Exhibit 10.22
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of February 7, 1999 by and between Home Security International, Inc., a
Delaware corporation (the "Company"), FAI Home Security Holdings Pty Ltd., a
corporation organized under the laws of Australia (the "Stockholder") and FAI
Insurance Ltd., a corporation organized under the laws of Australia ("FAI").
Each of the Company, Stockholder or FAI may be referred to herein as a "Party,"
or collectively as the "Parties.
RECITALS:
WHEREAS, Stockholder holds 2,150,000 shares of Common Stock of the Company
(the "Shares") representing 38.7% of the total shares outstanding, which Shares
are beneficially owned by FAI, the immediate parent of Stockholder.
WHEREAS, on December 31, 1997 the Company entered into a Share Sale
Agreement with FAI for a 50% interest in FAI Finance Corporation Pty Ltd.
("FFC"), for U.S. $7.04 Million, payable in an initial cash payment of U.S. $1.6
Million with the remainder payable in a five year note with interest at 7 3/4%
("FFC Note"). The Share Sale Agreement obligates the Company to pay 40% of any
subsequent debt or capital offering to FAI in payment of the FFC Note (the
"Capital Raising Obligation").
WHEREAS, as partial consideration for this Agreement, FAI has agreed: (i)
to amend the Share Sale Agreement to vary the Capital Raising Obligation; (ii)
to provide FFC with a credit facility of up to Two Million Dollars ($2,000,000);
and (iii) for the twelve (12) month period occurring immediately after the
Registration Statement is declared effective, Stockholder agrees not to sell an
amount in excess of twenty-five percent (25%) of the Shares (held at the time of
execution of this Agreement) in any three month period, without the express
written consent of the Company;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENTS:
1. Definitions.
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Affiliate: A Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with a
specified Person.
Common Stock: The common stock, no par value per share, of the Company.
Dollars: All monetary amount in this Agreement are in U.S. Dollars.
Exchange Act: The Securities Exchange Act of 1934, as amended from time to
time, and the rules and regulations promulgated thereunder.
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
Registrable Securities: (a) The shares of Common Stock issued to the
Stockholder and any securities issued or issuable with respect to the shares of
Common Stock referred to in the foregoing clause by way of stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. Any Registrable
Security will cease to be a Registrable Security when (i) a registration
statement covering such Registrable Security has been declared effective by the
SEC and the Registrable Security has been disposed of pursuant to such effective
registration statement, (ii) the Registrable Security is sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met, (iii) the
Registrable Security has been otherwise transferred, the Company has delivered a
new certificate or other evidence of ownership for it not bearing a legend
restricting further transfer, and it may be resold without subsequent
registration under the Securities Act, (iv) the Registrable Securities which are
owned by the Stockholder may be sold in the public market without limitation as
to manner of sale.
Registration Expenses: See Section 6 hereof.
Registration Statement: The Registration Statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder.
Underwritten Offering: An offering in which securities of the Company are
sold to an underwriter for reoffering to the public.
2. Registration Rights.
(a) Registration. The Company will, as soon as practicable and in any event
within 60 days following the execution of this Agreement, file a Registration
Statement with the Commission to register under the Securities Act the
Registrable Securities ("The Registration")
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Upon execution of this Agreement, the Stockholder shall provide the Company with
a check in the amount of $25,000.00 (the "Deposit") to cover a portion of the
Company's reasonable costs and expenses incurred by it in connection with such
Registration in an amount not to exceed $75,000.00 (excluding SEC registration
fees), all in accordance with the terms of Section 6 hereof. Any amount of the
Deposit not expended by the Company in connection with such Registration shall
be promptly refunded to the Stockholder, and any additional expenses incurred by
the Company in connection with such Registration in excess of the Deposit shall
promptly be paid by the Stockholder to the Company upon request. The Company
shall provide reasonable documentation to the Stockholder regarding the
Company's costs and expenses incurred in connection with such the Registration.
The Stockholder shall be liable for any costs and expenses incurred by the
Company in connection with such Registration, subject to the $75,000.00 limit
detailed above, including those directly related to bringing the Company's
reports filed under the Exchange Act in compliance with the SEC's rules and
regulations. In the event that the Registration shall be in the form of an
Underwritten Offering, the underwriter or underwriters utilized in any such
Underwritten Offering, shall be subject to the approval of the Company and
Stockholder; which approval shall not be unreasonably withheld.
