale of the Initial Notes in
the manner described in the Offering Memorandum under the caption "Use
of Proceeds."
(g) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Initial Notes in a manner
that would require the registration under the Act of the sale to the
Initial Purchasers or the Eligible Purchasers of the Initial Notes or
to take any other action that would result in the Exempt Resales not
being exempt from registration under the Act.
(h) For so long as any of the Notes remain outstanding and
during any period in which the Company and the Guarantors are not
subject to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), to make available to any holder or
beneficial owner of Initial Notes in connection with any sale thereof
and any prospective purchaser of such Notes from such holder or
beneficial owner, upon request of such holder, the information required
by Rule 144A(d) (4) under the Act.
(i) To furnish to the Initial Purchasers, at or before the
time of filing with the Commission subsequent to the date hereof and up
to and including the Closing Date, a copy of any document proposed to
be filed by the Company or any Guarantor pursuant to Section 13(a),
13(d), 14 or 15(d) of the Exchange Act.
(j) Not to take, directly or indirectly, any action designed
to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the
Company or any of the Guarantors to facilitate the sale or resale of
the Notes. Except as permitted by the Act, none of the Company or the
Guarantors will distribute any (i) preliminary offering memorandum,
including, without limitation, the Preliminary Offering Memorandum,
(ii) offering memorandum, including, without limitation, the Offering
Memorandum, or (iii) other offering material in connection with the
offering and sale of the Notes.
5
<PAGE> 7
5. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The several
obligations of the Initial Purchasers to purchase and pay for the Initial Notes,
as provided herein, shall be subject to the following conditions:
(a) The Offering Memorandum shall not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the Offering Memorandum as of its date and the Closing
Date shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, other than any statements
contained in, or any matter omitted from, the Offering Memorandum in
reliance upon, and in conformity with, information furnished in writing
by or on behalf of any Initial Purchaser to the Company expressly for
use with reference to such Initial Purchaser. Each of the Company and
the Guarantors shall have performed all of its obligations under this
Agreement which are to be performed by the terms hereof at or before
the Closing Date.
(b) All orders, approvals or consents of state or federal
regulatory commissions necessary to permit the issue, sale and delivery
of the Initial Notes and the Guarantees shall have been issued; at the
Closing Date such orders shall be in full force and effect; and prior
to such time of purchase no stop order with respect to the Initial
Notes or the Guarantees shall have been issued by the Commission and at
the Closing Date no proceeding thereof shall be pending or threatened.
(c) Since the dates as of which information is given in the
Offering Memorandum and prior to the Closing Date, there shall not have
taken place a material adverse change in the condition of the Company
or the Guarantors, financial or otherwise (other than as referred to in
or contemplated by the Offering Memorandum), which in the reasonable
judgment of the Initial Purchasers, is sufficiently material and
adverse so as to render it impracticable or inadvisable to offer or
deliver the Initial Notes on the terms and in the manner contemplated
by the Offering Memorandum.
(d) The Initial Purchasers shall have received signed
certificates of two executive officers, dated the Closing Date, signed
on behalf of the Company and the Guarantors, confirming, as of the
Closing Date, the matters set forth in paragraphs (a) and (c) of this
Section 5.
(e) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers, of Weil, Gotshal & Manges LLP, counsel for the
Company and the Guarantors, to the effect set forth in Exhibit B
hereto.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated on the Closing Date, in form and substances
reasonably satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers, of Renee T. Kingsley, General Counsel for the
Company and the Guarantors, to the effect set forth in Exhibit C
hereto.
(g) The Initial Purchasers shall have received on the Closing
Date an opinion, dated on the Closing Date, in form and substances
reasonably satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers, of Rick Terrill, General Counsel for Westar
Securities, Inc., a Kansas corporation and WestSec, Inc., a Kansas
corporation (collectively, the "Other Guarantors"), to the effect set
forth in Exhibit D hereto.
6
<PAGE> 8
(h) The Initial Purchasers shall have received an opinion,
dated the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchasers, of Latham & Watkins, counsel for the Initial
Purchasers, covering such matters as are customarily covered in such
opinions.
(i) At the time this Agreement is executed and at the Closing
Date, the Initial Purchasers shall have received from Arthur Andersen
LLP, independent public accountants, dated as of the date of this
Agreement and as of the Closing Date, customary comfort letters
addressed to the Initial Purchasers and in form and substance
satisfactory to the Initial Purchasers and counsel for the Initial
Purchasers with respect to the financial statements and certain
financial information of the Company, the Guarantors and their
respective subsidiaries contained or incorporated by reference in the
Offering Memorandum.
(j) Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably
require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 5 and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any
of the representations, warranties or conditions herein contained.
(k) The Company, the Guarantors and the Trustee shall have
entered into the Indenture and the Initial Purchasers shall have
received counterparts, conformed as executed, thereof.
(l) The Company and the Guarantors shall have entered into the
Registration Rights Agreement and the Initial Purchasers shall have
received counterparts, conformed as executed, thereof.
(m) Subsequent to the date of this Agreement and prior to the
Closing Date: (i) no downgrading shall have occurred in the rating
accorded to any class of securities of the Company by any "nationally
recognized securities rating organization," as defined by the
Commission for purposes of its Rule 436(g)(2); (ii) no such rating
organization shall have announced publicly subsequent to the date of
this Agreement that it has placed, or informed the Company or the
Initial Purchasers that it intends to place, any class of securities on
what is commonly referred to as a "watchlist" for possible downgrading,
in a manner or to an extent indicating a materially greater likelihood
of a downgrading as described in clause (i) above occurring than was
the case as of the date hereof.
(n) The Company and the Guarantors shall have given notice to
each of trustees under the Discount Notes Indenture and the Convertible
Notes Indenture that the Company is hereby designating the Notes to be
Senior Indebtedness (as defined in each such indenture) and that the
Guarantors are hereby designating their Guarantees to be senior
Guarantees. The Company and the Guarantors shall have complied with all
notice requirements under each such indenture.
6. TERMINATION OF AGREEMENT.
(a) The obligations of the several Initial Purchasers
hereunder shall be subject to termination in the Initial Purchasers'
absolute discretion, if, at any time prior to the time of purchase,
trading in securities on the New York Stock Exchange shall have been
suspended (other than a temporary suspension to provide for an orderly
market) or minimum prices shall have been
7
<PAGE> 9
established on the New York Stock Exchange, or if a banking moratorium
shall have been declared either by the United States or New York State
authorities, or if the United States shall have declared war in
accordance with its constitutional processes or there shall have
occurred any outbreak or material escalation of hostilities or other
national or international calamity or crisis of such magnitude in its
effect on the financial markets of the United States as, in the
reasonable judgment of the Initial Purchasers, to make it impracticable
to market the Initial Notes.
(b) If the Initial Purchasers elect to terminate this
Agreement as provided in this Section 6, the Company and each other
Initial Purchasers shall be notified promptly in writing or by
telephone, confirmed in writing.
(c) If the sale to the Initial Purchasers of the Initial
Notes, as herein contemplated, is not carried out by the Initial
Purchasers for any reason permitted hereunder or if such sale is not
carried out because the Company or the Guarantors shall be unable to
comply with any of the terms hereof, the Company and the Guarantors
shall not be under any obligation or liability under this Agreement
(except to the extent provided in Sections 4(e), 9(a) and 10 hereof),
and the Initial Purchasers shall be under no obligation or liability to
the Company (except to the extent provided in Sections 9(b) and 10
hereof) or to one another under this Agreement.
7. WARRANTIES AND REPRESENTATIONS OF THE COMPANY AND THE
GUARANTORS. Each of the Company and the Guarantors, severally and jointly,
represent and warrant to, and agree with the Initial Purchasers that:
(a) (i) Each document, if any, filed or to be filed pursuant
to the Exchange Act and incorporated by reference in the Offering
Memorandum complied or will comply when so filed in all material
respects with the Exchange Act and the applicable rules and regulations
of the Commission thereunder and (ii) the Offering Memorandum, in the
form used by the Initial Purchasers to confirm sales and on the Closing
Date, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in the Offering
Memorandum based upon information furnished to the Company in writing
by or on behalf of any Initial Purchaser expressly for use therein.
(b) Each subsidiary of Protection One, Inc. (other than the
Company) that has executed the Senior Credit Facility, the Discount
Notes Indenture (as defined in the Offering Memorandum) or the
Convertible Notes Indenture (as defined in the Offering Memorandum) in
the capacity as guarantor is listed on Exhibit A hereto.
(c) Neither the Company nor, to the Company's knowledge, any
affiliate (as defined in Rule 501(b) of Regulation D under the Act, an
"Affiliate") of the Company has directly, or through any agent, (i)
sold, offered for sale, solicited offers to buy or otherwise negotiated
in respect of, any security (as defined in the Act) which is or will be
integrated with the sale of the Initial Notes in a manner that would
require the registration under the Act of the Initial Notes or (ii)
engaged in any form of general solicitation or general advertising in
connection with the offering of the Notes (as those terms are used in
Regulation D under the Act), or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
8
<PAGE> 10
(d) The Initial Notes satisfy the requirements set forth in
Rule 144A(d)(3) under the Act.
