AIRPORT SYSTEMS INTERNATIONAL, INC.
REGISTRATION RIGHTS AGREEMENT
This Agreement is made as of February 7, 2000, by and among Airport
Systems International, Inc., a Kansas corporation ("ASII"), Chris I. Hammond,
William D. Cook and Larry C. Klusman (each of them, an "Investor" and
collectively, the "Investors").
WHEREAS, pursuant to that certain Stock Purchase Agreement to be entered
into by and among ASII, DCI, Inc., ("DCI") and the Investors (the "Stock
Purchase Agreement"), ASII shall purchase all of the issued and outstanding
stock of DCI from Investors (the "Acquisition") and the Investors shall receive,
as partial consideration for such stock, common stock of ASII, par value $.01
per share ("ASII Common Stock"), resulting in the issuance of an aggregate of
150,000 shares of ASII Common Stock.
WHEREAS, pursuant to the terms of the Stock Purchase Agreement, the
Investors shall be granted certain registration rights and ASII shall register
the ASII Common Stock received by the Investors for resale pursuant to the terms
set forth in this Agreement (the "Requested Registration").
NOW, THEREFORE, in consideration of the mutual covenants, conditions, and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as
follows:
Section 1. Definitions. The definitions set forth in the Stock
Purchase Agreement will apply to terms used in this Agreement. In addition,
the following terms shall have the following meanings:
(a) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(b) "Register," "registered" and "registration" refers to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement, and compliance with
applicable state securities laws of such states in which the Investors
notify ASII of their intention to offer Registrable Securities.
(c) "Registrable Securities" means all of the following, to the
extent the same have not been sold to the public, any and all ASII Common
Stock issued to the Investors pursuant to the Stock Purchase Agreement, or
(ii) stock issued in respect of stock referred to in (i) above in any
reorganization; or (iii) stock issued in respect of the stock referred to
in (i) or (ii) as a result of a stock split, stock dividend,
recapitalization or combination. Notwithstanding the foregoing,
Registrable Securities shall not include otherwise Registrable Securities
(i) sold to or through a broker in a transaction pursuant to Rule 144 or
otherwise exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(l) thereof so that all
transfer restrictions, and restrictive
legends with respect thereto, if any, are removed upon the consummation of
such sale, or (ii) as to which the registration rights have been
terminated pursuant to this Agreement.
(d) "Rule 144" means Rule 144 under the Securities Act or any
successor or similar rule as may be enacted by the SEC from time to time.
(e) "Securities Act" means the Securities Act of 1933, as amended.
Section 2. DEMAND REGISTRATION.
(a) DEMAND BY THE INVESTORS
(i) Subject to (ii) and (iii) below, at any time during the Demand
Period, as defined in Section 8 below, ASII, upon the written demand of the
Investors, will, as soon as is practicable, use commercially reasonable efforts
to effect the registration under the Securities Act of that number of shares of
the Registrable Securities as are specified by the Investors in such written
demand.
(ii) ASII's obligations under this Section 2(a) shall be subject to
the limitations set forth below, and ASII (i) shall not be obligated to cause
any special audit to be undertaken in connection with any registration under
this Section 2(a), (ii) at its sole discretion may offer a right to participate
in such registration statement to other holders of ASII's securities, and may
itself participate in such registration, (iii) shall be entitled to postpone for
a reasonable period of time, but not in excess of ninety (90) days, the filing
of any registration statement otherwise required to be prepared pursuant to this
Section 2(a) if ASII is, at such time, conducting or about to conduct an
underwritten public offering of equity securities (or securities convertible
into equity securities) and is advised in writing by its managing underwriter
that such offering would in its opinion be adversely affected by the
registration so requested and (iv) shall be entitled to postpone such requested
registration for up to one hundred twenty (120) days if ASII determines
reasonably and in good faith, in view of the advisability of deferring public
disclosure of material corporate developments or other information, that such
registration and the disclosure required to be made pursuant thereto would not
be in the best interests of ASII at such time.
(iii) The Investors are entitled to make only one demand for
registration of the Registrable Securities under this Agreement. ASII's
obligation to register the Registrable Securities hereunder shall terminate at
such time as a registration demanded pursuant to this Section 2(a) is deemed
effective.
(b) REGISTRATION STATEMENT FORM. If any registration demanded pursuant to
this Section 2 which is proposed by ASII to be effected by the filing of a
registration statement on Form S-3 (or any successor or similar short-form
registration statement) shall be in connection with an underwritten public
offering, and if the managing underwriter shall advise ASII in writing that, in
its opinion, the use of another form of registration statement is of material
importance to the success of such proposed offering, then such registration
shall be effected on such other form.