(b) The Company will use its reasonable best efforts to cause the
Registration Statement to become effective as soon as practicable after filing.
(c) The Company will use its reasonable best efforts to keep the
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (A) the date on which all of the Registrable Securities have been
sold and (B) the date on which the Registrable Securities (in the opinion of
counsel to the Company in substance reasonably acceptable to the Stockholder)
may be sold without volume limitations in a public transaction pursuant to an
available exemption from the requirements of registration under the Securities
Act (the "Registration Period").
(d) The Stockholder will cooperate with the Company in connection with a
registration of the Registrable Shares and will furnish (i) such information as
may be reasonably required by the Company or by the Commission in connection
therewith and (ii) such representations, undertakings and agreements as may be
reasonably required by the Commission in connection therewith.
(e) Preparation; Reasonable Investigation. In connection with the
preparation and filing of each Registration Statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such Registration Statement, their underwriters, if
any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such Registration Statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act; provided, however, that the holders of the
Registrable Securities, and their agents, shall bear all costs associated with
such investigation and agree to maintain all
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information of a non-public nature confidential, including but not limited to
information relating to the Company, its officers, directors, employees, agents
and affiliates.
3. Obligations of the Stockholder and FAI.
In connection with the registration of the Registrable Securities, the
Stockholder and FAI shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities that Stockholder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.
(b) Each of the Stockholder and FAI agree to cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
filing of any Registration Statement hereunder.
(c) Stockholder may not participate in any underwritten registration
hereunder unless it (i) agrees to sell its Registrable Securities on the basis
provided in any underwriting arrangements in usual and customary form entered
into by the Company, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements, and (iii) agrees to
pay its pro rata share of all underwriting discounts and commissions and any
expenses in excess of those payable by the Company pursuant to Section 6 below.
Nothing in this Section 3 (c) shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.
(d) For the twelve (12) month period occurring immediately after the
Registration Statement is declared effective, Stockholder agrees not to sell an
amount in excess of twenty-five percent (25%) of the Shares (held at the time of
execution of this Agreement) in any three month period, without the express
written consent of the Company.
(e) FAI agrees to provide FFC with a credit facility of up to Two Million
Dollars ($2,000,000). As of the execution of this Agreement, FAI has established
the credit facility referenced herein.
(f) Concurrent with the execution of this Agreement, FAI agrees to amend
the Share Sale Agreement to vary the Company's obligation to make the Capital
Payment and to execute a Variation Deed, in substantially the form attached
hereto as Exhibit A to this Agreement.
4. Hold-Back Agreement. Each holder of Registrable Securities agrees,
after expiration of the twelve (12) month period referenced in Section 3(d) of
this Agreement, if requested by the managing underwriters in an Underwritten
Offering, not to effect any public sale or distribution of securities of the
Company of the same class as the securities included in the applicable
registration statement, including a sale pursuant to Rule 144 under the
Securities
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Act (except as part of such Underwritten Registration), during the 10-day period
prior to the filing of the registration statement with respect to such
Underwritten Offering, and during the 90-day period beginning on the effective
date of the registration statement with respect to such Underwritten Offering,
to the extent timely notified in writing by the Company or the managing
underwriters, and to the extent reasonably requested by the underwriters in an
Underwritten Offering, each holder of Registrable Securities agrees to enter
into a lock-up agreement with the underwriters of any public registration of the
Company's securities in substantially the form entered into by the directors,
executive officers and holders of five percent of the Common Stock of the
Company; provided, however, that the time period of the lockup shall not exceed
90 days.