(e) No form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) was used by the
Company, the Guarantors or any of their respective representatives
(other than the Initial Purchasers, as to whom the Company and the
Guarantors make no representation) in connection with the offer and
sale of the Initial Notes contemplated hereby, including, but not
limited to, articles, notices or other communications, published in any
newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising. No securities of the
same class as the Initial Notes have been issued and sold by the
Company within the six-month period immediately prior to the date
hereof.
(f) Assuming the accuracy of the Initial Purchasers'
representations and warranties and compliance by the Initial Purchasers
with their agreements contained in Section 8 hereof, it is not
necessary in connection with the offer, sale and delivery of the
Initial Notes to the Initial Purchasers and to Eligible Purchasers in
the manner contemplated by this Agreement and the Offering Memorandum
to register the Initial Notes under the Act or to qualify the Indenture
under the TIA.
Each of the Company and the Guarantors understand that the
Initial Purchasers and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Section 8 hereof, counsels to the Company and
Guarantors, and counsel to the Initial Purchasers will rely upon the accuracy
and truth of the foregoing representations and hereby consents to such reliance.
8. WARRANTIES AND REPRESENTATIONS OF THE INITIAL PURCHASERS.
Each of the Initial Purchasers, severally and not jointly, represents, warrants
and covenants to the Company and agrees that:
(a) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order
to evaluate the merits and risks of an investment in the Initial Notes.
(b) Such Initial Purchaser is not acquiring the Initial Notes
with a view to any distribution thereof that would violate the Act or
the securities laws of any state of the United States or any other
applicable jurisdiction.
(c) No form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) has been or will be
used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Initial Notes,
including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(d) Each of the Initial Purchasers agrees that, in connection
with the Exempt Resales, it will solicit offers to buy the Initial
Notes only from, and will offer to sell the Initial Notes only to,
Eligible Purchasers. Each of the Initial Purchasers further (A) agrees
that it will offer to sell the Initial Notes only to, and will solicit
offers to buy the Initial Notes only from Eligible Purchasers, (B)
acknowledges and agrees that, in the case of such Eligible Purchasers,
such Initial Notes will
9
<PAGE> 11
not have been registered under the Act and may be resold, pledged or
otherwise transferred by such Eligible Purchasers only (x)(I) to a
person whom the seller reasonably believes is a QIB purchasing for its
own account or for the account of a QIB in a transaction meeting the
requirements of Rule 144A, (II) in an offshore transaction (as defined
in Rule 902 under the Act) meeting the requirements of Rule 904 under
the Act, (III) in a transaction meeting the requirements of Rule 144
under the Act, (IV) to an Accredited Investor that, prior to such
transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer
of such Initial Notes and, if such transfer is in respect an aggregate
principal amount of Initial Notes less than $250,000, an opinion of
counsel acceptable to the Company that such transfer is in compliance
with the Act or (V) in accordance with another exemption from the
registration requirements of the Act (and based upon an opinion of
counsel if the Company so requests), (y) to the Company, (z) pursuant
to an effective registration statement under the Act and, in each case,
in accordance with any applicable securities laws of any state of the
United States or any other applicable jurisdiction and (C) acknowledges
that it will, and each subsequent holder is required to, notify any
purchaser of the security evidenced thereby of the resale restrictions
set forth in (B) above.
(e) Each Initial Purchaser warrants and represents that the
information furnished in writing by or on behalf of such Initial
Purchaser to the Company expressly for use with reference to such
Initial Purchaser in the Offering Memorandum at the time it was
prepared, will not contain an untrue statement of a material fact and
will not omit to state a material fact in connection with such
information required to be stated in the Offering Memorandum or
necessary to make such information not misleading. Each Initial
Purchaser, in addition to other information furnished by such Initial
Purchaser in writing expressly for use with reference to such Initial
Purchaser in the Offering Memorandum, hereby furnishes to the Company
in writing expressly for use with reference to such Initial Purchaser
the statements with respect to the terms of the offering of the Initial
Notes by the Initial Purchasers set forth on the cover page of the
Offering Memorandum and under "Plan of Distribution" therein.
The Initial Purchasers acknowledge that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 8 hereof, counsel for the Company and the Guarantors and counsel for the
Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
9. INDEMNIFICATION.
(a) The Company and the Guarantors, jointly and severally,
agree to indemnify and hold harmless each Initial Purchaser, and any
person who controls any Initial Purchaser within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, from and against any
loss, expense, liability or claim which arises out of or is based upon
any alleged untrue statement of a material fact in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any supplement
thereto or amendment thereof, or arises out of or is based upon any
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein in light of
the circumstances under which they were made not misleading. The
foregoing shall not cover any such loss, expense, liability or claim,
however, which arises out of or is based upon any alleged untrue
statement of a material fact contained in, and in conformity with
information furnished in writing by or on behalf of any Initial
Purchaser to the Company expressly for use with reference to the
Initial Purchaser in, any such documents or arises out of or is based
upon any alleged omission to state a material fact in connection with
such information required to
10
<PAGE> 12
be stated in any such documents or necessary to make such information
not misleading. If any action is brought against an Initial Purchaser
or controlling person in respect of which indemnity may be sought
against the Company and the Guarantors pursuant to this paragraph, such
Initial Purchaser shall promptly notify the Company in writing or by
telephone, confirmed in writing, of the institution of such action, and
the Company and the Guarantors shall assume the defense of such action,
including the employment of counsel and payment of expenses; provided,
however, that the failure so to notify the Company will not relieve it
from any liability that it may have to such Initial Purchaser under
this Section 9(a) unless, and only to the extent that, such failure
results in the forfeiture of substantive rights or defenses by the
Company or the Guarantors. Such Initial Purchaser or controlling person
shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense
of such Initial Purchaser or such controlling person unless the
employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action or the Company
and the Guarantors shall not have employed counsel to have charge of
the defense of such action or such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or
them which are different from or additional to those available to the
Company or the Guarantors (in which case the Company and the Guarantors
shall not have the right to direct the defense of such action on behalf
of the indemnified party or parties), in any of which events such fees
and expenses of one counsel for all indemnified parties selected by
such Initial Purchaser shall be borne by the Company and the
Guarantors. Anything in this paragraph to the contrary notwithstanding,
the Company and the Guarantors shall not be liable for any settlement
of any such claim or action effected without its written consent. The
Company's indemnity agreement contained in this Section 9(a) and its
warranties and representations contained in this Agreement shall remain
in full force and effect regardless of any investigation made by or on
behalf of any Initial Purchaser or controlling person, and shall
survive any termination of this Agreement and the issuance and delivery
of the Initial Notes.
(b) Each Initial Purchaser, severally and not jointly, agrees
to indemnify and hold harmless the Company and the Guarantors and their
respective directors, officers and controlling persons from and against
any loss, expense, liability or claim which arises out of or is based
upon any alleged untrue statement of a material fact contained in, and
in conformity with information furnished in writing by or on behalf of
such Initial Purchaser to the Company expressly for use with reference
to such Initial Purchaser in the Preliminary Offering Memorandum or the
Offering Memorandum, or arises out of or is based upon any alleged
omission to state a material fact in connection with such information
required to be stated in such documents or necessary to make such
information not misleading. If any action is brought against the
Company or the Guarantors or any such person in respect of which
indemnity may be sought against any Initial Purchaser pursuant to this
paragraph, the Company or the Guarantors or such person shall promptly
notify such Initial Purchaser in writing or by telephone, confirmed in
writing, of the institution of such action, and such Initial Purchaser
shall assume the defense of such action, including the employment of
counsel and payment of expenses; provided, however, that the failure so
to notify such Initial Purchaser will not relieve it from any liability
that it may have to the Company or the Guarantors under this Section
9(b) unless, and only to the extent that, such failure results in the
forfeiture of substantive rights or defenses by such Initial Purchaser.
The Company or the Guarantors or such person shall have the right to
employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Company or the
Guarantors or such person unless the employment of such counsel shall
have been authorized in writing by such Initial Purchaser in connection
with the defense of such action or such Initial Purchaser shall not
have employed counsel to have charge of the defense of such action or
such
11
<PAGE> 13
indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from or
additional to those available to such Initial Purchaser (in which case
such Initial Purchaser shall not have the right to direct the defense
of such action on behalf of the indemnified party or parties), in any
of which events such fees and expenses of one counsel for all
indemnified parties selected by the Company shall be borne by such
Initial Purchaser. Anything in this paragraph to the contrary
notwithstanding, no Initial Purchaser shall be liable for any
settlement of any such claim or action effected without the written
consent of such Initial Purchaser. The indemnity agreement on the part
of each Initial Purchaser contained in this Section 9(b) shall remain
in full force and effect regardless of any investigation made by or on
behalf of the Company or the Guarantors or such person, and shall
survive any termination of this Agreement and the issuance and delivery
of the Initial Notes.
10. CONTRIBUTION. If the indemnification provided for in
Section 9 above is unavailable in respect of any losses, expenses, liabilities
or claims referred to therein, then the parties entitled to indemnification by
the terms thereof shall be entitled to contribution to liabilities and expenses
except to the extent that contribution is not permitted under Section 11(f) of
the Act. In determining the amount of contribution to which the respective
parties are entitled, there shall be considered the relative benefits received
by each party from the offering of the Initial Notes (taking into account the
portion of the proceeds of the offering received by each), the parties' relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted, the opportunity to correct and prevent any misstatement
or omission, and any other equitable considerations appropriate under the
circumstances. The parties entitled to indemnification agree that it would not
be equitable if the amount of such contribution were determined by pro rata or
per capita allocation (even if the Initial Purchasers and their directors,
officers and controlling persons were treated as one entity for such purpose).
