EXHIBIT 2
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated October 21, 1997 between
Guardian International, Inc., a Nevada corporation (the "Company"), and Westar
Capital, Inc., a Kansas corporation (the "Stockholder").
RECITALS
The Company has sold to the Stockholder 2,500,000 shares (the
"Common Shares") of the Company's Class A Voting Common Stock, par value $.001
per share (the "Common Stock") and has agreed to sell to the stockholders
1,875,000 shares (the "Preferred Shares") of Series A 9 3/4% Convertible
Cumulative Preferred Stock (the "Preferred Stock"), par value $.001 per share,
which is convertible into Common Stock. In this Agreement, the Common Shares and
the Common Stock issuable by the Company upon conversion of the Preferred
Shares, together with any stock dividends, distributions, or splits or any
shares issued or issuable in connection with any reclassification,
recapitalization, merger or consolidation or reorganization ("Adjustments"),
shall be collectively referred to as the "Shares."
AGREEMENT
1. REGISTRATION RIGHTS.
(a) INCIDENTAL RIGHTS. If at any time or from time to time the Company
proposes to file with the Securities and Exchange Commission (the "Commission")
a registration statement (other than a registration statement on Form S-8
covering solely an employee benefit plan or a registration statement on Form S-3
covering solely offers pursuant to a dividend or interest reinvestment plan) for
the registration under the Securities Act of 1933, as amended (the "Securities
Act") of any shares of Common Stock for sale to the public by the Company or on
behalf of a stockholder of the Company for cash (excluding shares of Common
Stock issuable by the Company upon the exercise of employee stock options or in
connection with the merger or consolidation of the Company with one or more
other corporations), the Company shall give the Stockholder and Xxxxxx
Financial, Inc. ("Xxxxxx") so long as Xxxxxx has Xxxxxx Registration Rights as
later defined, at least 30 days' prior written notice of the filing of the
proposed registration statement. The notice shall include a list of the states
and foreign jurisdictions, if any, in which the Company intends to qualify such
shares, the number of shares so proposed to be registered, the proposed date of
filing of such registration statement, any proposed means of distribution of
such shares, any proposed managing underwriter or underwriters, and a good faith
estimate by the Company or managing underwriter of the maximum offering price
thereof, as such price is proposed to appear on the facing page of such
registration statement. On written request of the Stockholder (and Xxxxxx, if
applicable) received by the Company within 15 days after the date of the
Company's delivery of its notice of intention, the Company shall, subject to the
conditions and in accordance with the procedures set forth in Sections
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1(c) and 1(d), and at its own expense as provided in Section 3, include in the
coverage of such registration statement and qualify for sale under the blue sky
or securities laws of the various states, the aggregate number of Shares
proposed to be registered (the "Registrable Shares").
Notwithstanding any other provision in this Section 1(a), if in
connection with an underwritten offering the managing underwriter (which shall
be a nationally recognized independent investment banking firm or such firm as
the parties shall mutually agree) for the Company indicates its reasonable
belief in writing that the effect of including all or part of the Registrable
Shares in such underwritten offering will materially and adversely affect the
sale of the Registrable Shares (which statement of the managing underwriter
shall also state the maximum number of shares (the "Maximum Shares"), if any,
which can be sold without materially adversely affecting the sale of the
Registrable Shares), then the number of Registrable Shares to be included in the
offering shall be reduced to the Maximum Shares and such Maximum Shares shall be
allocated (i) first, to the Company; and (ii) second, between the Stockholder
and Xxxxxx, in proportion, as nearly as practicable, as such Person's
Registrable Shares bears to the aggregate number of Registrable Shares.
If the managing underwriter has not limited the number of Shares to be
underwritten, the Company and other holders of the Company's securities, in
addition to Xxxxxx, may include securities for its (or their) own account in
such registration if (A) the managing underwriter so agrees and (B) the number
of shares which would otherwise have been included in such registration and
underwriting will not thereby be limited and (C) such other securities are then
registrable on Form S-3.
