Exhibit 10.2
EXECUTED COPY
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION
RIGHTS AGREEMENT (this “ Agreement ”) is made
and entered into as of February 8, 2005, by and among
Quadrangle Master Funding Ltd, a Cayman Islands limited company
(“ QDRF ”), POI Acquisition, LLC, a Delaware
limited liability company (“ POI Acquisition ”),
and Protection One, Inc., a Delaware corporation (the “
Company ”), and each other Person who becomes a Holder
(as defined below) hereunder.
RECITALS
WHEREAS, (i) POI
Acquisition owns two-thirds of the outstanding shares of common
stock of POI Acquisition I, Inc (“ PAII ”),
which directly owns approximately 88% of the outstanding shares of
common stock of the Company, and QDRF owns one-third of the
outstanding shares of common stock of PAII and (ii) POI Acquisition
owns two-thirds of the lenders’ rights under a Revolving
Credit Facility with Protection One Alarm Monitoring, Inc, (“
POAM ”) a wholly-owned subsidiary of the Company,
dated December 21, 1998 (as modified, amended, renewed,
extended or restated from time to time, the “ Credit
Facility ”) and QDRF owns one-third of the lenders’
rights under the Credit Facility;
WHEREAS, pursuant
to an exchange agreement dated as of November 12, 2004 (the
“ Exchange Agreement ”), in connection with
discharge of certain indebtedness under the Credit Facility, the
Company will issue 10,666,667 Common Shares (as defined below) to
POI Acquisition and 5,333,333 Common Shares to QDRF (the “
Restructuring ”); and
WHEREAS, the
execution and delivery of this Agreement by the parties hereto is a
condition precedent to the consummation of the
Restructuring.
NOW, THEREFORE, in
consideration of the mutual promises and agreements set forth
herein and in the Exchange Agreement, and other valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as
follows:
SECTION 1.
Definitions . For purposes of this Agreement, the
following capitalized terms have the following meanings:
“ Common
Shares ” means the shares of common stock, par value
$0.01 per share, of the Company.
“
Exchange Act ” means the United States Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, all as the same shall be in effect from
time to time.
“
Holders ” means POI Acquisition and QDRF and each of
their respective transferees of Registrable Securities who agrees
to be bound by the provisions of this Agreement in accordance with
Section 9(g) hereof.
“
Person ” means any individual, firm, corporation,
partnership, limited liability company, trust, joint venture,
governmental authority or other entity.
“
Prospectus ” means the prospectus included in any
Registration Statement (including, without limitation, a prospectus
that discloses information previously omitted from a prospectus
filed as part of an effective registration statement in reliance
upon Rule 430A under the Securities Act), 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 all other amendments and
supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to
be incorporated by reference in such prospectus.
“
Registrable Securities ” means all Common Shares held
as of the date hereof by the Holders (including, without
limitation, any Common Shares beneficially owned by the Holders
through their equity interests in PAII) and any Conversion
Securities as defined in Section 9(f). As to any
particular Registrable Securities, such securities shall cease to
be Registrable Securities when they have been distributed by the
Holder thereof to the public pursuant to an offering registered
under the Securities Act or 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 subsidiary of the Company.
“
Registration Statement ” means any registration
statement of the Company under the Securities Act that covers any
of the Registrable Securities pursuant to the provisions of this
Agreement, including the related Prospectus, any preliminary
prospectus, all amendments and supplements to such registration
statement (including post-effective amendments), all exhibits and
all material incorporated by reference or deemed to be incorporated
by reference in such registration statement.
“ S-3
Eligible ” means the ability of the Company to file a
Registration Statement on Form S-3 under the Securities
Act.
“ SEC
” means the United States Securities and Exchange
Commission.
“
Securities Act ” means the United States Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder, all as the same shall be in effect from time to
time.
“
Underwritten Offering ” means a distribution,
registered pursuant to the Securities Act, in which securities of
the Company are sold to the public through one or more underwriters
in a “firm commitment” underwriting.
SECTION 2.
Demand Registration .
(a)
Requests for
Registration .
(i)
Subject to the terms and conditions set forth in this Agreement,
each Holder will have the right, by written notice delivered to the
Company (a “ Demand Notice ”), to request that
the Company register Registrable Securities held by such Holder(s)
under and in accordance with the provisions of the Securities Act
(a “ Demand Registration ”); provided that a
Holder may not provide a Demand Notice for so long as such Holder
is able to sell its Registrable Securities pursuant to Rule 144(k)
under the Securities Act (or any similar rule then in force).
