EXHIBIT 10.(c)
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of October 21, 1998
(the "Effective Date") between Guardian International, Inc., a Nevada
corporation (the "Company"), and Westar Security, Inc., a Kansas corporation
(the "Stockholder").
RECITALS
1. The Company has sold to the Stockholder 16,397 shares of Series C
7.00% Redeemable Cumulative Preferred Stock (the "Redeemable Preferred Stock"),
par value $.001 per share, of the Company, and 10,000 shares of Series D 6.00%
Convertible Cumulative Preferred Stock (the "Convertible Preferred Stock"), par
value $.001 per share, of the Company.
2. The Company may, under certain circumstances more fully described in
the Series C Preferred Stock Certificate of Designations to the Articles of
Incorporation of the Company (the "Articles") of even date herewith, issue
shares (the "Dividend Common Shares") of its Class A Voting Common Stock (the
"Common Stock"), par value $.001 per share, in lieu of quarterly cash dividends
as dividends on the Redeemable Preferred Stock.
3. The Convertible Preferred Stock is convertible at the rate of
333.3333 shares of Common Stock for each share of Convertible Preferred Stock
pursuant to the terms and conditions of the Series D Preferred Stock Certificate
of Designations to the Articles of even date herewith defining the rights and
preferences of the Convertible Preferred Stock.
4. In this Agreement, the Dividend Common Shares and the shares Common
Stock issuable by the Company upon conversion of the Convertible Preferred
Stock, together with any stock dividends, distributions, or splits or any shares
of Common Stock 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. Upon 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 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 or other party at whose
request the registration statement is being filed; 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 (i) the managing underwriter so agrees and (ii)
the number of shares which would otherwise have been included in such
registration and underwriting will not thereby be limited.
No registration statement effected under this Section 1(a)
shall release the Company of its obligations to file registration statements on
behalf of the 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), unless such registration
statement is being filed pursuant to registration of a third party, in which
case the agreement governing such registration statement shall govern the
selection of underwriters. The Stockholder shall enter into (together with the
Company and any other holder including shares in such registration statement) an
underwriting agreement with the underwriter or underwriters, provided that such
underwriting agreement is in a customary form and is reasonably
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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 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
number of Maximum Shares and such Maximum Shares shall be allocated (i) first,
to the Stockholder and (ii) second, between the Company, any other holders
including shares in the Registration Statement 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
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securities for its (or their) own account in such registration if (i) the
managing underwriter so agrees, (ii) the number of shares which would otherwise
have been included in such registration and underwriting will not thereby be
limited and (iii) such other securities are then registrable on Form S-3.
The Stockholder shall be entitled to request one registration
during each 12-month period (each, a "Demand Period") pursuant to this Section
1(b). The Company may fulfill a demand by filing a post-effective amendment to
an effective Shelf Registration. The first such Demand Period shall commence on
the Effective Date of this Agreement and the last such Demand Period shall
terminate upon termination of this Agreement in accordance with Section 6. An
unexercised demand expires at the expiration of the Demand Period during which
it was exercisable, and any such unexercised demand may not be exercised during
subsequent Demand Periods. The Company shall be obligated to maintain the
effectiveness of each such registration statement until the earlier of (i) the
sale of all shares registered pursuant thereto or (ii) the date that is two
years after the date on which the registration statement is declared effective.
The Company shall not be required by this Section 1(b) to effect a registration
of Shares unless 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:
(i) unless the Stockholder agrees (A) that it has a present
intention to sell (other than in connection with a Shelf Registration) its
Shares so requested, (B) 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 (C) to bear a pro rata share of underwriter's discounts and
commissions;
(ii) if, in the case of a request for registration of an
underwritten offering under the provisions of Section 1(b), (A) 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, (B) the Company in good faith anticipates filing a
registration statement for an offering of Common Stock for the Company's account
within 30 days after such demand date and has not abandoned such proposed
offering; or (C) 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 30 days of the date of the
Stockholder's request;
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(iii) 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 necessary
in the opinion of outside counsel to enable the Company to include in the
registration statement all material facts required to be disclosed therein; or
(iv) 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:
(i) In accordance with the Securities Act and all applicable
rules and regulations, promptly, and in any event within 45 days after 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 (A) 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 (B) 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;
(A) 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
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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,
(B) 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 the prospectuses required to be
delivered in connection with the sale of Shares registered under the
registration statement as the Stockholder or Underwriters reasonably request,
(C) 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 Underwriters 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
(D) Deliver to the Company and the Underwriters upon
reasonable request copies of any documents incorporated into any such
registration statement, prospectus, amendment or supplement.