No registration statement effected under this Section 1(a) shall
release the Company of its obligations to file registration statements on behalf
of Stockholder under Section 1(b).
Notwithstanding any request for inclusion in any registration statement
under this Section 1(a), the Stockholder may elect to reduce or withdraw its
request for inclusion of its Shares at any time prior to execution of the
underwriting agreement with respect thereto by the Stockholder.
The Company shall have the right to select all underwriters, including
the managing underwriter, of all public offerings of shares of Common Stock
subject to the provisions of this Section 1(a). The Stockholder shall enter into
(together with the Company) an underwriting agreement with the underwriter or
underwriters, provided that such underwriting agreement is in a customary form
and is reasonably acceptable to the Stockholder. Nothing in this Section 1(a)
shall create any liability on the part of the Company to the Stockholder if the
Company for any reason decides not to file such a registration statement.
(b) MANDATORY RIGHTS. Upon written request by the Stockholder, the
Company shall, subject to the conditions, and in accordance with the procedures,
set forth in this Section 1(b) and Sections 1 (c) and 1(d), file a registration
statement, including, without limitation, by means of a shelf registration
pursuant to Rule 415 under the Securities Act (a "Shelf Registration") if so
requested by the Stockholder, (and use its best efforts to cause such
registration statement to become effective) and use its best efforts to qualify
Shares owned by the Stockholder for sale under the blue
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sky or securities laws of such states as may be reasonably requested by the
Stockholder. The request for registration pursuant to this Section 1(b) shall
specify the number of Shares to be registered. The Stockholder shall have the
right to select the underwriters and managers to administer the offering,
subject to approval of the Company, which approval may not be unreasonably
withheld. The Company shall enter into (together with the Stockholder) an
underwriting agreement with the underwriter or underwriters, provided that such
underwriting agreement is in a customary form and is reasonably acceptable to
the Company and the Stockholder.
The Company shall be permitted to delay the filing of any registration
statement requested pursuant to this Section 1(b) or to delay its effectiveness
for a reasonable period of time (in no event to exceed 45 days) if, in the good
faith and reasonable judgment of the Board of Directors of the Company, such
registration would have a material adverse effect on pending financing
transactions, corporate reorganizations or other material events involving the
Company, or if the Company, in the good faith judgment of its Board of
Directors, reasonably believes that the filing thereof at the time requested
would require disclosure of material confidential information which would
materially and adversely affect the business or prospects of the Company.
Notwithstanding anything herein to the contrary, the Company shall not exercise
its right to delay the effectiveness of a registration statement more than twice
in any twelve (12) month period. Once the cause of such delay is eliminated, the
Company shall promptly notify the Stockholder, and as soon as the Stockholder
notifies the Company to proceed, the Company shall file a registration statement
and use its best efforts to cause such sale to be registered under the
Securities Act and qualified under the securities laws of such states as may be
reasonably requested by the Stockholder, all as provided above.
Notwithstanding any other provision in this Section 1(b), if the
managing underwriter indicates its reasonable belief in writing that the effect
of including all or part of the securities requested to be registered by the
Stockholder, together with the number of shares to be registered on behalf of
Xxxxxx or the Company, if any, in the coverage of such registration statement
will materially and adversely affect the sale of such Registrable Shares (which
statement of the managing underwriter shall also state the number of Maximum
Shares, if any), then the number of Registrable Shares shall be reduced to the
Maximum Shares and such Maximum Shares shall be allocated (i) first, to the
Stockholder and (ii) second, between the Company and Xxxxxx, in proportion, as
nearly as practicable, as such Person's Registrable Shares bears to the
aggregate number of Registrable Shares.
If the managing underwriter has not limited the number of Shares to be
underwritten, the Company and other holders of the Company's securities, in
addition to Xxxxxx, may include securities for its (or their) own account in
such registration if (A) the managing underwriter so agrees and (B) the number
of shares which would otherwise have been included in such registration and
underwriting will not thereby be limited and (C) such other securities are then
registrable on Form S-3.