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(ii)
(x) POI Acquisition may make up to four (4) Demand Registrations
pursuant to Section 2(a)(i) and (y) QDRF may make up to two
(2) Demand Registrations pursuant to Section 2(a)(i)
(provided, that QDRF may make up to two (2) additional Demand
Registrations if and for so long as the Company is S-3 Eligible),
except that no Demand Notice may be given prior to six (6) months
after the Effectiveness Date (as defined below) of the immediately
preceding Demand Registration.
(b)
Filing and
Effectiveness .
(i)
The Company will file a Registration Statement relating to any
Demand Registration as promptly as reasonably practicable (but in
any event within 90 days in the case of a registration made on Form
S-1, or a comparable successor form, as applicable, or 45 days in
the case of any registration made on Form S-3 or a comparable
successor form, as applicable) following the date on which the
Demand Notice is given and will use its reasonable efforts to cause
the same to be declared effective by the SEC as soon as reasonably
practicable thereafter, but in any event will use its reasonable
efforts to cause the same to be declared effective by the SEC
within 150 days thereafter in the case of any registration made on
Form S-1 (or a comparable successor form) and within 90 days
thereafter in the case of any registration made on Form S-3 (or a
comparable successor form) (in each such case, such date being the
“ Effectiveness Date ”).
(ii)
The Company will use its reasonable best efforts to comply with all
necessary provisions of the federal securities laws in order to
keep each Registration Statement relating to a Demand Registration
effective for a period of (i) in the case of an Underwritten
Offering, three (3) months from its Effectiveness Date, and (ii) in
the case of any registration made pursuant to Rule 415 under the
Securities Act, six (6) months from its Effectiveness Date, or, in
any case, such shorter period that will terminate when all
Registrable Securities covered by such Registration Statement have
been sold pursuant to such Registration Statement (in each case,
such period being the “ Effective Period ”),
provided, however, that if any Black-Out (as defined below) occurs
during an Effectiveness Period, then such Effectiveness Period will
be tolled for the duration of the Black-Out.
Within ten (10)
business days after receipt of such Demand Notice, the Company will
serve written notice thereof (the “ Notice ”) to
all other Holders and will, subject to the provisions of Sections
2(c) and 3(b)(y), include in any registration required under this
Section 2 all Registrable Securities with respect to which the
Company receives written requests for inclusion therein within
fifteen (15) days after such Notice is given to the applicable
Holder. The Holder requesting such Demand Registration will
be permitted to withdraw in good faith all or part of the
Registrable Securities from a Demand Registration at any time prior
to the Effectiveness Date of such Demand Registration, in which
event the Company will promptly amend or, if applicable, terminate
or withdraw the related Registration Statement (whether or not
other Holders have elected to include Registrable Securities in
such Registration Statement) and, in the event of such a
withdrawal, subject to the provisions of Section 8, such
withdrawn Registration Statement shall not be considered a Demand
Registration for purposes of Section 2(a)(ii).
(c)
Priority on Demand
Registration . Notwithstanding the foregoing and
subject to the restrictions set forth in Section 3(b)(y), if
the managing underwriter or underwriters of an Underwritten
Offering to which such Demand Registration relates advises
the
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Company that the total amount
of Registrable Securities that the Holder or Holders intend to
include in such Demand Registration, together with any Piggyback
Shares (as defined below) requested to be included in such
registration by any other Holder(s) pursuant to
Section 2(b)(ii) above or any other Person pursuant to similar
registration rights, is in the aggregate such as to materially and
adversely affect the success of such offering (including by
affecting the price per share in the offering), then the number of
Registrable Securities to be included in such Demand Registration
will, if necessary, be reduced pro rata in accordance with
Section 3(b)(y) and there will be included in such
Underwritten Offering the largest number of Registrable Securities
that, in the opinion of such managing underwriter or underwriters,
can be sold without materially and adversely affecting the success
of such Underwritten Offering.