5. Registration Procedures. In connection with the Company's
registration obligations pursuant to Section 2 hereof, the Company will use
commercially reasonable efforts to effect such registration to permit the sale
of such Registrable Securities in accordance with the intended method or methods
of distribution thereof, and pursuant thereto the Company will as expeditiously
as possible, with its own counsel:
(a) prepare and file with the SEC, as soon as practicable, a Registration
Statement relating to the applicable registration on any appropriate form under
the Securities Act, which form shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution thereof and shall include all financial statements of the Company,
and use commercially reasonable efforts to cause such Registration Statement to
become effective as soon as possible; provided that the Company shall have the
right to delay filing or effectiveness of a Registration Statement filed
pursuant to Section 2(a) hereto or the commencement of a public distribution of
Registrable Securities, as applicable, for up to 60 days if the Company's Board
of Directors determines, in good faith, that the filing or effectiveness thereof
or the commencement of such public distribution could materially interfere with
a pending extraordinary transaction involving the Company or bona fide financing
plans of the Company or would require disclosure of information, the premature
disclosure of which would be materially detrimental to the best interests of the
Company, so long as the Company promptly thereafter complies with the
requirements of Section 5(j) hereof, if applicable;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for two years, or such shorter period which
will terminate when all Registrable Securities covered by such Registration
Statement have been sold; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement to the
Prospectus; the Company shall not be deemed to have used commercially reasonable
efforts to keep a Registration Statement effective during the applicable period
if it voluntarily takes any action that would result in Stockholder not being
able to sell such Registrable Securities during that period unless such action
is required under applicable law; provided that the Company shall be entitled to
defer filing any of the foregoing for a period of sixty (60) days if the Company
shall in good faith and for valid business reasons defer such filings, which
valid business reasons shall include, without limitation, the acquisition or
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divestiture of assets, so long as the Company promptly thereafter complies with
the requirements of Section 5(j) hereof, if applicable;
(c) notify the Stockholder and the managing underwriters, if any, promptly,
and (if requested by any such Person) confirm such advice in writing, (1) when
the Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (2) of any request by the SEC for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information, (3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose, (4) if at any time the representations and
warranties of the Company contemplated by paragraph (l) below cease to be true
and correct, (5) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (6) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated therein
by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) upon demand, furnish to Stockholder and each managing underwriter,
without charge, at least one original signed copy of the Registration Statement
and any post effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference and such number of conformed copies
of such documents as such parties may reasonably request);
(f) deliver to each Stockholder and the underwriters, if any, without
charge, as many copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as such Persons may reasonably request;
the Company consents to the use of the Prospectus or any amendment or supplement
thereto by Stockholder and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(g) prior to any public offering of Registrable Securities, register or
qualify or cooperate with the Stockholder, the underwriters, if any, and their
respective counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as Stockholder or underwriter reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the disposition in such jurisdictions of the Registrable Securities covered by
the Registration Statement;
(h) cooperate with Stockholder and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such
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denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(i) cause the Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the Stockholder or the
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(j) promptly upon the occurrence of any event contemplated by Section 5(a),
5(b) or 5(c) (6) above, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus will
not contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(k) cause all Registrable Securities covered by the Registration Statement
to be listed or approved for listing on each securities exchange on which
similar securities issued by the Company are then listed and approved for
quotation;
(l) enter into such agreements (including an underwriting agreement) and
take all such other actions in connection therewith in order to expedite or
facilitate the disposition of such Registrable Securities and in connection
therewith, whether or not an underwriting agreement is entered into and whether
or not the registration is an Underwritten Registration, (1) make such
representations, warranties, covenants and indemnities to Stockholder and the
underwriters, if any, in form, substance and scope as are customarily made by
issuers to underwriters in primary underwritten offerings; (2) obtain opinions
of counsel to the Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the Stockholder, covering the matters customarily
covered in opinions requested in Underwritten Offerings and such other matters
as may be reasonably requested by Stockholder and underwriters); and (3) obtain
"cold comfort" letters and updates thereof from the Company's independent
certified public accountants addressed to the Stockholder and the underwriters,
if any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters by underwriters in connection with
primary Underwritten Offerings;
(m) comply with all applicable rules and regulations of the SEC and make
available to its security holders, as soon as reasonably practicable, earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the Securities Act),
covering any 12-month period (or 90 days after the end of any 12-month period if
such period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm commitment or
reasonable efforts underwritten offering and (ii) if not sold to underwriters in
such an offering, commencing on the day of the first fiscal quarter of the
Company after the effective date of a Registration Statement;
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(n) cooperate with Stockholder and each underwriter participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD");
(o) keep the Stockholder advised of the status of any registration
statement filed under Section 2 and coordinate the effective date of such
registration statement with the Stockholder; and
(p) take such other lawful actions as shall be reasonable to facilitate the
registration of the Registrable Securities.