(ii) On or prior to the date on which the registration
statement is declared effective, 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, 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, HOWEVER, that the Company will not be required to qualify generally to
do business in any jurisdiction where it is not then so qualified.
(iii) Use its best efforts to cause all of the 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.
(iv) 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 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
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accurate information on annual and period reports, including 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.
(v) Cooperate with the Stockholder and the 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 statement, and enable such securities to be in such
denominations and registered in such names as the Underwriter or Underwriters,
if any, or the Stockholder requests, subject to the obligation to return any
certificates representing securities not sold.
(vi) Use its best efforts to cause the 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.
(vii) 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.
(viii) 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.
(ix) If requested by the Stockholder, 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.
(x) If requested by the Stockholder, use reasonable efforts to
participate in and assist with a "road show" any other customary marketing
efforts in connection with the sale of the
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Shares pursuant to such registration statement, at such times and in such manner
as the Company and the Stockholder mutually may determine.
(xi) 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, of
(A) any request by the Commission for amendments or
supplements to the registration statement or the related prospectus or for
additional information,
(B) 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) 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) 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.
(xii) In the case of a Block Trade (defined below):
(A) 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;
(B) obtain a "cold comfort" letter from the
independent public accountants of the Company 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 (B) 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
(C) deliver a certificate of a senior executive
officer of the Company to cover matters no more extensive in scope than those
matters customarily covered in underwritten offerings by issuers with similar
market capitalization and reporting and financial histories.
(D) "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
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agents, by the Stockholder, of any or all of the Registrable Shares to one or
more Institutional Investors.
(E) "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.
(xiii) 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, 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.
(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.
(i) 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. 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.
(ii) 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.
(iii) The Company covenants to make available "adequate
current public information" concerning the Company within the meaning of Rule
144(c) under the Securities Act.
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(iv) The Company will avoid taking any action which would
cause the Common Stock to cease to be eligible for inclusion on the National
Quotation Bureau's National Daily Quotation Price Sheets.
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, 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, the
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 obligations of the Stockholder in connection with
such loss, claim, damage or liability, including all other payments made by
Stockholder to parties other than the Company, 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
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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 the indemnifying party from any
liability which it may have to the indemnified party unless such indemnifying
party is incurably 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 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
indemnified party, a conflict or potential 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 in the sole discretion of the indemnified party. 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 national counsel and any 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. Costs 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, provided, that the obligations of Stockholder
pursuant to this subsection (d) shall be limited to the amount of proceeds
received by Stockholder in the offering giving rise to the contribution claim
including all other payments made by Stockholder to parties other than the
Company. 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.
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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 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) RESTRICTIONS ON SALES BY THE STOCKHOLDER. 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), except to the extent securities
held by Stockholder are included in such effective registration statement. 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 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 to the extent securities offered by the Company
are included in such effective registration statement (except (i) as part of
such registration or pursuant to registrations on 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).
12
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 Rule 405 of the Securities Act or any director or
officer of such affiliate or any person who controls such affiliate within the
meaning of the Securities Act, 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.
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, however, that this Agreement shall only terminate at the end of
such period if 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 Security, Inc.
0000 X. Xxxxx Xxx 000, Xxx. 000
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Protection One, Inc.
0000 X. Xxxxx Xxx 000, Xxx. 000
Xxxxxx, Xxxxx 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:
00
Xxxxxx Xxxxxxx, Xxx.
Steel Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxxxx, XX 00000-0000
Phone: 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.
12. TERMINATION OF REGISTRATION RIGHTS AGREEMENT. The parties hereto
agree that the Registration Rights Agreement dated as of October 21, 1997, as
amended by the Amendment to Registration Rights Agreement dated as of February
23, 1998, by and between the Company and the predecessor in interest to the
Stockholder is hereby terminated and of no further force and effect as of the
Effective Date and that no party thereto shall have any rights or obligations
thereunder.
* * * * *
14
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 SECURITY, INC.
By:/s/ Xxxx X. Xxxxx
--------------------------------------
Name: Xxxx X. Xxxxx
Title:
ACKNOWLEDGED AND AGREED:
XXXXXX FINANCIAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
Date: October 21, 1998
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