(d)
Limitations on
Demand Registration . Notwithstanding anything to the
contrary in any other provision of this Agreement, the Company will
not be required to effect a Demand Registration pursuant to this
Section 2:
(i)
during the period starting with the date of filing of, and ending
on the last day of the Effectiveness Period relating to a
registration statement in which such Holder had the right to
participate pursuant to Section 3 (or with respect to which
such Holder provided a Demand Notice), including a Registration
Statement in which the managing underwriter reduced the
Holder’s participation pursuant to Section 3(b); or
(ii)
if the Company shall furnish to Holders requesting a registration
statement pursuant to this Section 2 a certificate stating
that in the good faith judgment of the Board of Directors of the
Company, such registration and offering could materially interfere
with a bona
fide financing
transaction of the Company, including without limitation a primary
offering of securities, or any other material business transaction
of the Company, or would require disclosure of information, the
premature disclosure of which could materially and adversely affect
the Company, in which event the Company shall have the right to
defer the filing or effectiveness of a Registration Statement for a
period of not more than one-hundred twenty (120) days after receipt
of the request of a Holder pursuant to Section 2; provided
that such right to delay a request shall be exercised by the
Company not more than once in any consecutive twelve-month
period.
SECTION 3.
Piggyback Registration .
(a)
Right to
Piggyback . If at any time the Company proposes to
file a Registration Statement, whether or not for sale for the
Company’s own account, on a form and in a manner that would
also permit registration of Registrable Securities (other than in
connection with a registration statement on Forms S-4 or S-8 or any
similar or successor form), the Company shall give to Holders
holding Registrable Securities written notice of such proposed
filing at least thirty (30) days before the anticipated
filing. The notice referred to in the preceding sentence
shall offer such Holders the opportunity to register such amount of
Registrable Securities as each such Holder may request (a “
Piggyback Registration ”). Subject to
Section 3(b), the Company will include in each such Piggyback
Registration (and any related qualification under state blue sky
laws and other compliance filings, and in any underwriting involved
therein) all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within
fifteen (15) days after the written notice from the Company is
given. Each such Holder will be permitted to withdraw all or
part of its Registrable
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Securities from a Piggyback
Registration at any time prior to the effective date of such
Piggyback Registration.
(b)
Priority on
Piggyback Registrations . The Company will use its reasonable
best efforts to cause the managing underwriter or underwriters of a
proposed Underwritten Offering to permit Holders holding
Registrable Securities requested to be included in the registration
for such offering to include therein all such Registrable
Securities requested to be so included (such securities, together
with any other shares of the same class requested to be included in
such registration by any other Person pursuant to similar
registration rights, the “ Piggyback Shares ”)
on the same terms and conditions as any securities of the Company
included therein (other than the indemnification by the Holders,
which will be limited as set forth in Section 7(b) hereof and
provided , that the Holders give customary covenants,
representations and warranties). The Company shall cooperate
with any such Holder of Registrable Securities in order to seek to
limit any representations and warranties to, or agreements with,
the Company or the underwriters to be made by such Holder only to
those representations, warranties or agreements regarding such
Holder, such Holder’s Registrable Securities and such
Holder’s intended method of distribution and any other
representations required by law. Notwithstanding the
foregoing, if the managing underwriter or underwriters of such
Underwritten Offering advises the Company to the effect that the
total amount of securities that such Holders, the Company and any
other Person propose to include in such Underwritten Offering is
such as to materially and adversely affect the success of such
offering (including by affecting the price per share in the
offering), then the Company will include in such
registration:
(x)
in the case of a registration in connection with a sale of
securities for the Company’s own account, (i) first, 100% of
the securities that the Company proposes to sell for its own
account, (ii) second, to the extent that the number of securities
in clause (i) above is less than the number of securities which the
Company has been advised can be sold in such offering without
having the adverse effect referred to above, the number of
Piggyback Shares of each Holder and the number of Piggyback Shares
requested to be included in such offering by any other Persons
pursuant to similar registration rights, determined pro rata on the
basis of the number of Common Shares beneficially owned by each
Holder requesting registration and such other Persons requesting
registration, collectively; and
(y)
in the case of a Demand Registration or other sale of securities on
account of any Person other than the Company, (i) first, 100% of
the number of Registrable Securities requested to be included in
such Demand Registration or other sale by the applicable Holder or
other Person, as the case may be, (ii) second, to the extent that
the number of securities in clause (i) above, if applicable, is
less than the number of securities which the Company has been
advised can be sold in such offering without having the adverse
effect referred to in Section 2(c) above, the number of
Piggyback Shares requested to be included in such offering by any
other Holder or any other Persons pursuant to similar registration
rights, determined pro rata on the basis of the number of Common
Shares beneficially owned by each such Person requesting
registration and (iii) third, to the extent that the number of
securities in clauses (i) and (ii) above is less than the number of
securities which the Company has been advised can be sold in such
offering without having the adverse effect referred to in
Section 2(c) above, the securities sought to be included by
the Company in the offering.