The Company may require Stockholder to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing and to enter into agreements
related to the distribution of the Registrable Securities that are designed to
insure compliance with the Exchange Act.
The Stockholder hereby agree by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 5(c) hereof, such holder will forthwith
discontinue disposition of Registrable Securities until such holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
5(j) hereof, or until it is advised in writing (the "Advice") by the Company
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Company such holder will deliver to the
Company (at the Company's expense), all copies, other than permanent file copies
then in such holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the time periods regarding the effectiveness
of Registration Statements set forth in Section 2 hereof and Section 5(b) hereof
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 5(c) (6) hereof to the
date when the Stockholder shall receive copies of the supplemented or amended
prospectus contemplated by Section 5(j) hereof or the Advice.
6. Registration Fees. Subject to the $75,000.00 limit provided in
Section 2(a) hereof, all reasonable expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation:
all registration and filing fees; all fees associated with a required listing of
the Registrable Securities on any securities exchange; fees and expenses with
respect to filings required to be made with the NASD; fees and expenses of
compliance with securities or blue sky laws (including fees and disbursements of
counsel for the underwriters or holders of Registrable Securities in connection
with blue sky qualifications of the Registrable Securities and determination of
their eligibility for investment under the laws of such jurisdictions as the
managing underwriters or holders of a majority of the Registrable Securities
being sold may designate); printing expenses, messenger, telephone and delivery
expenses; fees and disbursements of counsel for the Company (which shall be
solely selected by the Company) and customary fees and expenses for independent
certified public accountants retained by the Company (including the expenses of
any comfort letters or costs associated with the delivery by independent
certified public accountants of a comfort letter or comfort letters requested
pursuant to Section 5(l) hereof); securities acts liability insurance, if the
Company so desires; all internal
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expenses of the Company (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties);
the expense of any annual audit; and the fees and expenses of any Person,
including special experts, retained by the Company (all such expenses being
herein called "Registration Expenses") will be borne by the Stockholder
regardless of whether the Registration Statement becomes effective. Under no
circumstances shall the Company have any obligation to pay any underwriting
fees, discounts, or commissions attributable to the sale of Registrable
Securities, or any legal fees and expenses of counsel to the holders of
Registrable Securities.
7. Indemnification: Contribution.
(a) Indemnification by Company. The Company agrees to indemnify and hold
harmless Stockholder, FAI and its officers, directors, employees, agents and
Affiliates against all losses, claims, damages, liabilities and expenses
(including reasonable attorneys fees) arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any amendment or supplement
thereto or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by the Stockholder or FAI for
use therein.
(b) Indemnification by Holder of Registrable Securities. Stockholder agrees
to indemnify and hold harmless the Company, its directors, officers, employees,
agents, and Affiliates, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) and each
other holder against any losses, claims, damages, liabilities and expenses
(including reasonable attorneys fees) resulting from any untrue statement of a
material fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary prospectus or any amendment
or supplement thereto or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is contained in any information or affidavit so furnished in writing by
such holder to the Company specifically for inclusion in such Registration
Statement or Prospectus or any amendment or supplement thereto.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification, provided, however,
that the failure of any indemnified party to give such notice shall not relieve
the indemnified party of its obligations under this section, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any Person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the expense of
such Person unless (a) the indemnifying party has agreed to pay such fees or
expenses, (b) the indemnifying party shall have failed to assume the defense of
such claim and employ counsel reasonably satisfactory to such Person or (c)
based upon advice of counsel of such Person, a conflict of interest may exist
between such Person and the indemnifying party with respect to such claims (in
which case, if the Person notifies the indemnifying party in writing that such
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Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person), in each of which events the fees and
expenses of such counsel shall be at the expense of the indemnifying party. The
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld), but if
settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, the indemnifying party shall
indemnify and hold harmless the indemnified parties from and against any loss or
liability (to the extent stated above) by reason of such settlement or judgment.
No indemnified party will be required to 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 to such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for in the
preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by, the preceding clauses (a)
and (b), then each indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability (net of income tax effect) in such proportion as is appropriate to
reflect not only the relative benefits received by the indemnified party and
each such indemnifying party, but also the relative fault of the indemnified
party and each such indemnifying party, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
Stockholder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the party's relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
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 misrepresentations.