The Stockholder shall be entitled to request three registrations
pursuant to this Section 1(b). The Company shall be obligated to maintain the
effectiveness of each such registration statement until the earlier of (A) the
sale of all shares registered pursuant thereto, or (B) the date that is two
years after the date on which the registration statement is declared effective.
The Company shall not
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be required by this Section 1(b) to effect a registration of Shares unless (A)
Form S-3, or another equivalent short-form registration statement, is then
available to the Company for such registration, and (B) the aggregate number of
the Shares requested to be registered exceeds 500,000 Shares as adjusted for any
Adjustments.
The Stockholder may withdraw a request under this Section 1(b) in
circumstances where the Company is in material breach of its obligations
hereunder and has not cured such breach after notice thereof and a reasonable
opportunity to do so, or the withdrawal occurs in connection with a delay by the
Company or inability of Stockholder to include all of its Shares requested by
Stockholder to be so registered or the failure of any requested registration to
become or remain effective as provided herein. Any request so withdrawn prior to
such registration statement being declared effective shall not constitute a
request for determining the number of requests to which Stockholder is entitled.
(c) CERTAIN REGISTRATION CONDITIONS. The Company shall not be required
to effect a registration of any Shares of the Stockholder pursuant to Section
1(a) or 1(b), or file any post-effective amendment thereto:
(1) unless the Stockholder agrees (w) that it has a present
intention to sell (other than in connection with a Shelf Registration) its
Shares so requested (x) to sell and distribute a portion or all of its Shares in
accordance with the plan or plans of distribution adopted by and through
underwriters, if any, acting for the Company with respect to any request under
Section 1(a), and (y) to bear a pro rata share of underwriter's discounts and
commissions;
(2) if, in the case of a request for registration under the
provisions of Section 1(b), in the opinion of counsel for the Company and
counsel for the Stockholder, the Shares for which registration has been
requested may be disposed of within a comparable time frame without registration
under the Securities Act and upon such disposition all legends on certificates
representing such Shares which restrict transfer under the Securities Act and
applicable state securities laws may be removed from such certificates and any
such restriction and legends are so removed;
(3) if, in the case of a request for registration of an
underwritten offering under the provisions of Section 1(b), (x) a registration
statement requested by the Stockholder with respect to an underwritten offering
covering Common Stock became effective in the same calendar quarter in which
such request was made, (y) the Company in good faith anticipates filing a
registration statement for an offering of Common Stock for the Company's account
within thirty (30) days after such demand date and has not abandoned such
proposed offering; or (z) the Company has received a request for a demand
registration from the holders of other registration rights pursuant to which the
Company is effecting a registration of Common Stock within thirty (30) days of
the date of the Stockholder's request;
(4) unless the Company has received from the Stockholder all
such information the Company reasonably requests from the Stockholder concerning
the Stockholder and its intended method of distribution of the Shares to enable
the Company to include in the registration statement all material facts required
to be disclosed therein; or
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(5) if the particular Shares for which registration has been
requested have been distributed to the public pursuant to an offering registered
under the Securities Act, sold to the public through a broker, dealer or market
maker in compliance with Rule 144 under the Securities Act (or any similar rule
then in force), or repurchased by the Company or any affiliate thereof.