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(c)
Right to Terminate
Registration . The Company shall have the right to
postpone, terminate or withdraw any registration initiated by it
under this Section 3 prior to the effectiveness of such
registration whether or not the Holders have elected to include
Registrable Securities in such registration.
SECTION 4.
Registration Procedures . In connection with the
Company’s registration obligations pursuant to, and subject
to the terms and conditions contained in, Sections 2 and 3, the
Company will use its reasonable best efforts to effect such
registrations to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company will as expeditiously as
reasonably practicable, and in each case to the extent
applicable:
(a)
Prepare and file with
the SEC a Registration Statement or Registration Statements on any
appropriate form under the Securities Act available for the sale of
the Registrable Securities by the holders thereof in accordance
with the intended method or methods of distribution thereof, and
use reasonable efforts to cause each such Registration Statement to
become effective and remain effective as provided herein;
provided , however , that before filing a
Registration Statement or Prospectus or any amendments or
supplements thereto (including documents that would be incorporated
or deemed to be incorporated therein by reference) the Company will
furnish to (i) the Holders holding Registrable Securities covered
by such Registration Statement, (ii) not more than one counsel
chosen by Holders holding a majority of the Registrable Securities
included in the Demand Notice or, in the case of a Piggyback
Registration, the Holders holding a majority of the Registrable
Securities being registered (“ Special Counsel
”) and (iii) the managing underwriters, if any, copies of all
such documents proposed to be filed, which documents will be
subject to the review of such Holders, such Special Counsel and
such underwriters, and the Company will not file any such
Registration Statement or amendment thereto or any Prospectus or
any supplement thereto (excluding such documents that, upon filing,
will be incorporated or deemed to be incorporated by reference
therein) to which the Holders holding a majority of the Registrable
Securities covered by such Registration Statement or the managing
underwriter, if any, shall reasonably object.
(b)
Prepare and file with
the SEC such amendments and post-effective amendments to each
Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable
Effectiveness Period specified in Section 2; cause the related
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act;
and comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration
Statement during the applicable Effectiveness Period in accordance
with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement as so amended or in such
Prospectus as so supplemented.
(c)
Notify the selling
Holders and the managing underwriters, if any, reasonably promptly,
and (if requested by any such Person) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any
other federal or state governmental authority for amendments or
supplements to a Registration Statement or related Prospectus or
for
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additional information, (iii)
of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) if at any time the
representations and warranties of the Company contained in any
agreement contemplated by Section 4(l) (including any
underwriting agreement) cease to be true and correct in any
material respect, (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities
for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose, (vi) of the occurrence of any
event that makes any statement made in such Registration Statement
or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or
that requires the making of any changes in a Registration
Statement, Prospectus or any such document so that, in the case of
the Registration Statement, it 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 not misleading and, in the case of the Prospectus, it will
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading, and (vii) of the Company’s
reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d)
Use its reasonable
best efforts to obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction,
at the earliest possible moment.
(e)
Furnish to each
selling Holder and each managing underwriter, if any, without
charge, at least one conformed copy of the Registration Statement
and any post-effective amendment thereto (but excluding schedules,
all documents incorporated or deemed incorporated therein by
reference and all exhibits, unless requested in writing by such
Holder or underwriter).
(f)
Deliver to each
selling Holder and the underwriters, if any, without charge as many
copies of the Prospectus or Prospectuses relating to such
Registrable Securities (including each preliminary prospectus) and
any amendment or supplement thereto as such persons may reasonably
request; and, subject to Section 5(e), the Company hereby
consents to the use of such Prospectus or each amendment or
supplement thereto by each of the selling Holders and the
underwriters, if any, in connection with the offering and sale of
the Registrable Securities covered by such Prospectus or any
amendment or supplement thereto.
(g)
Prior to any public
offering of Registrable Securitie
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