The contribution agreement contained in this Section 10 shall remain in full
force and effect regardless of any investigation made by or on behalf of any
Initial Purchaser or the Company and the Guarantors or any of their respective
directors, officers or controlling persons and shall survive any termination of
this Agreement and the issuance and delivery of the Initial Notes.
11. NOTICES. All statements, requests, notices and agreements
shall be in writing or by telegram or facsimile and, if to the Initial
Purchasers, shall be sufficient in all respects if delivered or sent by
registered mail to the address furnished in writing for the purpose of such
statements, requests, notices and agreements hereunder, and, if to the Company
or the Guarantors shall be sufficient in all respects if delivered or sent by
registered mail to the Company at 6225 North Highway 161, Suite 400, Irving,
Texas 75030, Attention:
General Counsel.
12. CONSTRUCTION. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York.
The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
13. PARTIES IN INTEREST. The Agreement herein set forth has
been and is made solely for the benefit of the Initial Purchasers and the
Company and the Guarantors, and the controlling persons, directors and officers
referred to in Sections 9 and 10 hereof, and their respective successors,
assigns, executors and administrators, and no other person shall acquire or have
any right under or by virtue of this Agreement. Nothing in this Agreement is
intended or shall be construed to give to any other person, firm or corporation
(including, without limitation, any purchaser of the Initial Notes from an
12
<PAGE> 14
Initial Purchaser or any subsequent holder thereof) any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained.
The term "successor" as used in this Agreement shall not
include any purchaser, as such purchaser, of any Initial Notes from any Initial
Purchaser or any subsequent holder thereof or any purchaser, as such purchaser,
of any Notes or any subsequent holder thereof.
14. COUNTERPARTS. This Agreement may be executed in any number
of counterparts which, taken together, shall constitute one and the same
instrument.
[Signature Pages follow]
13
<PAGE> 15
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement between the Company, the Guarantors
and the Initial Purchasers in accordance with its terms.
Very truly yours,
BEAR, STEARNS & CO. INC.
By: /s/ TIMOTHY O'NEIL
-----------------------------------
Name: Timothy O'Neil
Title: Senior Managing Director
LEHMAN BROTHERS INC.
By: /s/ C. VAN SCHELTINGER
-----------------------------------
Name: C. Van Scheltinger
Title: Senior Vice President
MORGAN STANLEY & CO. INCORPORATED
By: /s/ MARK BRADLEY
-----------------------------------
Name: Mark Bradley
Title: Principal
SALOMON BROTHERS INC
By: /s/ ARTHUR H. TILDESLEY, JR.
-----------------------------------
Name: Arthur H. Tildesley, Jr.
Title: Managing Director
<PAGE> 16
The foregoing Purchase Agreement is hereby confirmed as of the date first above
written.
PROTECTION ONE ALARM MONITORING, INC.
By: /s/ JOHN W. HESSE
-------------------------------
Name: John W. Hesse
Title: Chief Financial Officer, Vice
President and Secretary
PROTECTION ONE, INC.
By: /s/ JOHN W. HESSE
-------------------------------
Name: John W. Hesse
Title: Chief Financial Officer, Vice
President and Secretary
WESTAR SECURITY, INC.
By: /s/ JOHN W. HESSE
-------------------------------
Name: John W. Hesse
Title: Secretary and Treasurer
WESTSEC, INC.
By: /s/ JOHN W. HESSE
-------------------------------
Name: John W. Hesse
Title: Secretary and Treasurer
<PAGE> 17
SCHEDULE I
----------
<TABLE>
<CAPTION>
Name of Initial Purchaser Amount
- -------------------------- ------
<S> <C>
Bear Stearns & Co. Inc. 125,000,000
Lehman Brothers Inc. 50,000,000
Morgan Stanley & Co. Incorporated 50,000,000
Salomon Brothers Inc 25,000,000
-----------------
Total $ 250,000,000
-----------------
</TABLE>
<PAGE> 18
EXHIBIT A
Protection One, Inc.
Westar Security, Inc.
WestSec, Inc.
<PAGE> 1
EXHIBIT 10.2
EXECUTION COPY
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$250,000,000
7 3/8% SENIOR NOTES DUE 2005
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REGISTRATION RIGHTS AGREEMENT
DATED AS OF AUGUST 17, 1998
BY AND AMONG
PROTECTION ONE ALARM MONITORING, INC.,
THE GUARANTORS NAMED ON THE SIGNATURE PAGES HERETO
AND
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of August 17, 1998 by and among Protection One
Alarm Monitoring, Inc., a Delaware corporation (the "Company"),
Protection One, Inc., a Delaware corporation, Westar Security, Inc., a
Kansas corporation, and WestSec, Inc., a Kansas corporation (the
"Guarantors"), and Bear, Stearns & Co. Inc., Lehman Brothers Inc.,
Morgan Stanley & Co. Incorporated and Salomon Brothers Inc (each an
"Initial Purchaser" and, collectively, the "Initial Purchasers"), each
of whom has agreed to purchase the Company's 7 3/8% Senior Notes due
2005 (the "Initial Notes") pursuant to the Purchase Agreement (as
defined below).
This Agreement is made pursuant to the Purchase Agreement,
dated August 12, 1998, (the "Purchase Agreement"), by and among the
Company, the Guarantors and the Initial Purchasers. In order to induce
the Initial Purchasers to purchase the Initial Notes, the Company and
the Guarantors have agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in the
Purchase Agreement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the Indenture, dated
August 17, 1998, among the Company, the Guarantors and The Bank of New
York, as trustee, relating to the Initial Notes and the Exchange Notes
(as defined) (the "Indenture").
1. Certain Definitions.
For purposes of this Registration Rights Agreement, the following terms
shall have the following respective meanings:
(a) "Closing Date" means the date on which the Initial Notes
are initially issued.
(b) "Commission" means the Securities and Exchange Commission,
or any other federal agency at the time administering the Exchange Act
or the Securities Act, whichever is the relevant statute for the
particular purpose.
(c) "Consummate" An Exchange Offer shall be deemed
"Consummated" for purposes of this Agreement upon the occurrence of (a)
the filing and effectiveness under the Act of the Exchange Offer
Registration Statement relating to the Exchange Notes to be issued in
the Exchange Offer, (b) the maintenance of such Exchange Offer
Registration Statement continuously effective and the keeping of the
Exchange Offer open for the period required under Section 2(a) hereof
and (c) the delivery by the Company to the Registrar under the
Indenture of Exchange Notes in the same aggregate principal amount as
the aggregate principal amount of Initial Notes tendered by Holders
thereof pursuant to the Exchange Offer.
(d) "Effective Time," in the case of (i) an Exchange Offer,
means the time and date as of which the Commission declares the
Exchange Offer Registration Statement effective or as of which the
Exchange Offer Registration Statement otherwise becomes effective and
(ii) a Shelf Registration, means the time and date as of which the
Commission declares the Shelf Registration effective or as of which the
Shelf Registration otherwise becomes effective.
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(e) "Exchange Act" means the Securities Exchange Act of 1934,
or any successor thereto, as the same shall be amended from time to
time.
(f) "Exchange Notes" has the meaning assigned thereto under
Section 2(a).
(g) "Exchange Offer" has the meaning assigned thereto in
Section 2(a).
(h) "Exchange Offer Registration Statement" has the meaning
assigned thereto in Section 2(a).
(i) "Exchange Registration" has the meaning assigned thereto
in Section 3(f).
(j) "Holder" means each Initial Purchaser for so long as it
holds of record any Transfer Restricted Securities, and such of its
respective successors and assigns who acquire and hold of record
Transfer Restricted Securities, directly or indirectly, from such
person or from any successor or assign of such person, in each case for
so long as such person owns any Transfer Restricted Securities.
(k) "Participant" has the meaning as assigned thereto in
Section 6(a).
(l) "Person" means a corporation, association, partnership,
organization, business, individual, government or political subdivision
thereof or governmental agency.
(m) "Registration Default" has the meaning assigned thereto in
Section 2(c).
(n) "Registration Expenses" has the meaning assigned thereto
in Section 4.
(o) "Resale Period" means the period beginning on the date the
Shelf Registration becomes effective and ending on the earlier of (i)
the Shelf Registration ceasing to be effective or (ii) the second
anniversary of the Closing Date.
(p) "Restricted Holder" means (i) a Holder that is an
affiliate of the Company within the meaning of Rule 405, (ii) a Holder
who acquires Exchange Notes outside the ordinary course of such
Holder's business, (iii) a Holder who has arrangements or
understandings with any person to participate in the Exchange Offer for
the purpose of distributing Exchange Notes, or (iv) a broker-dealer who
receives Initial Notes for its own account but did not acquire the
Initial Notes as a result of market-making activities or other trading
activities.
(q) "Rule 144," "Rule 405" and "Rule 415" means, in each case,
such rule promulgated under the Securities Act.
(r) "Securities Act" means the Securities Act of 1933, or any
successor thereto, as the same may be amended from time to time.
(s) "Shelf Registration" has the meaning assigned thereto in
Section 2(b).