(d) COVENANTS AND PROCEDURES. If and whenever the Company is required
hereunder to effect the registration of Shares under the Securities Act, the
Company, at its expense as provided in Section 3 hereof and as expeditiously as
possible, shall:
(1) In accordance with the Securities Act and all applicable
rules and regulations, promptly, and in any event within forty-five (45) days of
the request, prepare and file with the Commission a registration statement
covering the Shares requested to be registered and use its best efforts to cause
such registration statement to become and remain effective. The Company will
file such post-effective amendments to such registration statement (and use its
best efforts to cause them to become effective) and such supplements as are
necessary so that current prospectuses are at all times available until the
earlier of the completion of the distribution of all shares under the
registration statement or two (2) years after the effective date of the
registration statement; PROVIDED that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company will furnish to
counsel selected by the Stockholder, and the sales or placement agent or agents,
if any, for the Shares and the managing underwriter or underwriters, if any,
draft copies of all such documents proposed to be filed at least seven (7) days
prior to such filing, which documents will be subject to the reasonable review
of the Stockholder, the sales or placement agent or agents, if any, for the
Shares and the managing underwriter or underwriters, if any, and their
respective agents and representatives and (x) the Company will not include in
any registration statement information concerning or relating to the Stockholder
to which the Stockholder shall reasonably object in writing (unless in the
reasonable opinion of outside counsel the inclusion of such information is
required by applicable law or the regulations of any securities exchange to
which the Company may be subject), and (y), the Company will not file any
registration statement pursuant to Section 1(b) or amendment thereto or any
prospectus or any supplement thereto to which the Stockholder and managing
Underwriter shall reasonably object in writing;
If the offering is to be underwritten, in whole or in part,
enter into a written underwriting agreement in form and substance reasonably
satisfactory to the managing underwriter of the public offering, the Stockholder
and the Company;
If the Shares to be covered by the registration statement are
not to be sold to or through underwriters acting for the Company, the Company
shall: (w) deliver to the Stockholder, the sales or placement agent or agents,
if any, and the managing underwriter or underwriters, if any, ("Underwriter or
Underwriters") as promptly as practicable as many copies of preliminary
prospectuses as the Stockholder reasonably requests, and the Stockholder shall
keep, or cause to be kept, a written record of the distribution of such
preliminary prospectuses and shall refrain from delivery of such preliminary
prospectuses in any manner or under any circumstances which would violate the
Securities Act or the securities laws of any other jurisdiction, including the
various states of the United States, (x) deliver to the Stockholder, and the
Underwriters as soon as practicable after the effective date of the registration
statement, and from time to time thereafter as many copies of
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the prospectuses required to be delivered in connection with the sale of Shares
registered under the registration statement as the Stockholder or Underwriter
reasonably request, (y) in case of the happening, after the effective date of
such registration statement, of any event or occurrence which is required or may
be advisable, in the judgment of the Company, the Stockholder, any Underwriter
and their counsel to be set forth in an amendment of or supplement to such
prospectus to make any statements therein not misleading, give the Stockholder
and Underwriter written notice thereof and prepare and furnish to the
Stockholder, and Underwriters in such quantities as it may reasonably request,
copies of such amended prospectus or of such supplement to be attached to the
prospectus in order that the prospectus, as so amended or supplemented, will not
contain any untrue statement of a material fact or omit to state any 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 and
to comply with the Securities Act, and (z) deliver to the Company and the
Underwriters upon reasonable request copies of any documents incorporated into
any such registration statement, prospectus, amendment or supplement.
(2) On or prior to the date on which the registration
statement is declared effective, the Company shall use its best efforts to
register or qualify, and cooperate with the Stockholder, the Underwriter or
Underwriters, if any, and their counsel, in connection with the registration or
qualification of the Shares covered by the registration statement for offer and
sale under the securities or blue sky laws of each state and other jurisdiction
of the United States as the Stockholder or Underwriter reasonably requests, to
use its best efforts to keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the period such
registration statement is required to be kept effective and to do any and all
other acts or things necessary or advisable to enable the disposition in all
such jurisdictions of the Shares covered by the applicable registration
statement; provided that the Company will not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified.
(3) The Company shall use its best efforts to cause all of the
Stockholder's Shares included in such registration statement to be listed, by
the date of the first sale of such Common Stock pursuant to such registration
statement, on each securities exchange on which the Common Stock of the Company
is then listed or proposed to be listed, if any.
(4) The Company shall make generally available to the
Stockholder and any underwriter participating in the offering conducted pursuant
to the registration statement an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act no later than forty-five (45) days after the
end of the 12-month period beginning with the first day of the Company's first
fiscal quarter commencing after the effective date of the registration
statement, which earnings statement shall cover said 12-month period, which
requirement will be deemed to be satisfied if the Company timely files complete
and accurate information on Forms 10-QSB, 10-KSB, and (if needed) 8-K under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and otherwise
complies with Rule 158 under the Securities Act.