8. Miscellaneous.
(a) Rule 144. The Company shall timely file the reports required to be
filed by it under the Securities Act and the Exchange Act (including but not
limited to the reports under Section 13 and 15(d) of the Exchange Act referred
to in subparagraph (c) of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, will, upon
the request of any holder of Registrable Securities, make publicly available
other information) and will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by:
(i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or
(ii) Any similar rule or regulation hereafter adopted by the
Commission.
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Upon the request of any holder of Registrable Securities, the Company will
deliver to such holder a written statement as to whether it has complied with
the requirements of this Section 8(a).
(b) Remedies. Each party hereto, in addition to being entitled to exercise
all rights provided herein, including recovery of damages, will be entitled to
specific performance of its right under this Agreement. Each party hereto agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.
(c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company, the Stockholder and FAI.
(d) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telecopier, or air courier guaranteeing overnight delivery:
If to the Company:
Home Security International, Inc.
Xxxxx 0
00 Xxxxxxx Xxxxxxx
Xxxxx Xxxxxx, XXX 0000
Xxxxxxxxx
ATTN: Xxxx Xxxxxxxx
If to the Stockholder:
FAI Home Security Holdings Pty, Ltd.
000 Xxxx Xxxxxx
Xxxxxx, XXX 0000
Xxxxxxxxx
ATTN: Secretary of the Company
To FAI:
FAI Insurances, Ltd.
000 Xxxx Xxxxxx
Xxxxxx, XXX 0000
Xxxxxxxxx
ATTN: Secretary of the Company
If to any transferee, at the address given by such transferee to
the Company.
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(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
Parties, including, without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities who agree in writing to
be bound by the obligations of Stockholder and FAI. Specifically, FAI may assign
its rights and obligations under this Agreement to HIH Investment Holdings
Limited ACN:008 664 293 or HIH Insurance Limited ACN: 008 636 575; provided,
however, that such entities agree to be bound by the terms of this Agreement.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter hereof.
(k) Injunctive Relief. The Parties recognizes that any breach by it of this
Agreement will cause irreparable injury to the other Party and that actual
damages may be difficult to ascertain, and in any event, may be inadequate.
Accordingly (and without limiting the availability of legal or equitable,
including injunctive, remedies under any other provisions of this Agreement),
the Parties agrees that in the event of any such breach, the non-breaching Party
shall be entitled to injunctive relief in addition to such other legal and
equitable remedies that may be available.
(l) Arbitration. Except as otherwise provided in subparagraph (a) and (j)
above, all disputes, differences, or questions arising out of or relating to
this Agreement, or the validity, interpretation, breach, violation or
termination thereof (including disputes arising under this Clause), shall be
finally and solely determined and settled by arbitration in Chicago, Illinois in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Such arbitration shall be conducted by a panel of three
arbitrators, one of which shall be selected by the Stockholder and one of which
shall be selected by the Company. The two arbitrators so selected shall mutually
appoint a third arbitrator. If any Party hereto fails to appoint an arbitrator
12
within twenty (20) days of its receipt of notice of a dispute, the other Party
hereto shall select the arbitrator that was to be selected by such delinquent
party. In any such arbitration proceedings, the arbitrators shall adopt and
apply the provisions of the Federal Rules of Civil Procedure relating to
discovery so that each party shall allow and may obtain discovery of any matter
not privileged which is relevant to the subject matter involved in the
arbitration to the same extent as if such arbitration were a civil action
pending in a United States District Court. The arbitrators may proceed to an
award notwithstanding the failure of any Party to participate in such
proceedings. The prevailing Party in the arbitration proceeding shall be
entitled to an award of reasonable attorney fees incurred in connection with the
arbitration in such amount as may be determined by the arbitrators. The award of
the arbitrators shall be (i) the sole and exclusive remedy of the Parties, (ii)
enforceable in any court of competent jurisdiction and (iii) final and binding
on the Parties. Each Party irrevocably consents to personal jurisdiction and to
ex parte action should any Party refuse to participate in such proceedings.