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(t) "Transfer Restricted Securities" means the Initial Notes;
provided, however, that such Initial Notes shall cease to be Transfer
Restricted Securities when (i) such Initial Notes have been exchanged
for Exchange Notes in an Exchange Offer; (ii) in the circumstances
contemplated by Section 2(b), a registration statement registering such
Initial Notes under the Securities Act has been declared or becomes
effective and such Initial Notes have been sold or otherwise
transferred by the Holder thereof pursuant to such effective
registration statement; (iii) such Initial Notes are sold pursuant to
Rule 144 under circumstances in which any legend borne by such Initial
Notes relating to restrictions on transferability thereof, under the
Securities Act or otherwise, is removed or such Initial Notes are
eligible to be sold pursuant to paragraph (k) of Rule 144; or (iv) such
Initial Notes shall cease to be outstanding.
(u) "Trust Indenture Act" means the Trust Indenture Act of
1939, or any successor thereto, and the rules, regulations and forms
promulgated thereunder, all as the same shall be amended from time to
time.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Agreement, and the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision. Unless the context otherwise requires, any
reference to a statute, rule or regulation refers to the same (including any
successor statute, rule or regulation thereto) as it may be amended from time to
time.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b), the Company and the
Guarantors agree to use their respective reasonable best efforts to
file under the Securities Act a registration statement (the "Exchange
Offer Registration Statement") with the Commission on or prior to 45
days after the Closing Date (such 45th day the "Exchange Deadline")
relating to an offer to exchange (the "Exchange Offer") any and all of
the Initial Notes for a like aggregate amount of securities issued by
the Company, which have the same terms as the Initial Notes (and are
entitled to the benefits of a trust indenture which has been qualified
under the Trust Indenture Act), except that they have been registered
pursuant to an effective registration statement under the Securities
Act and do not contain restrictions on transfers. The Company and the
Guarantors agree to use their respective reasonable best efforts to
cause the Exchange Offer Registration Statement to become effective
under the Securities Act within 120 days after the Closing Date (such
120th day the "Exchange Effectiveness Deadline"). The Exchange Offer
will be registered under the Securities Act on the appropriate form and
will comply in all material respects with all applicable tender offer
rules and regulations under the Exchange Act. Unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the
Company will commence the Exchange Offer and use its best efforts to
issue on or prior to 30 business days after the date on which the
Exchange Offer Registration Statement was declared effective by the
Commission, Exchange Notes in exchange for all Notes tendered prior
thereto in the Exchange Offer. The Exchange Offer shall be deemed to
have been completed upon the Company having exchanged, pursuant to the
Exchange Offer, 7 3/8% Senior Notes due 2005 (the "Exchange Notes") for
all Initial Notes that have been properly
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tendered and not withdrawn before the expiration of the Exchange
Offer, which shall be on a date that is at least 30 days following the
commencement of the Exchange Offer. The Exchange Offer will be deemed
completed only if the Exchange Notes received by Holders (other than
Restricted Holders) in the Exchange Offer for Initial Notes are, upon
receipt, transferable by each such Holder without restriction imposed
thereon by the Securities Act or the Exchange Act and without material
restrictions imposed thereon by the blue sky or securities laws of a
substantial majority of the States of the United States of America.
(b) If (i) the Company is not required to file the Exchange
Offer Registration Statement or permitted to Consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy or (ii) any Holder of Transfer Restricted Securities
notifies the Company prior to the 20th day following Consummation of
the Exchange Offer that (A) it is prohibited by law or Commission
policy from participating in the Exchange Offer or (B) that it may not
resell the Exchange Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the prospectus contained in
the Exchange Offer Registration Offer is not appropriate or available
for such resales or (C) that it is a broker-dealer and owns Notes
acquired directly from the Company or an affiliate of the Company, then
in addition to or in lieu of conducting the Exchange Offer contemplated
by Section 2(a), the Company and the Guarantors shall file under the
Securities Act as promptly as practicable a "shelf" registration
statement (the "Shelf Registration") with the Commission on or prior to
45 days after such filing obligation arises (such 45th day the "Shelf
Deadline" and, together with the Exchange Deadline, the "Filing
Deadline") and use its best efforts to cause the Shelf Registration to
be declared effective by the Commission on or prior to 120 days after
such obligation arises (such 120th day the "Shelf Effectiveness
Deadline" and, together with the Exchange Effectiveness Deadline, the
"Effectiveness Deadline") providing for the registration of, and the
sale on a continuous or delayed basis by any such Holder of, all of the
Transfer Restricted Securities held by such Holder, pursuant to Rule
415 or any similar rule that may be adopted by the Commission. The
Company and the Guarantors agree to use their respective reasonable
best efforts to cause the Shelf Registration to become or be declared
effective and to keep such Shelf Registration continuously effective
for a period (the "Effectiveness Period") ending on the earlier of (i)
the second anniversary of the Closing Date or (ii) such time as there
are no longer any Transfer Restricted Securities outstanding. The
Company and the Guarantors further agree to supplement or make
amendments to the Shelf Registration during the Effectiveness Period,
as and when required by the rules, regulations or instructions
applicable to the registration form used for such Shelf Registration or
by the Securities Act or rules and regulations thereunder for shelf
registration, and the Company and the Guarantors agree to furnish to
the Holders of the Transfer Restricted Securities copies of any such
supplement or amendment prior to its being used or promptly following
its filing with the Commission. Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith that it is
in the best interests of the Company not to disclose the existence of
or facts surrounding any proposed or pending material corporate
transaction involving the Company, the Company may allow the Shelf
Registration to fail to be effective and usable as a result of such
nondisclosure for up to 60 days during the two year period of
effectiveness required by Section 2 hereof, but in no event for any
period in excess of 30 consecutive days.
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(c) If (i) any Registration Statement required by this
Agreement is not filed with the Commission on or prior to the
applicable Filing Deadline, (ii) any such Registration Statement has
not been declared effective by the Commission on or prior to the
applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated within 30 business days of the Exchange Effectiveness
Deadline (the "Consummation Deadline") or (iv) except as provided in
the last sentence of paragraph (b) of this Section, any Registration
Statement required by this Agreement is filed and declared effective
but shall thereafter cease to be effective or fail to be usable for its
intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such
failure and that is itself declared effective within 5 days of filing
such post-effective amendment to such Registration Statement (each such
event referred to in clauses (i) through (iv), a "Registration
Default"), then the Company and the Guarantors hereby jointly and
severally agree to pay to each Holder of Transfer Restricted Securities
affected thereby liquidated damages in an amount equal to $.05 per week
per $1,000 in principal amount of Transfer Restricted Securities held
by such Holder for each week or portion thereof that the Registration
Default continues for the first 90-day period immediately following the
occurrence of such Registration Default. The amount of the liquidated
damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been
cured, up to a maximum amount of liquidated damages of $.50 per week
per $1,000 in principal amount of Transfer Restricted Securities;
provided that the Company and the Guarantors shall in no event be
required to pay liquidated damages for more than one Registration
Default at any given time. Notwithstanding anything to the contrary set
forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration),
in the case of (ii) above, (3) upon Consummation of the Exchange Offer,
in the case of (iii) above, (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration
Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration) to again be declared
effective or made usable, in the case of (iv) above, or (5) if sooner,
upon the first date on which no Transfer Restricted Securities are
outstanding in the case of clauses (i) - (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a
result of such clause (i), (ii), (iii) or (iv), as applicable, shall
cease.
All accrued liquidated damages shall be paid to the Holders
entitled thereto, in the manner provided for the payment of interest in
the Indenture, on each Interest Payment Date, as more fully set forth
in the Indenture and the Notes. Notwithstanding the fact that any
securities for which liquidated damages are due cease to be Transfer
Restricted Securities, all obligations of the Company and the
Guarantors to pay liquidated damages with respect to securities shall
survive until such time as such obligations with respect to such
securities shall have been satisfied in full.
3. Registration Procedures.
The following provisions shall apply to registration statements filed
pursuant to Section 2:
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(a) At or before the Effective Time of the Exchange Offer or
the Shelf Registration, as the case may be, the Company and the
Guarantors shall qualify the Indenture under the Trust Indenture Act.