(5) The Company shall cooperate with the Stockholder and the
managing Underwriter or Underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing the Shares to be sold under the registration
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statement, and enable such securities to be in such denominations and registered
in such names as the managing Underwriter or Underwriters, if any, or the
Stockholder requests, subject to the obligation to return any certificates
representing securities not sold.
(6) The Company shall use its best efforts to cause the
Stockholder's Shares covered by the registration statement to be registered with
or approved by such other governmental agencies or authorities within the United
States as may be necessary to enable the Stockholder or the Underwriter or
Underwriters, if any, to consummate the disposition of such Shares.
(7) The Company shall make available for inspection by the
Stockholder and each Underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant or other agent
retained by the Stockholder or any such Underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company, as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the Company's
officers, directors, employees, and independent public accountants to supply all
information reasonably requested by any such Inspector in connection with such
registration statement, in each case to the extent necessary to enable the
Stockholder and any Underwriter to conduct a "reasonable investigation" for
purposes of Section 11(a) of the Securities Act.
(8) The Company shall obtain a "cold comfort" letter from the
Company's independent public accountants, and an opinion of counsel for the
Company, each in customary form and covering such matters of the type
customarily covered by cold comfort letters and opinions of counsel in
connection with public offerings of securities, as the Stockholder or
Underwriters may reasonably request.
(9) If requested by the Stockholder, the Company shall
promptly incorporate in a prospectus, prospectus supplement or post-effective
amendment such information as the Stockholder reasonably specifies should be
included therein, including, without limitation, information relating to the
planned distribution of Shares, the number of Shares being sold by the
Stockholder, the name and description of the Stockholder, the offering price of
such Shares and any discount, commission or other compensation payable in
respect of the Shares being sold, the purchase price being paid therefor to the
Stockholder and information with respect to any other terms of the offering of
the Shares to be sold in such offering, except to the extent that the Company is
advised in a written opinion of outside counsel that the inclusion of such
information is reasonably likely to violate applicable securities laws; and make
all required filings of such prospectus, prospectus supplement or post-effective
amendment promptly after notification of the matters to be incorporated in such
prospectus, prospectus supplement or post-effective amendment.
(10) If requested by the Stockholder the Company shall use
reasonable efforts to participate in and assist with a "road show" any other
customary marketing efforts in connection with the sale of Shares pursuant to
such registration statement, at such times and in such manner as the Company and
the Stockholder mutually may determine.
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(11) The Company shall promptly notify the Stockholder and
Underwriters, after becoming aware thereof, when the registration statement or
any related prospectus or any amendment or supplement has been filed, and, with
respect to the registration statement or any post-effective amendment, when the
same has become effective, (A) of any request by the Commission for amendments
or supplements to the registration statement or the related prospectus or for
additional information, (B) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the initiation 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 Shares
for sale in any jurisdiction or the initiation of any proceeding for such
purpose or (D) of the happening of any event which makes any statement in the
registration statement or any post-effective amendment thereto, prospectus or
any amendment or supplement thereto, or any document incorporated therein by
reference untrue in any material respect or which requires the making of any
changes in the registration statement or post-effective amendment thereto or any
prospectus or amendment or supplement thereto so that they will not contain any
untrue statement or a material fact or omit to state any 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.