Notwithstanding the foregoing, nothing herein shall preclude a Party from
seeking appropriate injunctive or other interlocutory relief in any court of
competent jurisdiction to enforce its rights hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
HOME SECURITY INTERNATIONAL, INC.
By:________________________________
Title:_____________________________
Its:_______________________________
FAI HOME SECURITY HOLDINGS PTY LTD.
By:________________________________
Title:_____________________________
Its:_______________________________
FAI INSURANCES LTD.
By:________________________________
Title:_____________________________
Its:_______________________________
13
EXHIBIT A
FORM OF
DEED OF VARIATION
-----------------
14
FAI INSURANCES LIMITED
ACN 004 304 545
FAI HOME SECURITY PTY LIMITED
ACN 000 000 000
HOME SECURITY INTERNATIONAL INC.
DEED OF VARIATION
XXXXXX XXXXXXX
Lawyers
Xxxxxx Xxxxxxx Building
00 Xxxxxx Xxxxx
XXXXXX XXX 0000
DX 000 Xxxxxx
Telephone (00) 0000 0000
Facsimile (00) 0000 0000
MJM 10733331
DEED OF VARIATION
DEED dated February 1999
BETWEEN FAI INSURANCES LIMITED ACN 004 304 545 of Xxxxx 0, 000 Xxxx
Xxxxxx, Xxxxxx, Xxx Xxxxx Xxxxx, 0000 ('FAI')
AND FAI HOME SECURITY PTY LIMITED ACN 000 000 000 of 0/00 Xxxxxxx
Xxxxxxx, Xxxxx Xxxxxx, Xxx Xxxxx Xxxxx ('FHS')
AND HOME SECURITY INTERNATIONAL INC. c/o X'Xxxxxx and Xxxxxx of 000
Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx, XXX 00000-0000
('HSI')
RECITALS
A. FAI and FHS are parties to a Share Sale Agreement dated 31 December 1997
('Share Sale Agreement') under which FAI sold to FHS half of the issued
shares in FAI Finance Corporation Pty Limited.
B. Under clause 4.2 of the Share Sale Agreement, FAI and FHS agreed that the
Purchase Price was to be paid in instalments on each date that FHS or a
Related Body Corporate of FHS receives proceeds from any issue of debt or
equity instruments to the public or effects any capital raising.
C. As part of the consideration payable for the acquisition of the shares in
Integrated International Home Security Limited, Home Security International
(a Related Body Corporate of FHS) issued shares valued at US$4.1 million
and warrants worth US$504,000 to Integral Investments Limited and executed
a promissory note in respect of the HSI Group Debt.
D. FAI contends that FHS is obliged to pay FAI up to 40% of the sums referred
to in Recital C towards payment of the balance of the Purchase Price under
the Share Sale Agreement. FHS does not concede that this is the case.
E. FAI and FHS have agreed to vary the terms for payment of the balance of the
Purchase Price set out in clause 4.2 of the Share Sale Agreement on the
terms and conditions of this Deed.
2
AGREEMENT
1. DEFINITIONS AND INTERPRETATION
In this Deed:
'Capital Raising' means any issue of debt or equity instruments (of
whatever type or nature) to the public or any other capital raising
undertaken by the HSI Group (including, without limitation, any issue of
securities to an entity not within the HSI Group and irrespective of
whether the capital raised is cash or another form of consideration);
'HSI Group' means HSI and/or any of its Related Bodies Corporate including
(without limitation) its wholly owned subsidiary, FHS;
'HSI Group Debt' means the sum of US$9,098,000, being the amount owed by
the HSI Group to Integral Investments Limited as part of the consideration
for the acquisition of Integrated International Home Security Limited;
'Purchase Price' has the same meaning as in the Share Sale Agreement;
'Related Body Corporate' has the same meaning as in the Share Sale
Agreement; and
'Share Sale Agreement' means the agreement referred to in Recital A.
1.1 Interpretation
In this Deed, unless the context indicates otherwise:
(a) the singular includes the plural and vice versa;
(b) other grammatical forms of defined words and expressions have
corresponding meanings; and
(c) a reference to a clause is a reference to a clause of this Deed.
2. FHS WAIVER
Subject to clause 4 and clause 5, FAI agrees not to enforce any right which
it may have under the Share Sale Agreement to receive payment of part of
the Purchase Price as a result of the transaction referred to in Recital C.