(b) In connection with the Company's obligations with respect
to the Shelf Registration, if applicable, the Company and the
Guarantors shall, as soon as reasonably practicable (or as otherwise
specified herein):
(i) prepare and file with the Commission a
registration statement with respect to the Shelf Registration
on any form which may be utilized by the Company and the
Guarantors and which shall permit the disposition of the
Transfer Restricted Securities in accordance with the intended
method or methods thereof, as specified in writing by the
Holders of the Transfer Restricted Securities, and use their
respective reasonable best efforts to cause such registration
statement to become effective as soon as practicable
thereafter;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus included therein as may be necessary to effect
and maintain the effectiveness of such registration statement
for the period specified in Section 2(b) and as may be
required by the applicable rules and regulations of the
Commission and the instructions applicable to the form of such
registration statement, and furnish to the Holders of the
Transfer Restricted Securities copies of any such supplement
or amendment simultaneously with or prior to its being used or
filed with the Commission;
(iii) comply in all material respects, as to all
matters within the Company's and the Guarantors' control, with
the provisions of the Securities Act with respect to the
disposition of all of the Transfer Restricted Securities
covered by such registration statement in accordance with the
intended methods of disposition by the Holders thereof
provided for in such registration statement;
(iv) permit any of (A) the Holders of the Transfer
Restricted Securities to be included in such registration
statement, (B) the underwriters (which term, for purposes of
this Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(11) of the
Securities Act), if any, thereof, (C) the sales or placement
agent, if any, therefor, (D) counsel for such underwriters or
agent and (E) not more than one counsel for all the Holders of
such Transfer Restricted Securities who so request of the
Company and the Guarantors in writing to participate in the
preparation of such registration statement, each prospectus
included therein or filed with the Commission and each
amendment or supplement thereto;
(v) for a reasonable period prior to the filing of
such registration statement, and throughout the Resale Period,
make available at reasonable times at the Company's principal
place of business or such other reasonable place for
inspection by the persons referred to in Section 3(b)(iv), who
shall certify to the Company and the Guarantors that they have
a current intention to sell their Transfer Restricted
Securities pursuant to the
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Shelf Registration, such financial and other information and
books and records of the Company and the Guarantors, and
cause the officers, employees, counsel and independent
certified public accountants of the Company and the
Guarantors to respond to such inquiries, as shall be
reasonably necessary, in the judgment of the respective
counsel referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the
Securities Act; provided, however, that each such party
shall be required to maintain in confidence and not to
disclose to any other person any information or records
concerning the Company or the Guarantors until such time as
(A) such information becomes a matter of public record
(whether by virtue of its inclusion in such registration
statement or otherwise), or (B) such person shall be
required so to disclose such information pursuant to a
subpoena or order of any court or other governmental agency
or body having jurisdiction over the matter (subject to the
requirements of such order, and only after such person shall
have given the Company and the Guarantors prompt prior
written notice of such requirement and the opportunity to
contest the same or seek an appropriate protective order),
or (C) such information is required to be set forth in such
registration statement or the prospectus included therein or
in an amendment to such registration statement or an
amendment or supplement to such prospectus in order that
such registration statement, prospectus, amendment or
supplement, as the case may be, does not contain an untrue
statement of a material fact or omit to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading;
(vi) promptly notify the selling Holders of Transfer
Restricted Securities, the sales or placement agent, if any,
therefor and the managing underwriter or underwriters, if any,
thereof named in the Shelf Registration or a supplement
thereto, and confirm such notice in writing, (A) when such
registration statement or the prospectus included therein or
any prospectus amendment or supplement or post-effective
amendment has been filed, and, with respect to such
registration statement or any post-effective amendment, when
the same has become effective, (B) of the issuance by the
Commission of any stop order suspending the effectiveness of
such registration statement or the initiation or written
threat of any proceedings for that purpose, (C) of the receipt
by the Company or the Guarantors of any notification with
respect to the suspension of the qualification of the Transfer
Restricted Securities for sale in any jurisdiction or the
initiation or written threat of any proceeding for such
purpose, or (D) at any time when a prospectus is required to
be delivered under the Securities Act, that such registration
statement, prospectus, prospectus amendment or supplement or
post-effective amendment does not conform in all material
respects to the applicable requirements of the Securities Act
and the Trust Indenture Act and the rules and regulations of
the Commission thereunder;
(vii) use their reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of such
registration statement or any post-effective amendment thereto
at the earliest practicable date;
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(viii) if requested by any managing underwriter or
underwriters, any placement or sales agent or any Holder of
Transfer Restricted Securities, promptly incorporate in a
prospectus supplement or post-effective amendment such
information as is required by the applicable rules and
regulations of the Commission relating to the terms of the
sale of such Transfer Restricted Securities, including
information with respect to the principal amount of Transfer
Restricted Securities being sold by such Holder or agent or to
any underwriters, the name and description of such Holder,
agent or underwriter, the offering price of such Transfer
Restricted Securities and any discount, commission or other
compensation payable in respect thereof, the purchase price
being paid therefor by such underwriters and with respect to
any other terms of the offering of the Transfer Restricted
Securities to be sold by such Holder or agent or to such
underwriters; and make all required filings of such prospectus
supplement or post-effective amendment promptly after
notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment;
(ix) furnish to each Holder of Transfer Restricted
Securities, each placement or sales agent, if any, therefor,
each underwriter, if any, thereof and the respective counsel
referred to in Section 3(b)(iv) an executed (or conformed)
copy of such registration statement, each such amendment or
supplement thereto (in each case including all exhibits
thereto) and such number of copies of such registration
statement (excluding exhibits thereto) and of the prospectus
included in such registration statement (including each
preliminary prospectus and any summary prospectus), in
conformity in all material respects with the applicable
requirements of the Securities Act and the Trust Indenture Act
and the rules and regulations of the Commission thereunder;
and the Company and the Guarantors hereby consent to the use
of such prospectus (including any such preliminary or summary
prospectus) and any amendment or supplement thereto by each
such Holder and by any such agent and underwriter, in each
case, in the form most recently provided to such person by the
Company or the Guarantors in connection with the offering and
sale of the Transfer Restricted Securities covered by the
prospectus (including any such preliminary or summary
prospectus) or any supplement or amendment thereto; and
(x) use their respective reasonable best efforts to
(A) register or qualify the Transfer Restricted Securities to
be included in such registration statement under such
securities laws or blue sky laws of such United States
jurisdictions as any Holder of such Transfer Restricted
Securities and each placement or sales agent, if any, therefor
and underwriter, if any, thereof shall reasonably request, and
(B) keep such registrations or qualifications in effect and
comply with such laws so as to permit the continuance of
offers, sales and dealings therein in such jurisdictions
during the period the Shelf Registration is required to remain
effective under Section 2(b) and for so long as may be
necessary to enable any such Holder, agent or underwriter to
complete its distribution of Transfer Restricted Securities
pursuant to such registration statement but in any event not
later than the date through which the Company and the
Guarantors are required to keep the Shelf Registration
effective pursuant to Section 2(b); provided, however, that
the Company shall not be required for any such purpose to (1)
qualify as a foreign corporation
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in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section
3(b)(x), (2) consent to general service of process in any
such jurisdiction or (3) make any changes to its certificate
of incorporation or by-laws or any agreement between it and
its stockholders.
In case any of the foregoing obligations is dependent upon information
provided or to be provided by a party other than the Company or the Guarantors,
such obligation shall be subject to the provision of such information by such
party; provided that the Company and the Guarantors shall use their respective
reasonable best efforts to obtain the necessary information from any party
responsible for providing such information.
(c) In the event that the Company would be required, pursuant
to Section 3(b)(vi)(D), to notify the selling Holders of Transfer
Restricted Securities, the placement or sales agent, if any, therefor
or the managing underwriters, if any, thereof named in the Shelf
Registration or a supplement thereto of the existence of the
circumstances described therein, the Company and the Guarantors shall
promptly prepare and furnish to each such Holder, to each placement or
sales agent, if any, and to each such underwriter, if any, a reasonable
number of copies of a prospectus supplemented or amended so that, as
thereafter delivered to purchasers of Transfer Restricted Securities,
such prospectus shall conform in all material respects to the
applicable requirements of the Securities Act and the Trust Indenture
Act and the rules and regulations of the Commission thereunder. Each
Holder of Transfer Restricted Securities agrees that upon receipt of
any notice from the Company or the Guarantors, pursuant to Section
3(b)(vi)(D), such Holder shall forthwith discontinue (and cause any
placement or sales agent or underwriters acting on their behalf to
discontinue) the disposition of Transfer Restricted Securities pursuant
to the registration statement applicable to such Transfer Restricted
Securities until such Holder (i) shall have received copies of such
amended or supplemented prospectus and, if so directed by the Company
or the Guarantors, such Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then
in such Holder's possession of the prospectus covering such Transfer
Restricted Securities at the time of receipt of such notice or (ii)
shall have received notice from the Company or the Guarantors that the
disposition of Transfer Restricted Securities pursuant to the Shelf
Registration may continue.
(d) The Company or the Guarantors may require each Holder of
Transfer Restricted Securities as to which any registration pursuant to
Section 2(b) is being effected to furnish to the Company or the
Guarantors such information regarding such Holder and such Holder's
intended method of distribution of such Transfer Restricted Securities
as the Company or the Guarantors may from time to time reasonably
request in writing, but only to the extent that such information is
required in order to comply with the Securities Act. Each such Holder
agrees to notify the Company or the Guarantors as promptly as
practicable of any inaccuracy or change in information previously
furnished by such Holder to the Company or the Guarantors or of the
occurrence of any event in either case as a result of which any
prospectus relating to such registration contains or would contain an
untrue statement of a material fact regarding such Holder or such
Holder's intended method of disposition of such Transfer
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Restricted Securities or omits to state any material fact regarding
such Holder or such Holder's intended method of disposition of such
Transfer Restricted Securities required to be stated therein or
necessary to make the statements therein not misleading, and promptly
to furnish to the Company or the Guarantors any additional information
required to correct and update any previously furnished information or
required so that such prospectus shall not contain, with respect to
such Holder or the disposition of such Transfer Restricted Securities,
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(e) Until the expiration of two years after the Closing Date,
the Company will not, and will not permit any of its "affiliates" (as
defined in Rule 144) to, resell any of the Initial Notes that have been
reacquired by any of them except pursuant to an effective registration
statement under the Securities Act.