(12) In the case of a Block Trade (defined below), the Company
shall: (1) obtain an opinion of counsel addressed to the Stockholder and the
other party to the "block trade" covering matters that are no more extensive in
scope than would be customarily covered in opinions obtained in secondary
underwritten offerings by issuers with similar market capitalization and
reporting and financial histories; (2) obtain a "cold comfort" letter from the
independent public accountants of the Company and covering matters that are no
more extensive in scope than would be customarily covered in "cold comfort"
letters and updates obtained in secondary underwritten offerings by issuers with
similar market capitalization and reporting and financial histories, provided
that the letter described in this clause (2) shall only be required to the
extent such letters are being issued in respect of non-underwritten secondary
offerings under then prevailing accounting practices; and (3) deliver a
certificate of a senior executive officer of the Company to cover matters no
more extensive in scope than those matters customarily underwritten offerings by
issuers with similar market capitalization and reporting and financial
histories. "Block Trade" shall mean the disposition, in connection with a Shelf
Registration, at a single time in a single transaction, including through one or
more placement agents, by the Stockholder, of any or all of the Registrable
Shares to one or more Institutional Investors. "Institutional Investor" shall
mean any insurance company, pension fund, mutual fund, investment company,
commercial bank, savings bank, savings and loan association, investment banking
company, trust company or any finance or credit company, or any portfolio or
investment fund managed by any of the foregoing.
(13) If any person becomes a holder of shares that were
included in a Shelf Registration statement subsequent to the time that the Shelf
Registration statement became effective, the Company shall add such holder to
the Shelf Registration statement, on a timely basis, through a post-effective
amendment or a supplement to the Prospectus, as shall be necessary in accordance
with the rules of the Commission under the Securities Act to include such holder
as a selling stockholder in a distribution under the Shelf Registration
statement.
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(e) XXXXXX REGISTRATION RIGHTS. The Stockholder acknowledges that
Xxxxxx has certain incidental registration rights with respect to equity
securities of the Company owned by it pursuant to that certain Agreement dated
August 15, 1996 between Xxxxxx and the Company (the "Xxxxxx Registration
Rights"). Accordingly, the Stockholder acknowledges that pursuant to the Xxxxxx
Registration Rights, Xxxxxx has the right to participate in any registration
effected pursuant to Section 1.
(f) COMPANY COVENANTS.
(1) The Company covenants to and with the Stockholder that to the
extent it shall be required to do so under the Exchange Act, the Company shall
timely file the reports required to be filed by it under the Exchange Act or the
Securities Act (including, but not limited to, the reports under Sections 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted
by the Commission under the Securities Act and the rules and regulations adopted
by the Commission thereunder) and shall take such further action as the
Stockholder may reasonably request, all to the extent required from time to time
to enable the Stockholder to sell Shares without registration under the
Securities Act within the limitations of the exemption provided by Rule 144
under the Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission and for the
Company to qualify for use of Form S-3. Upon the request of the Stockholder, the
Company shall deliver to the Stockholder a written statement as to whether it
has complied with such requirements.
(2) If at any time the Company is not subject to Section 13 or 15(d)
of the Exchange Act and is exempt from reporting pursuant to Rule 12g3-2(b)
under the Exchange Act, the Company agrees, upon the request of the Stockholder
seeking to transfer Shares in conformity with Rule 144A under the Securities
Act, to furnish to the Stockholder or prospective purchasers of the Shares from
the Stockholder the information required by Rule 144A(d)(4)(i) under the
Securities Act in the manner and at the times contemplated by such Rule.
(3) The Company covenants to make available "adequate current public
information" concerning the Company within the meaning of Rule 144(c) under the
Securities Act.
(4) The Company represents and covenants that it will qualify for use
of Form S-3 on November 1, 1998 for transactions involving secondary offerings
and that it will preserve such eligibility for so long as the Company is
obligated to file and maintain the effectiveness of registration statements
hereunder.
(5) The Company will avoid taking any action which would cause the
Common Stock to cease to be eligible for inclusion on the OTC Bulletin Board
Service.
2. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. If Shares are registered under the
Securities Act pursuant to this Agreement, the Company will indemnify and hold
harmless the Stockholder and each underwriter of such Shares and their
respective officers and directors and each other person,
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if any, who controls the Stockholder or such underwriter within the meaning of
the Securities Act, against any losses, claims, damages, actions (actual or
threatened), liabilities, costs and expenses (including legal fees and costs of
court), joint or several, to which the Stockholder or such underwriter,
director, officer, or controlling person may become subject under the Securities
Act or otherwise, if and to the extent that such losses, claims, damages, costs,
expenses or liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained, in any registration
statement under which such Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, 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 not misleading; and will reimburse the
Stockholder, each such underwriter, and each such controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage or liability; provided,
however, that the Company shall not be liable to the Stockholder or its
underwriters or controlling persons in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, preliminary prospectus or final prospectus or such
amendment or supplement in reliance upon and in conformity with information
furnished to the Company through a written instrument duly executed by the
Stockholder or such underwriter specifically for use in the preparation thereof.
(b) INDEMNIFICATION BY THE STOCKHOLDER. In connection with any
registration statement in which the Stockholder is participating, Stockholder
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in Section 2(a)) the Company, each director of the Company, each
officer of the Company who signs such registration statement and all persons who
control the Company within the meaning of the Securities Act, with respect to
any statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, to the extent, but only to the extent, such statement or omission was
made in reliance upon and in conformity with information furnished to the
Company through a written instrument duly executed by the Stockholder
specifically for use in the preparation of such registration statement,
preliminary prospectus or final prospectus or such amendment or supplement
thereto, and provided that the liability of the Stockholder shall be limited to
the amount of proceeds received by Stockholder in the offering giving rise to
the indemnification claim.
(c) INDEMNIFICATION PROCEDURES. Promptly after receipt by an
indemnified party of notice of the commencement of any action involving a claim
referred to in the preceding paragraphs of this Section 2, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of such
action; but the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to the indemnified party unless such
indemnifying party is prejudiced by such omission. If any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
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indemnified party for any legal or other expenses incurred by the latter in
connection with the defense thereof unless (i) in the reasonable opinion of
counsel for the indemnification party a conflict of interest exists between the
indemnified party and indemnifying party, (ii) the indemnified party reasonably
objects to such assumption on the basis that there may be defenses available to
it which are different from or in addition to the defenses available to the
indemnifying party, (iii) the indemnifying party has failed to timely assume the
defense of any such action or proceeding or (iv) the indemnifying party and its
counsel do not actively and vigorously pursue the defense of such action .
Whether or not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent. No indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation. An
indemnifying party who elects not to assume the defense of an action or where a
potential conflict of interest or other defenses may be available, shall not be
obligated to pay the fees and expenses of more than one counsel and local
counsel where appropriate for all parties indemnified by such indemnifying party
with respect to such action, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such action.
Cost and expenses incurred by the indemnified party shall be reimbursed, from
time to time, by the Company as and when bills are received or expenses are
incurred.
(d) CONTRIBUTION. If the indemnification provided for in this Section 2
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities, and expenses referred to above shall be deemed to
include all legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
3. EXPENSES. All expenses incurred by the Company and the Stockholder
in connection with any registration statement covering Shares offered by the
Stockholder, including, without
11
limitation, all registration and filing fees (including all expenses incident to
filing with the National Association of Securities Dealers, Inc.), printing
expenses, fees and disbursements of counsel (including the reasonable fees and
disbursements of one counsel for the Stockholder) and of the independent
certified public accountants, and the expense of qualifying such Shares under
state blue sky laws (including reasonable fees and disbursements of counsel in
connection with such qualification), messenger, telephone and delivery expenses,
fees and expenses of counsel for the underwriters, costs of preparation,
printing, distribution and reproduction of the registration statement, each
prospectus, and each amendment and supplement thereto, the cost and charges of
any transfer agent and registrar, and the premiums and other costs of insurance
against liability arising out of such offering, if any, shall be borne by the
Company; provided, however, that the Stockholder shall bear its pro rata share
of (A) underwriter's discounts and commissions and (B) any transfer taxes
related to the sale of Shares. To the extent any such expenses are incurred or
paid by the Stockholder, any sales or placement agent or underwriter, if any,
thereof, the Company shall reimburse such person for the full amount thereof
promptly after a request therefor.
