[PROTECTION ONE, INC. LETTERHEAD]
June 2, 1998
Westar Capital, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxx 00000-0000
Attn: Xx. Xxxx X. Xxxxxx
Re: Securities Purchase Agreement for the Sale and Purchase of
Common Stock of Protection One, Inc. to Westar Capital, Inc.
Dear Xx. Xxxxxx:
Protection One, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Westar Capital, Inc. (the "Purchaser"),
30,650,000 shares of common stock, $.01 par value per share, of the
Company (the "Firm Shares"). The Company also proposes to issue and
sell to the Purchaser not more than an additional 4,597,500 shares of
its common stock, $.01 par value per share (the "Additional Shares"), if
and to the extent that (i) the comparable over-allotment option granted
by the Company to the several underwriters (the "Underwriters") named in
that certain Underwriting Agreement, dated of even date herewith and
attached hereto as Exhibit A (the "Underwriting Agreement"), by and
among the Company and the several underwriters named therein (the
"Underwriters' Over-allotment Option") is exercised by the managers (the
"Managers") of the public offering (the "Public Offering") of shares of
common stock, $.01 par value per share, of the Company (the "Public
Shares") named in the Underwriting Agreement on behalf of the
Underwriters and (ii) Purchaser shall have determined to exercise the
right to purchase such shares of common stock granted to the Purchaser
in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares." The shares of
common stock, $.01 par value per share, of the Company to be outstanding
after giving effect to the sales contemplated hereby and pursuant to the
Underwriting Agreement are hereinafter referred to as the "Common
Stock."
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with the Purchaser that:
(a) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of
Delaware, has the corporate power and authority to own its
property and to conduct its business as described in its currently
effective and operative public filings with the Securities and
Exchange Commission (the "Commission") pursuant to the
requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereto (the "Securities Act")
and pursuant to the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereto (the "Exchange
Act," which currently effective and operative public filings, as
amended or supplemented, are collectively the "Public Documents"),
and is duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the
Company and its subsidiaries specified on Exhibit B hereto (each,
a "Subsidiary," and collectively, the "Subsidiaries"), taken as a
whole.
(b) Each Subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a
material adverse effect on the Company and its Subsidiaries, taken
as a whole.
(c) This Agreement has been duly authorized, executed and
delivered by the Company.
(d) The authorized capital stock of the Company conforms to
the description thereof contained in the Public Documents.
(e) The shares of common stock, $.01 par value per share,
of the Company outstanding prior to the issuance of the Shares and
the Public Shares have been duly authorized and are validly
issued, fully paid and non-assessable.
(f) The Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be
subject to any preemptive rights or to similar rights.
(g) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
Agreement will not contravene any provision of applicable law or
the certificate of incorporation or by-laws of the Company or any
agreement or other instrument binding upon the Company or any of
its Subsidiaries that is material to the Company and its
Subsidiaries, taken as a whole, or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over
the Company or any Subsidiary, except to the extent that such
contravention would not, singly or in the aggregate, have a
material adverse effect on the Company and its Subsidiaries, taken
as a whole, and no consent, approval, authorization or order of or
qualification with any governmental body or agency is required for
the performance by the Company of its obligations under this
Agreement.
(h) Each Public Document, if any, filed or to be filed with
the Commission pursuant to the Securities Act and the Exchange
Act, as applicable, complied or will comply when so filed in all
material respects with the Securities Act and/or Exchange Act, as
applicable, and when read together with the other information in
the Public Documents does not contain and will 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 light of the circumstances under which they
were made, not misleading.
(i) There has not occurred any material adverse change, or
any development involving a prospective material adverse change,
in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its Subsidiaries, taken
as a whole, from that set forth in the Public Documents (exclusive
of any amendments or supplements thereto subsequent to the date of
this Agreement).
(j) There are no legal or governmental proceedings pending
or, to the Company's knowledge, threatened to which the Company or
any of its Subsidiaries is a party or to which any of the
properties of the Company or any of its Subsidiaries is subject
that are required to be described in the Public Documents and are
not so described or any statutes, regulations, contracts or other
documents that are required to be described in the Public
Documents or to be filed as exhibits to the Public Documents that
are not described or filed as required.