3. VARIATION OF SHARE SALE AGREEMENT
Subject to clause 4 and clause 5, FAI and FHS agree that the operation of
clause 4.2 of the Share Sale Agreement is varied to the following extent:
(a) FHS will not be obliged to pay FAI any part of the proceeds received
from any Capital Raising undertaken before the HSI Group Debt has been
repaid (or otherwise discharged), provided that the proceeds of any
such Capital Raising
3
are applied by the HSI Group towards repayment of the HSI Group Debt;
(b) FHS will be obliged to pay FAI:
(i) 40% (or such lesser percentage as will be sufficient to pay the
balance of the Purchase Price) of the proceeds of any Capital
Raising undertaken after repayment of the HSI Group Debt; and
(ii) if the proceeds of a Capital Raising undertaken before the HSI
Group Debt is repaid exceed the amount required to repay the HSI
Group Debt, the full amount of that excess (or such lesser amount
as will be sufficient to pay the balance of the Purchase Price);
and
(c) FHS will not be obliged to pay FAI any part of the proceeds of any
capital raising undertaken by the HSI Group in connection with the
acquisition of the shareholding in Ness Security Products Pty Limited
held by Xxxxxxxx Pty Limited in its capacity as trustee for the Xxx
Xxxxxxxx Unit Trust.
4. HSI GROUP OBLIGATIONS
4.1 FHS or HSI (on behalf of FHS) will pay FAI the sum of $500,000 on 30 June
1999 in reduction of the outstanding balance of the Purchase Price.
4.2 HSI will immediately give FAI details and adequate documentation (to the
satisfaction of FAI) of:
(a) each Capital Raising;
(b) the amount of consideration received by the HSI Group in respect of
each Capital Raising;
(c) if the consideration referred to in clause 4.2(b) is not cash, the
value attributed to that consideration in the financial statements of
the HSI Group;
(d) all payments made towards repayment of the HSI Group Debt and any
other reductions or partial discharges of the HSI Group Debt; and
(e) the satisfaction (or other discharge) of the HSI Group's obligations
to repay the HSI Group Debt.
5. CONDITION
Clause 2 and clause 3(a) are subject to, and conditional upon:
(a) compliance by HSI with all its obligations under the agreement titled
'Registration Rights Agreement' between HSI and FAI and dated on or
about the date of this Deed relating to the registration of the shares
FAI holds in HSI by the Securities and Exchange Commission of the
United States of America; and
4
(b) compliance by HSI and FHS with their obligations under clause 4.1 and
clause 4.2.
6. GENERAL
6.1 This Deed may be executed in counterparts.
6.2 Each party must bear its own costs of preparing and executing this Deed and
must pay all stamp duty or other taxes of a similar nature on this Deed for
which the party is liable under the Duties Xxx 0000.
6.3 A provision or a right under this Deed may not be waived except by a waiver
in writing signed by the party granting the waiver, and will be effective
only to the extent specifically set out in that waiver.
6.4 This Deed is governed by the laws of New South Wales and each party
unconditionally and irrevocably submits to the non-exclusive jurisdiction
of the courts of that State.
EXECUTED as a deed.
THE COMMON SEAL of FAI )
INSURANCES LIMITED is fixed to this )
document in accordance with its constitution )
in the presence of )
/s/ Xxxxxx X. Xxxxx /s/ Xxxxxx X. Baulderstone
.................................... .......................................
Signature of director Signature of director/company secretary
(Please delete as applicable)
Xxxxxx X. Xxxxx Xxxxxx X. Baulderstone
.................................... .......................................
Name of director (print) Name of director/company secretary
(print)
THE COMMON SEAL of FAI HOME )
SECURITY PTY LIMITED is fixed to this )
document in accordance with its constitution )
in the presence of )
.................................... .......................................
Signature of director Signature of director/company secretary
(Please delete as applicable)
.................................... .......................................
Name of director (print) Name of director/company secretary
(print)
5
THE COMMON SEAL of HOME )
SECURITY INTERNATIONAL INC. is )
fixed to this document in accordance with its )
constitution in the presence of )
............................... ...........................................
Signature of director Signature of director/company secretary
(Please delete as applicable)
............................... ...........................................
Name of director (print) Name of director/company secretary (print)