4. DISPOSITIONS DURING REGISTRATION. (a) The Stockholder shall not
effect any public sale or distribution (including sales pursuant to Rule 144) of
equity securities of the Company, or any securities convertible or exchangeable
or exercisable for such securities, during the fifteen days prior to and the
90-day period beginning on the effective date of any underwritten demand
registration or underwritten incidental registration (or such longer period as
the Stockholder may agree with the underwriter). The Stockholder agrees to
comply with the foregoing requirements even if its Shares are not being included
in such registration.
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. The Company
shall not effect any public or non-public sale or distribution of any securities
similar to those being registered, or any securities convertible into or
exchangeable or exercisable for any such securities or similar securities,
during the fifteen (15) day period prior to, and during the 90-day period
beginning on, the effective date of any registration statement in which the
Stockholder is participating or the commencement of a public distribution of
Shares pursuant to any such registration statement (except (i) as part of such
registration or pursuant to registrations on Commission Forms S-4 or S-8 or any
similar or successor form, or on any form filed in connection with an exchange
offer or an offering of securities solely to the existing stockholders or
employees of the Company or (ii) for sales or other issuances of securities
pursuant to outstanding options, warrants, rights or similar obligations).
5. TRANSFER OF RIGHTS. No registration rights and benefits set forth in
this Agreement, including indemnification by the Company, shall be transferable
by the Stockholder in connection with the transfer of Shares except to an
"affiliate" as defined in Regulation D of the Securities Act, including but not
limited to, Protection One., Inc. following acquisition by Western Resources,
Inc., Westar's parent, of not less than 50% of the outstanding equity of
Protection One, Inc., or to any party pursuant to a Block Trade. In case of any
partial assignment to more than one affiliate or Block Trade party, the
affiliates or Block Trade parties who have the rights and benefits of the
"Stockholder" under this Agreement shall not, as a group, have the right to any
greater number of registrations than provided herein as if no such assignment
occurred.
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6. TERM. The obligations of the Company to register Shares hereunder
shall terminate on the fifth anniversary of the date of this Agreement with
respect to the registration of Shares not otherwise demanded or effected by such
date provided that at the end of such period all Shares held by the Stockholder
or any of its assigns hereunder, shall be freely and publicly tradable without
an effective registration statement. Section 2 shall survive the termination of
this Agreement.
7. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
hand delivered or sent by first class registered or certified mail (return
receipt requested), postage prepaid, to the respective addresses of the Company
and the Stockholders set forth below, unless subsequently changed by written
notice. Any notice shall be deemed to be effective when it is received.
To the Stockholder:
Westar Capital, Inc.
000 Xxxxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxx 00000
Attention: President
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxx X. Xxxxxxxxx, Esq.
000 Xxxxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
To the Company:
Guardian International, Inc.
0000 Xxxxx 00xx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxx, President
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxxxx Xxxxxxx, Esq.
Steel Xxxxxx & Xxxxx LLP
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000 Xxxxx Xxxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxxxx, XX 00000-0000
Phone: 000-000-0000
Fax: 000-000-0000
8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF FLORIDA WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES THEREUNDER.
9. AMENDMENTS. This Agreement may be amended only by an instrument in
writing executed by all the parties hereto.
10. COUNTERPARTS. This Agreement may be executed in multiple original
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.
11. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable. In the
event any provision of this Agreement shall be held invalid, the parties agree
to enter into such further agreements as may be necessary in order to carry out
the intent and purposes of the parties herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
GUARDIAN INTERNATIONAL, INC.
By: /s/ XXXXXXX XXXXXXXX
-------------------------------------
Xxxxxxx Xxxxxxxx
President and Chief Executive Officer
WESTAR CAPITAL, INC.
By: /s/ XXXX X. XXXXXX
-------------------------------------
Xxxx X. Xxxxxx
President
ACKNOWLEDGED AND AGREED:
XXXXXX FINANCIAL, INC.
By: /s/ XXXX XXXXXX
-------------------
Xxxx Xxxxxx
Vice President
Date: Oct. 21, 1997
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