(f) In connection with the Company's and the Guarantors'
obligations with respect to the registration of Exchange Notes as
contemplated by Section 2(a) (the "Exchange Registration"), if
applicable, the Company and the Guarantors shall, as soon as reasonably
practicable (or as otherwise specified):
(i) prepare and file with the Commission such
amendments and supplements to the Exchange Offer Registration
Statement and the prospectus included therein as may be
necessary to effect and maintain the effectiveness thereof for
the periods and purposes contemplated in Section 2(a) and as
may be required by the applicable rules and regulations of the
Commission and the instructions applicable to the form of the
Exchange Offer Registration Statement, and promptly provide
each broker-dealer holding Exchange Notes with such number of
copies of the prospectus included therein (as then amended or
supplemented), in conformity in all material respects with the
requirements of the Securities Act and the Trust Indenture Act
and the rules and regulations of the Commission thereunder, as
such broker-dealer reasonably may request for use in
connection with resales of Exchange Notes;
(ii) for a period of 120 days from the date on which
the Exchange Offer Registration Statement is declared
effective (the "120 Day Period"), promptly notify each
broker-dealer that has requested or received copies of the
prospectus included in the Exchange Offer Registration
Statement, and confirm such advice in writing, (A) when any
prospectus amendment or supplement or post-effective amendment
to the Exchange Offer Registration Statement has been filed,
and, with respect to any post-effective amendment to the
Exchange Offer Registration Statement, when the same has
become effective, (B) of the issuance by the Commission of any
stop order suspending the effectiveness of the Exchange Offer
Registration Statement or the initiation or threatening of any
proceedings for that purpose, (C) of the receipt by the
Company of any notification with respect to the suspension of
the qualification of the Exchange Notes for sale in any United
States jurisdiction or the initiation or threatening in
writing of any proceeding for such purpose, or (D) at any time
when a prospectus is required to be delivered under the
Securities Act, that the Exchange Offer Registration
Statement, prospectus, prospectus amendment or supplement or
post-effective amendment does not conform in all material
respects to the
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applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder;
(iii) in the event that the Company or the Guarantors
would be required, pursuant to Section 3(f)(ii)(D), to notify
any broker-dealers holding Exchange Notes, promptly prepare
and furnish to each such Holder a reasonable number of copies
of a prospectus supplemented or amended so that, as thereafter
delivered to purchasers of such Exchange Notes, such
prospectus shall conform in all material respects to the
applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder or notify such broker-dealers that the offer and
sale of Exchange Notes pursuant to the Exchange Offer
Registration Statement may continue;
(iv) use their respective reasonable best efforts to
obtain the withdrawal of any order suspending the
effectiveness of the Exchange Offer Registration Statement or
any post-effective amendment thereto at the earliest
practicable date;
(v) use their respective reasonable best efforts to
register or qualify the Exchange Notes under the securities
laws or blue sky laws of such jurisdictions as are
contemplated by Section 2(a) no later than the commencement of
the Exchange Offer, provided, however, that the Company shall
not be required for any such purpose to (1) qualify as a
foreign corporation in any jurisdiction wherein it would not
otherwise be required to qualify but for the requirements of
this Section 3(f)(v), (2) consent to general service of
process in any such jurisdiction or (3) make any changes to
its certificate of incorporation or by-laws or any agreement
between it and its stockholders; and
(vi) make generally available to its security Holders
as soon as practicable but no later than eighteen months after
the effective date of such registration statement, an earning
statement of the Company, the Guarantors and their
subsidiaries complying with Section 1(a) of the Securities
Act (including, at the option of the Company, Rule 158
thereunder).
In case any of the foregoing obligations is dependent upon
information provided or to be provided by a party other than the
Company or the Guarantors, such obligation shall be subject to the
provision of such information; provided that the Company or the
Guarantors shall use their respective reasonable best efforts to obtain
the necessary information from any party responsible for providing such
information.
4. Registration Expenses.
The Company and the Guarantors agree to bear and to pay or cause to be
paid promptly upon request being made therefor all expenses incident to the
Company's or the Guarantors' performance of or compliance with this Agreement,
including (a) all Commission and any National Association of Securities Dealers
registration and filing fees and expenses, (b) all filing fees and expenses in
connection with the qualification of the Initial Notes or Exchange Notes for
offering and sale under the state securities and blue
11
<PAGE> 13
sky laws referred to in Section 3(b)(x) and Section 3(f)(v) hereof, (c) all
expenses relating to the preparation, printing, distribution and reproduction of
each registration statement required to be filed hereunder, each prospectus
included therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, the certificates representing the Exchange Notes
and all other documents relating hereto, (d) fees and expenses of the Trustee
under the Indenture, and of any escrow agent or custodian, (e) internal expenses
(including all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), (f) fees, disbursements and expenses of
counsel and independent certified public accountants of the Company
(collectively, the "Registration Expenses"). To the extent that any Registration
Expenses are incurred, assumed or paid by any Holder of Transfer Restricted
Securities or any placement or sales agent therefor or underwriter thereof, the
Company and the Guarantors shall reimburse such person for the full amount of
the Registration Expenses so incurred, assumed or paid promptly after receipt of
a documented request therefor. Notwithstanding the foregoing, the Holders of the
Transfer Restricted Securities being registered shall pay all agency fees and
commissions and underwriting discounts and commissions attributable to the sale
of such Transfer Restricted Securities and the fees and disbursements of any
counsel or other advisors or experts retained by such Holders (severally or
jointly), other than the counsel and experts specifically referred to above.
5. Indemnification.
(a) Indemnification by the Company and the Guarantors. In
connection with a Shelf Registration, the Company and the Guarantors
shall, and they hereby, jointly and severally, agree to, indemnify and
hold harmless each of the Holders of Transfer Restricted Securities,
included in such Shelf Registration, and each person who is named in
such Shelf Registration or a supplement thereto as a placement or sales
agent or as an underwriter in any offering or sale of such Transfer
Restricted Securities and each person who controls any such person
(each, a "Participant") within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses,
liabilities, claims, damages and expenses whatsoever, to which they or
any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that the Company and the Guarantors will not be liable in any
such case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
information relating to any Participants furnished to the Company in
writing by or on behalf of such Participant expressly for use therein.
This indemnity will be in addition to any liability which the Company
and the Guarantors may otherwise have, including under this Agreement.
(b) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
each party against whom indemnification is to be sought in writing of
the commencement thereof (but the
12
<PAGE> 14
failure so to notify an indemnifying party shall not relieve it from
any liability which it may have under this Section 6 except to the
extent that it has been prejudiced in any material respect by such
failure). In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless (i) the employment of such
counsel shall have been authorized in writing by the indemnifying
parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to take charge of
the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties
shall have reasonably concluded that there may be defenses available
to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties),
in any of which events such fees and expenses of counsel shall be
borne by the indemnifying parties; provided, however, that the
indemnifying party under subsection (a) or (b) above shall only be
liable for the legal expenses of one counsel (in addition to any local
counsel) for all indemnified parties in each jurisdiction in which any
claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable
for any settlement of any claim or action effected without its prior
written consent, provided that such consent was not unreasonably
withheld.
(c) Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 6(a)
is for any reason held to be unavailable from the indemnifying party or
is insufficient to hold harmless a party indemnified thereunder, the
Company and the Guarantors, on the one hand, and each Participant, on
the other hand, shall contribute to the aggregate losses, claims,
damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company and the Guarantors,
any contribution received by the Company and the Guarantors from
persons, other than the Participants, who may also be liable for
contribution, including persons who control the Company and the
Guarantors within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act) to which the Company, the Guarantors and the
Participants may be subject, in such proportion as is appropriate to
reflect the relative benefits received by the Company and the
Guarantors, on one hand, and such Participant, on the other hand, from
the offering of the Initial Notes or, if such allocation is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to above but also the
relative fault of the Company and the Guarantors, on one hand, and each
Participant, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities
or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company and the Guarantors, on one hand, and
of each
13
<PAGE> 15
Participant, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company, the Guarantors or
such Participant and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, the Guarantors and the Participants agree that
it would not be just and equitable if contribution pursuant to this
Section 6(b) were determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of
this Section 6(b), (i) in no case shall any of the Participant required
to contribute any amount in excess of the amount by which the dollar
amount of the proceeds received by such Participant from the sale of
any Transfer Restricted Securities exceeds the amount of any damages
which such Participant has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission, and no underwriter shall be required to contribute any amount
in excess of the amount by which the discounts and commissions in
respect of the Transfer Restricted Securities underwritten by it and
distributed to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission, (ii) no
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 6(b), (A) each person, if any, who controls
any of the Participants within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and (B) the respective officers,
directors, partners, employees, representatives and agents of each of
the Participants or any controlling person shall have the same rights
to contribution as the Participants, and (X) each person, if any, who
controls any of the Company and the Guarantors within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and (Y) the
respective officers, directors, partners, employees, representatives
and agents of the Company and the Guarantors shall have the same rights
to contribution as the Company and the Guarantors, subject in each case
to clauses (i) and (ii) of this Section 6(b).