(k) Each of the Company and its Subsidiaries has all
necessary consents, authorizations, approvals, orders,
certificates and permits of and from, and has made all
declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and
all courts and other tribunals, to own, lease, license and use its
properties and assets and to conduct its business in the manner
described in the Public Documents, except to the extent that the
failure to obtain or file would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(l) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended.
(m) The Company and its Subsidiaries are (i) in compliance
with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii)
have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure
to comply with the terms and conditions of such permits, licenses
or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its Subsidiaries, taken
as a whole.
(n) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for cleanup, closure of properties
or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any
potential liabilities to third parties) which would, singly or in
the aggregate, have a material adverse effect on the Company and
its Subsidiaries, taken as a whole.
2. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to and agrees with the Company that:
(a) The Purchaser has been duly incorporated, is validly
existing as a corporation in good standing under the laws of
Kansas, has the corporate power and authority to enter into and
perform this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by the Purchaser.
(c) The Shares to be acquired by Purchaser pursuant to this
Agreement are being acquired for its own account and without a
view to the distribution of such Shares or any interest therein in
violation of the Securities Act of 1933, as amended (the
"Securities Act");
(d) Purchaser is an "accredited investor" within the
meaning of Rule 501 under the Securities Act and has such
knowledge and experience in financial and business matters so as
to be capable of evaluating the merits and risks of its investment
in the Shares, and Purchaser is capable of bearing the economic
risks of such investment and is able to bear a complete loss of
its investment in the Shares;
(e) Purchaser acknowledges that the Shares have not been
registered under the Securities Act and understands that the
Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or such sale is permitted
pursuant to an available exemption from such registration
requirement.
3. Agreements to Sell and Purchase. The Company hereby agrees
to sell to the Purchaser, and the Purchaser, upon the basis of the
representations and warranties herein contained, but subject to the
conditions hereinafter states, agrees to purchase from the Company the
Firm Shares at $9.50 a share (the "Purchase Price").
On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the Company
agrees to sell to the Purchaser the Additional Shares, and the Purchaser
shall have a one-time right to purchase up to 4,597,500 Additional
Shares at the Purchase Price. If the Managers elect to exercise the
Underwriters' Over-allotment Option on behalf of the Underwriters
pursuant to the terms and conditions of the Underwriting Agreement, the
Company shall promptly notify Purchaser of such election and the date
and time such election is to be exercised and Purchaser shall notify
Company of its decision to exercise this option at any time prior to the
exercise of the Underwriters' Over-allotment Option, which notice shall
specify the number of Additional Shares to be purchased by Purchaser and
the date on which such Shares are to be purchased. Such date may be the
same as the Closing Date (as defined
below) but not earlier than the Closing Date nor later than the date of
the exercise of the Underwriters' Over-allotment Option.
4. Payment and Delivery. Payment for the Firm Shares shall be
made to the Company in a form reasonably acceptable to the Company,
including, without limitation, the repayment of debt or other funds
immediately available in Dallas, Texas against delivery of such Firm
Shares at 9:00 a.m., Dallas time, on June 8, 1998, or at such time on
the same or such other date, not later than June 15, 1998, as shall be
designated in writing by the parties hereto. The time and date of such
payment are hereinafter referred to as the "Closing Date."
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in Dallas against delivery
of such Additional Shares at 9:00 a.m., Dallas time, on the dated
specified in the notice described in Section 3 or on such other date, in
any event not later than July 16, 1998, as shall be designated in
writing by the parties hereto. The time and date of such payment are
hereinafter referred to as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in the name of the Purchaser. The
certificates evidencing the Firm Shares and Additional Shares shall be
delivered to Purchaser on the Closing Date or the Option Closing Date,
as the case may be, against payment of the Purchase Price therefor.
5. Conditions to Purchaser's Obligations. The obligations of
the Purchaser are subject to the following conditions:
(a) Purchaser shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect that the representations and
warranties of the Company contained in this Agreement are true and
correct as of the Closing Date and that the Company has complied
with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied hereunder on or before the
Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings
threatened.