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Upon execution of this Agreement, ASII shall use its reasonable efforts to
register the Registrable Securities when demanded by the Investors, for resale
on or before the expiration of the Demand Period; PROVIDED, HOWEVER, that ASII
shall not be obligated to register the Registrable Securities in any particular
state in which ASII would be required to: (i) qualify to do business as a
foreign corporation and where it would not otherwise be required to so qualify,
(ii) subject itself to taxation in any such jurisdiction, or (iii) execute a
general consent to service of process in any such jurisdiction.
The registration of the Registrable Securities pursuant to this Agreement
shall not relieve the Investors of their respective obligations pursuant to the
terms of the Stock Purchase Agreement.
Section 3. EXPENSES OF REGISTRATION. In addition to the fees and expenses
contemplated by Section 4 hereof, all expenses incurred in connection with the
registration pursuant to Section 2 hereof, including without limitation all
registration, filing and qualification fees, printing expenses, fees and
disbursements of counsel for ASII, and expenses of any special audits of ASII's
financial statements incidental to or required by such registration, shall be
borne by ASII, except that ASII shall not be required to pay (a) any fees and
expenses in order to amend or supplement the registration statement or
prospectus to reflect donees or pledges pursuant to Section 4(b) and (b) any
underwriters' fees, discounts or commissions relating to the sale of the
Registrable Securities. ASII shall not, under any circumstances, be required in
connection with a registration hereunder, to (x) conduct any road shows or
similar sales efforts for the Investors, (y) pay any expenses to the Investors
for any road shows or similar sales efforts, or (z) pay any fees and
disbursements of counsel(s) for the Investors.
Section 4. REGISTRATION PROCEDURES. In the case of the registration
effected by ASII pursuant to this Agreement, ASII will keep each of the
Investors advised in writing as to the initiation of registration and as to the
completion thereof. At its expense, ASII will use reasonable efforts to:
(a) keep such registration pursuant to Section 2 continuously
effective for such reasonable period as necessary to permit the Investors
to complete the distribution in the manner requested by the Investors and
described in the registration statement relating thereto, but in no event
beyond the date that is one year from the Closing Date of the Acquisition;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the
Securities Act, excluding any supplement or amendment required to name
donees or pledgees of Investors, and to keep such registration statement
effective for the applicable period of time specified in Section 4(a)
above;
(c) furnish such number of prospectuses and other documents incident
thereto as any of the Investors from time to time may reasonably request
and assist the Investors in satisfying their prospectus delivery
obligations by furnishing to any national securities exchange, including
the American Stock Exchange ("AMEX"), on which the Registrable
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Securities are then listed, copies of the prospectus and each amendment or
supplement thereto in accordance with Rule 153 under the Securities Act
(or any comparable rule then in existence);
(d) obtain the withdrawal of any order suspending the effectiveness
of a registration statement, or the lifting of any suspension of the
qualification of any of the Registrable Securities for sale in any
jurisdiction;
(e) subject to Section 2(b), register or qualify such Registrable
Securities for offer and sale under the securities or Blue Sky laws of
such jurisdictions as any of the Investors reasonably require, and keep
such registration or qualification effective for the applicable period
specified in Section 4(a) above;
(f) cause all Registrable Securities covered by such
registrations to be listed on AMEX;
(g) notify each of the Investors promptly of any request by the
SEC for the amending or supplementing of the registration statement or
prospectus or for additional information;
(h) advise each of the Investors, after ASII receives notice or
obtains knowledge of the issuance, of any order by the SEC suspending the
effectiveness of the registration statement or amendment thereto or of the
initiation or threatening of any proceeding for that purpose, and promptly
use reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal promptly if such stop order should be issued;
(i) use its best efforts to timely file with the SEC all of the
reports it is required to file under the Exchange Act as a prerequisite to
availability of Form S-3; and
(k) notify each Investor at any time a prospectus covered by such
registration statement is required to be delivered under the Securities
Act, of the happening of any event of which it has knowledge as a result
of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
then existing.