6. Rule 144.
The Company and the Guarantors covenant to the Holder of Transfer
Restricted Securities that the Company and the Guarantors shall use their
respective reasonable best efforts to timely file the reports required to be
filed by it under the Exchange Act or the Securities Act (including the reports
under Section 13 and 15(d) of the Exchange Act referred to in subparagraph
(c)(l) of Rule 144) and the rules and regulations adopted by the Commission
thereunder, all to the extent required from time to time to enable such Holder
to sell Transfer Restricted Securities without registration under the Securities
Act within the limitations of the safe harbor provided by Rule 144, as such Rule
144 may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the Commission.
7. Remedies.
The Company and the Guarantors agree that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of Section 2 of this
14
<PAGE> 16
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
8. Miscellaneous.
(a) No Inconsistent Agreements. The Company and the Guarantors
represent, warrant, covenant and agree that they have not granted, and
shall not grant, registration rights with respect to Transfer
Restricted Securities which would be inconsistent with the terms
contained in this Agreement.
(b) Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a)
delivered personally, (b) mailed, certified or registered mail with
postage prepaid, (c) sent by next-day or overnight mail or delivery or
(d) sent by telecopy or telegram, as follows:
(i) If to the Initial Purchasers:
Bear Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Telecopy No.: (212) 272-3092
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Telecopy No.: (212) 751-4864
Attention: Roger H. Kimmel, Esq.
(ii) If to the Company and the Guarantors, at:
Protection One Alarm Monitoring, Inc.
6225 North Highway 161
Suite 400
Irving, Texas 75038
Telecopy No.: (972) 916-6156
Attention: General Counsel
with a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
15
<PAGE> 17
Telecopy No.: (214) 746-7777
Attention: Jeremy W. Dickens, Esq.
or, in each case, at such other address as may be specified in writing
to the other parties hereto.
(c) Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and
shall be enforceable by the respective successors and assigns of the
parties hereto. In the event that any transferee of any Holder of
Transfer Restricted Securities shall acquire Transfer Restricted
Securities, in any manner, whether by gift, bequest, purchase,
operation of law or otherwise, such transferee shall, without any
further writing or action of any kind, be deemed a party hereto for all
purposes and such Transfer Restricted Securities shall be held subject
to all of the terms of this Agreement, and by taking and holding such
Transfer Restricted Securities such transferee shall be entitled to
receive the benefits of, and be conclusively deemed to have agreed to
be bound by and to perform, all of the applicable terms and provisions
of this Agreement.
(d) Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this
Agreement or made pursuant hereto shall remain in full force and effect
regardless of any investigation (or statement as to the results
thereof) made by or on behalf of the Company or the Guarantors, any
officer, director or agent of the Company or the Guarantors, any Holder
of Transfer Restricted Securities, any director, officer or partner of
such Holder, any agent or underwriter or any director, officer or
partner thereof, or any controlling person of any of the foregoing, and
shall survive delivery of and payment for the Transfer Restricted
Securities pursuant to the Purchase Agreement and the transfer and
registration of Transfer Restricted Securities by such Holder and the
consummation of an Exchange Offer.
(e) LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF NEW YORK.
(f) Headings. The descriptive headings of the several Sections
and paragraphs of this Agreement are inserted for convenience only, do
not constitute a part of this Agreement and shall not affect in any way
the meaning or interpretation of this Agreement.
(g) Entire Agreement; Amendments. This Agreement and the other
writings referred to herein (including the Indenture) or delivered
pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between
the parties with respect to its subject matter. This Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively
or prospectively) only by a written instrument duly executed by the
Company, the Guarantors and the Holders of at least a majority in
aggregate principal amount of the Transfer Restricted Securities at the
time outstanding. Each Holder of any Transfer Restricted Securities at
the time or thereafter outstanding shall be bound by any amendment or
waiver effected pursuant to this Section 8(g),
16
<PAGE> 18
whether or not any notice, writing or marking indicating such amendment
or waiver appears on such Transfer Restricted Securities or is
delivered to such Holder.
(h) Inspection. For so long as this Agreement shall be in
effect, this Agreement and a complete list of the names and addresses
of all the Holders of Transfer Restricted Securities shall be made
available for inspection and copying on any business day by any Holder
of Transfer Restricted Securities for proper purposes only (which shall
include any purpose related to the rights of the Holders of Transfer
Restricted Securities under the Securities, the Indenture and this
Agreement) at the offices of the Company at the address thereof set
forth in Section 8(b) above, or at the office of the Trustee under the
Indenture.
(i) Counterparts. This Agreement may be executed by the
parties in counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together
constitute one and the same instrument.
[signature page follows]
17
<PAGE> 19
Agreed to and accepted as of the date referred to above.
PROTECTION ONE ALARM MONITORING, INC
By: /s/ JOHN W. HESSE
-------------------------------
Name: John W. Hesse
Title: Chief Financial Officer, Vice
President and Secretary
PROTECTION ONE, INC.
By: /s/ JOHN W. HESSE
-------------------------------
Name: John W. Hesse
Title: Chief Financial Officer, Vice
President and Secretary
WESTAR SECURITY, INC.
By: /s/ JOHN W. HESSE
-------------------------------
Name: John W. Hesse
Title: Secretary and Treasurer
WESTSEC, INC.
By: /s/ JOHN W. HESSE
-------------------------------
Name: John W. Hesse
Title: Secretary and Treasurer
<PAGE> 20
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
BEAR, STEARNS & CO. INC.
By: /s/ TIMOTHY O'NEIL
-----------------------------------
Name: Timothy O'Neil
Title: Senior Managing Director
LEHMAN BROTHERS INC.
By: /s/ C. VAN SCHELTINGER
-----------------------------------
Name: C. Van Scheltinger
Title: Senior Vice President
MORGAN STANLEY & CO. INCORPORATED
By: /s/ MARK BRADLEY
-----------------------------------
Name: Mark Bradley
Title: Principal
SALOMON BROTHERS INC
By: /s/ ARTHUR H. TILDESLEY, JR.
-----------------------------------
Name: Arthur H. Tildesley, Jr.
Title: Managing Director
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated January 29, 1998
and August 22, 1997 included in Protection One, Inc.'s Form 10-K for the year
ended December 31, 1997 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
Dallas, Texas
September 22, 1998
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER
UNREGISTERED 7 3/8% SENIOR NOTES DUE 2005
OF
PROTECTION ONE ALARM MONITORING, INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS
EXTENDED BY THE COMPANY.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
Deliver to:
The Bank of New York, Exchange Agent
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery before 4:30
p.m.:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Floor 7-E Corporate Trust Services Window
New York, New York 10286 Ground Level
New York, New York 10286
Attn: Reorganization Section,
Gerturde Jeanpierre Attn: Reorganization Section,
(212) 815-5920 Gerturde Jeanpierre
(212) 815-5920
</TABLE>
By Facsimile (for Eligible Institutions):
(212) 815-6339
For Information or
Confirmation by Telephone:
(212) 815-5920
(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail,
by hand or by overnight delivery service)
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
IF YOU WISH TO EXCHANGE UNREGISTERED 7 3/8% SENIOR NOTES DUE 2005, FOR AN
EQUAL AGGREGATE PRINCIPAL AMOUNT OF REGISTERED 7 3/8% SENIOR NOTES DUE 2005,
PURSUANT TO THE EXCHANGE OFFER, YOU MUST VALIDLY TENDER (AND NOT WITHDRAW) OLD
NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
SIGNATURES MUST BE PROVIDED.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BEFORE COMPLETING
THIS LETTER OF TRANSMITTAL.
<PAGE> 2
DESCRIPTION OF TENDERED OLD NOTES
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
AGGREGATE
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) CERTIFICATE PRINCIPAL AMOUNT
AS IT APPEARS ON THE 7 3/8% SENIOR NOTES DUE 2005 NUMBER(S) OF OLD NOTES
(PLEASE FILL IN, IF BLANK) OF OLD NOTES TENDERED
- ------------------------------------------------------------------------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
TOTAL PRINCIPAL
AMOUNT OF OLD
NOTES TENDERED
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
LADIES AND GENTLEMEN:
1. The undersigned hereby tenders to Protection One Alarm Monitoring, Inc.,
a Delaware corporation ("Monitoring"), the 7 3/8% Senior Notes due 2005 (the
"Old Notes"), described above pursuant to Monitoring's offer of $1,000 principal
amount of 7 3/8% Senior Notes due 2005 (the "New Notes"), in exchange for each
$1,000 principal amount of the Old Notes, upon the terms and subject to the
conditions contained in the Prospectus dated August , 1998 (the "Prospectus"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which together constitute the "Exchange Offer").
2. The undersigned hereby represents and warrants that it has full
authority to tender the Old Notes described above. The undersigned will, upon
request, execute and deliver any additional documents deemed by Monitoring to be
necessary or desirable to complete the tender of Old Notes.
3. The undersigned understands that the tender of the Old Notes pursuant to
all of the procedures set forth in the Prospectus will constitute an agreement
between the undersigned and Monitoring as to the terms and conditions set forth
in the Prospectus.
4. Unless the box under the heading "Special Registration Instructions" is
checked, the undersigned hereby represents and warrants that:
(i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the undersigned, whether or
not the undersigned is the holder;
(ii) neither the undersigned nor any such other person is engaging in
or intends to engage in a distribution of such New Notes;
(iii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Notes; and
(iv) neither the holder nor any such other person is an "affiliate,"
as such term is defined under Rule 405 promulgated under the Securities Act
of 1933, as amended (the "Securities Act"), of Monitoring.