(b) Purchaser shall have received on the Closing Date an
opinion of Xxxx, Xxxxxxx & Xxxxxx LLP, counsel for the Company,
dated the Closing Date, in substantially the form attached hereto
as Exhibit C.
(c) Purchaser shall have received such other documents and
certificates of the Company as are reasonably requested by
Purchaser.
6. Termination. This Agreement shall be subject to termination
by notice given by Purchaser to the Company, if the Underwriting
Agreement is terminated by the Managers on behalf of the Underwriters or
is otherwise not consummated.
7. Effectiveness. This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.
8. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect
as of the signatures thereto and hereto were upon the same instrument.
9. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
10. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be
deemed a part of this Agreement.
Very truly yours,
PROTECTION ONE, INC.
By:
Xxxx X. Xxxxx
Executive Vice President and
Chief Financial Officer
Accepted as of the date hereof:
WESTAR CAPITAL, INC.
By:
Xxxx X. Xxxxxx
President
EXHIBIT A
Underwriting Agreement
EXHIBIT B
Subsidiaries
Network Multi-Family Security Corporation, a Delaware corporation
Protection One Alarm Monitoring, Inc., a Delaware corporation
Westar Security, Inc., a Kansas corporation
Westsec, Inc., a Kansas corporation
EXHIBIT C
Form of Legal Opinion
The opinion of counsel for the Company to be delivered pursuant to
Section 5(b) of this Agreement shall be to the effect that:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted.
2. Each subsidiary of the Company listed on Schedule I
hereto (each a "Subsidiary") is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
Protection One Alarm Monitoring, Inc. and Network Multi-Family Security
Corporation are duly qualified to transact business and are in good
standing as foreign corporations in California, Florida and Texas.
3. The authorized capital stock of the Company consists of
150,000,000 shares of common stock, par value $0.01 per share, and
5,000,000 shares of preferred stock, par value $0.10 per share. As of
May 27, 1998, there were 83,831,678 shares of common stock and no shares
of preferred stock, issued and outstanding.
4. All of the outstanding shares of capital stock of each
Subsidiary is owned of record and, to our knowledge, beneficially by the
Company, free and clear, to our knowledge, of all liens, claims,
limitations on voting rights, options, security interests and other
encumbrances and are duly authorized, validly issued, fully paid and
nonassessable, and have not been issued in violation of any preemptive
rights pursuant to law or the Subsidiary's certificate of incorporation.
5. The shares of Common Stock to be issued pursuant to the
Agreement have been duly authorized and, when issued as contemplated by
the Agreement, will be validly issued, fully paid and nonassessable and
will not have been issued in violation of any preemptive rights pursuant
to law or in the Company's certificate of incorporation.
6. The Company has all requisite corporate power and
authority to execute and deliver the Agreement and to perform its
obligations thereunder. The execution, delivery and performance of the
Agreement by the Company and the
consummation by the Company of the transactions contemplated thereby
have been duly authorized by all necessary corporate action on the part
of the Company. The Agreement has been duly and validly executed and
delivered by the Company.
7. The execution and delivery of the Agreement, the
consummation of the transactions contemplated thereby and compliance by
the Company with the provisions thereof will not conflict with,
constitute a default under or violate (i) any of the terms, conditions
or provisions of the certificate of incorporation or by-laws of the
Company, (ii) to our knowledge, any of the terms, conditions or
provisions of any material document, agreement or other instrument to
which the Company is a party or by which it is bound, (iii) any New
York, Delaware corporate or federal law or regulation (other than
federal and state securities or blue sky laws, as to which we express no
opinion), or (iv) to our knowledge, any judgment, writ, injunction,
decree, order or ruling of any court or governmental authority binding
on the Company.
8. Assuming that the representations of Westar Capital
contained in the Agreement are true, correct and complete and assuming
compliance by Westar Capital with its covenants set forth in the
Agreement, it is not necessary in connection with the offer, sale and
delivery of the Shares to Westar Capital pursuant to the Agreement to
register the Shares under the Securities Act of 1933, as amended.