Section 5. REGISTRATION COVENANTS OF THE INVESTORS. In consideration of
the benefits accruing to them pursuant to this Agreement and in addition to
their other obligations set forth in this Agreement, each of the Investors'
covenants and agrees to:
(a) cooperate with ASII, its counsel, advisors and other
representatives, and comply with all applicable provisions of law
(including without limitation the prospectus delivery requirements of the
Securities Act and Rule 10b-5 and Regulation M under the Exchange Act) in
connection with any registration effected pursuant to the provisions of
this Agreement;
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(b) promptly provide to ASII, in writing, such information as ASII
or its counsel deems necessary or appropriate for inclusion in the
registration statement, which information, when given, shall be true and
correct in all material respects and shall not omit any information
necessary to make the information furnished not misleading;
(c) execute all questionnaires, custody agreements, powers of
attorney or other documents as ASII may reasonably request;
(d) discontinue sales of Registrable Securities upon
notification of any stop order or suspension of the effectiveness of
the registration statement;
(e) notify ASII immediately upon any material change in the plan of
distribution or other information concerning any of the Investors
described in the prospectus;
(f) discontinue sales of Registrable Securities and use of the
related prospectus following notification by ASII that the registration
statement must be amended or supplemented;
(g) not use any prospectus other than the most recent
prospectus related to the registration statement;
(h) upon presentation of a stock certificate representing
Registrable Securities sold under the registration statement, certify that
the sale was made in accordance with the terms hereof and the plan of
distribution described in the Registration Statement; and
(i) notify ASII of any request by the SEC or any state securities
commission or agency for additional information or for such registration
statement or prospectus to be amended or supplemented.
In the event that an Investor fails to comply in any material respect with
its obligations pursuant to Sections 5(a) through (c), any Registrable
Securities held by such Investor may be excluded from the registration statement
and all of such Investor's rights pursuant to the Agreement shall terminate. In
the even that an Investor fails to comply in any material respect with its
obligations pursuant to Sections 5(d) through (i), all of such Investor's rights
pursuant to this Agreement shall terminate other than with respect to
Registrable Shares then registered on a Registration Statement.
Section 6. INDEMNIFICATION.
(a) ASII shall indemnify and hold harmless each of the Investors
against any losses, claims, damages or liabilities, joint or several, to
which such Investor may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment
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or supplement thereof, 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, or any
violation by ASII of any rule or regulation promulgated under the
Securities Act or any state securities law applicable to ASII and relating
to action or inaction required of ASII in connection with any such
registration, and will reimburse each such Investor for any reasonable
legal and any other expenses incurred in connection with investigating,
defending or settling any such claim, loss, damage, liability or action;
PROVIDED, HOWEVER, that ASII will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or is
based on (i) the failure of any Investor to comply in any material respect
with its obligations pursuant to Sections 5(d) through (i), or (ii) any
untrue statement or omission based upon information furnished to or
requested by ASII by or from any Investor for use therein.
(b) Each Investor will, if Registrable Securities held by or
issuable to such Investor are included in the securities as to which such
registration is being effected, indemnify and hold harmless ASII, each of
its directors and officers, each person who controls ASII, and each other
Investor, against all claims, losses, expenses, damages and liabilities
(or actions in respect thereof) arising out of or based on (i) the failure
of any Investor to comply in any material respect with its obligations
pursuant to Sections 5(d) through (i), or (ii) any untrue statement (or
alleged statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document 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,
and will reimburse ASII, each person who controls ASII, such directors or
officers, or such other Investors for any reasonable legal or any other
expenses incurred in connection with investigating, defending or settling
any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with information furnished to or requested
by ASII by or from such Investor specifically for use therein; PROVIDED,
HOWEVER, the total amount for which any Investor shall be liable under
this Section 6(b) shall not in any event exceed the aggregate proceeds
received by such Investor from the sale of Registrable Securities sold by
such Investor in such registration.
(c) Each party entitled to indemnification under this Section 6 (the
"INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified
Party has actual knowledge of any claims as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided
further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations hereunder, unless such failure resulted in actual detriment to
the Indemnifying Party. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the
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consent of each Indemnified Party, 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 full and unconditional release from all liability in respect of such
claim or litigation.
(d) If the indemnification provided for in this Section 6 is held by
a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense
referred to therein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party thereunder, shall contribute the amount paid or
payable by such Indemnified Party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other hand in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense
as well as any other relevant equitable considerations. The relevant fault
of the Indemnifying Party and the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. Notwithstanding the foregoing, the amount any Investor shall be
obligated to contribute pursuant to this Section 6(d) shall be limited to
an amount equal to the proceeds to such Investor of the Registrable
Securities sold pursuant to the registration statement which gives rise to
such obligation to contribute (less the aggregate amount of any damages
which the Investor has otherwise been required to pay in respect of such
loss, claim, damage, liability or action or any substantially similar
loss, claim, damage, liability or action arising from the sale of such
Registrable Securities).