5. The undersigned may, if, and only if, unable to make all of the
representations and warranties contained in Item 4 above, elect to have its Old
Notes registered in the shelf registration described in the Registration Rights
Agreement, dated as of August 17, 1998, between Monitoring, the Guarantors and
the Initial Purchasers in the form filed as an exhibit to the Registration
Statement (the "Registration Agreement") (all terms used in this Item 5 with
their initial letters capitalized, unless otherwise defined herein, shall have
the meanings given them in the Registration Agreement). Such election may be
made by checking the box under "Special Registration Instructions" on page 5. By
making such election, the undersigned agrees, as a holder of Transfer Restricted
Securities participating in a shelf registration, to indemnify and hold harmless
Monitoring and the Guarantors, their directors, officers, representatives and
agents and each person, if any, who controls Monitoring or the Guarantors within
the meaning of either Section 15 of the Securities Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all losses, liabilities, claims, damages and expenses whatsoever
(including, without limitation, any legal or other expenses incurred in
connection with defending or investigating any matter), joint or several, or any
action in respect thereof, to which Monitoring or Guarantors, or any such
director, officer, representative, agent or controlling person may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such loss, liability, claim, damage or expense arises out of, or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or the Prospectus or in any
amendment thereof or supplement thereto or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that any such loss, liability, claim, damage or expense arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with information relating to the undersigned furnished to Monitoring in writing
by or on behalf of the undersigned expressly for use therein. Any such
indemnification shall be governed by the terms and subject to the conditions set
forth in
<PAGE> 4
the Registration Agreement, including, without limitation, the provisions
regarding notice, retention of counsel, contribution and payment of expenses set
forth therein. The above summary of the indemnification provision of the
Registration Agreement is not intended to be exhaustive and is qualified in its
entirety by reference to the Registration Agreement.
6. If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and delivering a prospectus, the undersigned will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. If the undersigned is a broker-dealer and Old Notes held for its
own account were not acquired as a result of market-making or other trading
activities, such Old Notes cannot be exchanged pursuant to the Exchange Offer.
7. Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and legal
and personal representatives of the undersigned.
8. Unless otherwise indicated herein under "Special Delivery Instructions,"
the certificates for the New Notes will be issued in the name of the
undersigned.
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 1)
To be completed ONLY IF the New Notes are to be issued or sent to someone
other than the undersigned or to the undersigned at an address other than that
provided above.
Mail [ ] Issue [ ] (check appropriate boxes) certificates to:
Name:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS
(See Item 5)
To be completed ONLY IF (i) the undersigned satisfies the conditions set
forth in Item 5 above, (ii) the undersigned elects to register its Old Notes in
the shelf registration described in the Registration Agreement, and (iii) the
undersigned agrees to indemnify certain entities and individuals as set forth in
the Registration Agreement and summarized in Item 5 above.
[ ] By checking this box the undersigned hereby (i) represents that it is
unable to make all of the representations and warranties set forth in Item 4
above, (ii) elects to have its Old Notes registered pursuant to the shelf
registration described in the Registration Agreement, and (iii) agrees to
indemnify certain entities and individuals identified in, and to the extent
provided in, the Registration Agreement and summarized in Item 5 above.
<PAGE> 5
SPECIAL BROKER-DEALER INSTRUCTIONS
(See Item 6)
[ ] Check here if you are a broker-dealer and wish to receive 10 additional
copies of the Prospectus and 10 copies of any amendments or supplements thereto.
<TABLE>
<S> <C>
Name:
------------------------------------------------------------
(PLEASE PRINT)
Address:
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
(INCLUDING ZIP CODE)
</TABLE>
<PAGE> 6
SIGNATURE
To be completed by all exchanging noteholders. Must be signed by registered
holder exactly as name appears on Old Notes. If signature is by trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please set forth
full title. See Instruction 3.
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATURE
Dated:
- --------------------------------------------------------------------------------
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone No.:
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SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 1)
Certain Signatures Must be Guaranteed by an Eligible Institution
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(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
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(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
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(AUTHORIZED SIGNATURE)
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(PRINTED NAME)
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(TITLE)
Dated:
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PLEASE READ THE INSTRUCTIONS BELOW,
WHICH FORM A PART OF THIS LETTER OF TRANSMITTAL.
<PAGE> 7
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal must
be guaranteed by an eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or by an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 promulgated under the Exchange
Act (an "Eligible Institution") unless the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" above has not been completed or
the Old Notes described above are tendered for the account of an Eligible
Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND OLD NOTES. The Old Notes, together
with a properly completed and duly executed Letter of Transmittal (or copy
thereof), should be mailed or delivered to the Exchange Agent at the address set
forth above.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
3. SIGNATURE ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by a person other than a registered holder
of any Old Notes, such Old Notes must be endorsed or accompanied by appropriate
bond powers, signed by such registered holder exactly as such registered
holder's name appears on such Old Notes.
If this Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by Monitoring,
proper evidence satisfactory to Monitoring of their authority to so act must be
submitted with this Letter of Transmittal.
4. MISCELLANEOUS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance, and withdrawal of tendered Old Notes
will be determined by Monitoring in its sole discretion, which determination
will be final and binding on all parties. Monitoring reserves the absolute right
to reject any or all Old Notes not properly tendered or any Old Notes
Monitoring's acceptance of which would, in the opinion of counsel for
Monitoring, be unlawful. Monitoring also reserves the right to waive any
defects, irregularities, or conditions of tender as to particular Old Notes.
Monitoring's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) will be final and
binding. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as Monitoring shall determine.
Neither Monitoring, the Exchange Agent, nor any other person shall be under any
duty to give notification of defects in such tenders or shall incur any
liability for failure to give such notification. Tenders of Old Notes will not
be deemed to have been made until such defects or irregularities have been cured
or waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holder thereof as
soon as practicable following the Expiration Date.
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
TO TENDER
UNREGISTERED 7 3/8% SENIOR NOTES DUE 2005
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
PROTECTION ONE ALARM MONITORING, INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1998
As set forth in the Prospectus (as defined below), this form or one
substantially equivalent hereto must be used to accept the Exchange Offer (i) if
certificates for unregistered 7 3/8% Senior Notes due 2005 (the "Old Notes") of
Protection One Alarm Monitoring, Inc., a Delaware corporation ("Monitoring"),
are not immediately available, (ii) time will not permit a holder's Old Notes or
other required documents to reach the Exchange Agent on or prior to the
Expiration Date (as defined below) or (iii) the procedure for book-entry
transfer cannot be completed on a timely basis. This form may be delivered by
facsimile transmission, registered or certified mail, by hand or by overnight
delivery service to the Exchange Agent. See "The Exchange Offer -- Procedures
for Tendering" in the Prospectus.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS
EXTENDED BY THE COMPANY.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
Deliver to:
The Bank of New York, Exchange Agent
THE BANK OF NEW YORK
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery before 4:30
p.m.:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Floor 7-E Corporate Trust Services Window
New York, New York 10286 Ground Level
New York, New York 10286
Attn: Reorganization Section,
Gertude Jeanpierre Attn: Reorganization Section,
(212) 815-5920 Gertude Jeanpierre
(212) 815-5920
</TABLE>
By Facsimile (for Eligible Institutions):
(212) 815-6339
For Information or
Confirmation by Telephone:
(212) 815-5920
(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or by overnight delivery service.
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OR
TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Monitoring, in accordance with
Monitoring's offer, upon the terms and subject to the conditions set forth in
the Prospectus dated , 1998 (the "Prospectus"), and in the
accompanying Letter of Transmittal, receipt of which is hereby acknowledged,
$ in aggregate principal amount of Old Notes pursuant to the
guaranteed delivery procedures described in the Prospectus.
Name(s) of Registered
Holder(s):
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(PLEASE TYPE OR PRINT)
Address:
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Area Code & Telephone No.:
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Certificate Number(s) for
Old Notes (if available):
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Total Principal Amount
Tendered and Represented
by Certificate(s): $
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Signature of Registered Holders(s):
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Dated:
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[ ] The Depository Trust Company
(Check if Old Notes will be tendered
by book-entry transfer)
Account Number
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THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED.
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, being a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office in the United States, hereby
guarantees (a) that the above named person(s) "own(s)" the Old Notes tendered
hereby within the meaning of Rule 14e-4 ("Rule 14e-4") under the Securities
Exchange Act of 1934, as amended, (b) that such tender of such Old Notes
complies with Rule 14e-4, and (c) to deliver to the Exchange Agent the
certificates representing the Old Notes tendered hereby or confirmation of
book-entry transfer of such Old Notes into the Exchange Agent's account at The
Depository Trust Company, in proper form for transfer, together with the Letter
of Transmittal, properly completed and duly executed, with any required
signature guarantees and any other required documents, within three New York
Stock Exchange trading days after the execution of the Notice of Guaranteed
Delivery.
Name of Firm:
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Address:
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Area Code and Telephone No.:
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Authorized Signature:
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Name:
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Title:
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Dated:
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NOTE: DO NOT SEND CERTIFICATES OF OLD NOTES WITH THIS FORM. CERTIFICATES OF OLD
NOTES SHOULD BE SENT ONLY WITH A LETTER OF TRANSMITTAL.