(e) The indemnification provided by this Section 6 shall be a
continuing right to indemnification and shall survive the registration and
sale of any securities by any person entitled to indemnification hereunder
and the expiration or termination of this Agreement.
Section 7. CERTIFICATE LEGENDS. Within five (5) business days after a
registration statement filed under Section 2 hereof becomes effective, ASII will
notify each Investor. Upon receipt of such notice, each Investor may return its
certificate representing the Registrable Securities and request that ASII issue
a new certificate in such Investor's name free of any restrictive legend
relating to compliance with federal securities laws and ASII shall take all
reasonable steps to do so; PROVIDED, HOWEVER, that ASII shall only be obligated
to remove the legend for that number of Registrable Securities which any
Investor represents is being sold pursuant to the registration statement.
Section 8. TERMINATION OF RIGHTS. All rights of the Investors to demand
registration of the Registrable Securities under this Agreement shall exist
during the period (the "Demand Period") commencing on the date hereof and
terminating at 5:00 P.M. Eastern time on the date one year after the date
hereof.
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Section 9. REPRESENTATIONS AND WARRANTIES OF ASII. ASII represents
and warrants to the Investors as follows:
(a) The execution, delivery and performance of this Agreement by
ASII has been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other
government agency, the Articles of Incorporation or the Bylaws of ASII or
any provision of any indenture, agreement or other instrument to which it
or any of its properties or assets is bound, conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument or result
in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of ASII.
(b) This Agreement has been duly executed and delivered by ASII and
constitutes the legal, valid and binding obligation of ASII, enforceable
in accordance with its terms, subject to (i) applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and moratorium laws and
other laws of general application affecting enforcement of creditors'
rights generally, and (ii) the availability of equitable remedies as such
remedies may be limited by equitable principles of general applicability
(regardless of whether enforcement is sought in a proceeding in equity or
at law).
Section 10. MISCELLANEOUS.
(a) AMENDMENTS. This Agreement may be amended only by a
writing signed by ASII and all of the Investors.
(b) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which shall constitute a single instrument.
(c) NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and may be sent by facsimile
transmission (with written confirmation of successful transmission), by
registered or certified mail, postage prepaid, or delivered by hand or by
messenger, addressed (a) if to an Investor, at such Investor's address set
forth on the books of ASII, or at such other address as such Investor
shall have furnished to ASII in writing pursuant to this Section, or (b)
if to ASII, to ASII's then current executive office address, or at such
other address as ASII shall have furnished to the Investors pursuant to
this Section. Each such notice or other communication shall for all
purposes of this Agreement be treated as effective or having been given
when delivered if delivered personally, or, if sent by registered or
certified mail or facsimile transmission, upon its receipt.
(e) SEVERABILITY. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other
provision of this Agreement, and this Agreement shall be carried out as if
any such illegal, invalid or unenforceable provision were not contained
herein.
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(f) DILUTION. If, and as often as, there is any change in the ASII
Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be
made in the provisions hereof so that the rights and privileges granted
hereby shall continue with respect to the ASII Common Stock as so changed.
(g) SPECIFIC PERFORMANCE. The parties hereto acknowledge that they
will be irreparably damaged in the event that this Agreement is not
specifically enforced. Upon any breach threatened, breach of the terms,
covenants or conditions of this Agreement by any party hereto, the other
party shall, in addition to all other remedies, be entitled to a temporary
permanent injunction, without showing any actual damage or posting any
bond, or a decree for specific performance, in accordance with the
provisions hereof.
(h) GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Kansas without regard to
principles of conflict of law.
(i) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the
Investors without the prior written consent of ASII. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective
successors and assigns.
(j) ENTIRE AGREEMENT. This Agreement and the other documents
referred to herein and therein contain the entire understanding of the
parties with respect to the subject matter hereof. There are no
restrictions, promises, warranties, covenants or undertakings concerning
the subject matter other than those expressly set forth in this Agreement.
This Agreement supercedes all prior negotiations, agreements and
undertakings between the parties with respect to such subject matter.
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IN WITNESS HEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
AIRPORT SYSTEMS INTERNATIONAL, INC.
__________________________________
Keith Cowan, President
INVESTORS
__________________________________
Chris I. Hammond
__________________________________
William D. Cook
__________________________________
Larry C. Klusman