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EXHIBIT 5
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of February 2,
1998, between Alarmguard Holdings, Inc., a Delaware corporation (the "Company"),
and the Purchasers listed on Schedule I hereto (each a "Purchaser" and
collectively, the "Purchasers").
RECITALS:
(a) The Purchasers and the Company have entered into a Preferred Stock
Purchase Agreement, dated as of the date hereof (the "Stock Purchase Agreement")
(each capitalized term used herein and not otherwise defined shall have the
meaning ascribed to such term in the Stock Purchase Agreement), pursuant to
which the Purchasers are simultaneously with the execution hereof purchasing
from the Company the number of shares of Series A Preferred or Series B
Preferred (collectively referred to herein as the "Preferred Shares") of the
Company set forth opposite its name on Schedule I hereto except that Advance
will purchase the Preferred Shares to be purchased by it as of the Advance
Closing Date.
(b) As of the date hereof, the Preferred Shares purchased by the Purchasers
pursuant to the Stock Purchase Agreement entitles the holder thereof to receive,
upon the conversion thereof, the number of shares of Common Stock as are set
forth opposite its name on Schedule I, which number of shares are subject to
adjustment as set forth in the provisions of the Certificate of Amendment to the
Second Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation").
(c) The Company desires to grant the Purchasers certain registration rights
with respect to the Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. Subject to paragraph 1(b) below, the holders
at any time of at least 50% of the Registrable Securities may request at any
time registration under the Securities Act of 1933, as amended (the "Securities
Act"), of all or part of their Registrable Securities on Form S-1 or any similar
long-form registration ("Long-Form Registrations"), and
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each holder of Registrable Securities may request registration under the
Securities Act of all or part of their Registrable Securities on Form S-2 or S-3
or any similar short-form registration ("Short-Form Registrations") if
available. Each request for a Demand Registration shall specify the approximate
number of Registrable Securities requested to be registered and the anticipated
per share price range for such offering. Within ten days after receipt of any
such request, the Company will give written notice of such requested
registration to all other holders of Registrable Securities and will include in
such registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within 15 days after the
receipt of the Company's notice. All registrations requested pursuant to this
paragraph 1(a) are referred to herein as "Demand Registrations".
(b) LONG-FORM REGISTRATIONS. Subject to paragraph 1(a), the holders of
Registrable Securities will be entitled at any time to request Long-Form
Registrations in which (subject to Section 5(b)) the Company will pay all
Registration Expenses ("Company-paid Long-Form Registrations"); provided that
the holders of Registrable Securities may not request more than two (2)
Long-Form Registrations (each a "Demand Long-Form Registration," and each of
which shall be a Company-paid Long-Form Registration), such number to be reduced
by the number of previously consummated Demand Long-Form Registrations. A
registration will not count as one of the permitted Demand Long-Form
Registrations until it has become effective, and no Company-paid Long-Form
Registration will count as one of the permitted Demand Long-Form Registrations
unless the holders of Registrable Securities are able to register and sell at
least 85% of the Registrable Securities requested to be included in such
registration; provided that in any event the Company will pay all Registration
Expenses in connection with any registration initiated as a Company-paid
Long-Form Registration whether or not it has become effective.
(c) SHORT-FORM REGISTRATIONS. In addition to the Long-Form Registrations
provided pursuant to paragraph 1(b), each holder of Registrable Securities will
be entitled to request a Short Form Registration (provided that the holders may
only request up to two (2) Short-Form Registrations in any twelve-month period,
which number shall be reduced by the number of previously consummated Demand
Short-Form Registrations in such twelve-month period) in which the Company will
pay all Registration Expenses. Demand Registrations will be Short-Form
Registrations whenever the Company is permitted to use any applicable short
form. The Company will use its best efforts to make Short-Form Registrations on
Form S-3 available for the sale of Registrable Securities. The holders of
Registrable Securities agree that they will not request a Long-Form Registration
when the Company is eligible to use a Short-Form Registration; provided that the
Company agrees to include in the prospectus included in any Short-Form
Registration Statement, such material describing the Company and intended to
facilitate the sale of securities being so registered as is reasonably requested
for inclusion therein by any of the shareholders selling securities pursuant to
such registration statement, whether or not the form used for such registration
statement requires the inclusion of such information.
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(d) PRIORITY ON DEMAND REGISTRATIONS. The Company will not include in any
Demand Registration any securities which are not Registrable Securities without
the prior written consent of the holders of at least 50.1% of the Registrable
Securities included in such registration. If a Demand Registration is an
underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any, which
can be sold therein without adversely affecting the marketability of the
offering, the Company will include in such registration prior to the inclusion
of any securities which are not Registrable Securities the number of Registrable
Securities requested to be included which in the opinion of such underwriters
can be sold without adversely affecting the marketability of the offering, pro
rata among the respective holders thereof on the basis of the number of
Registrable Securities owned by each holder participating in such offering.
(e) RESTRICTIONS ON LONG-FORM REGISTRATIONS AND DEMAND REGISTRATIONS. The
Company will not be obligated to effect any Demand Long-Form Registration during
the period starting with the date thirty (30) days prior to the Company's good
faith estimate of the date of filing of, and ending on a date one hundred and
twenty (120) days after the effective date of, a Company-initiated registration;
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become and remain effective. The
Company will not be obligated to effect any Demand Long-Form Registration within
six (6) months after the effective date of a previous Long-Form Registration.
The Company may postpone for up to six (6) months the filing or the
effectiveness of a registration statement for a Demand Registration if the
Company and the holders of at least 66.67% of the Registrable Securities to be
covered thereby agree that such Demand Registration would reasonably be expected
to have an adverse effect on any proposal or plan by the Company or any of its
subsidiaries to engage in any acquisition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or similar
transaction; provided that in such event, the holders of Registrable Securities
initially requesting such Demand Registration will be entitled to withdraw such
request and such Demand Registration will not count as one of the permitted
Demand Registrations hereunder and the Company will pay all Registration
Expenses in connection with such registration. The Company will not be obligated
to effect any Demand Long-Form Registration unless the anticipated aggregate
offering price, net of underwriting discounts and commissions, of the Common
Stock to be included in such Demand Long-Form Registration equals more than ten
million dollars ($10,000,000).
(f) OTHER REGISTRATION RIGHTS. Except as provided in this Agreement, the
Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of at least 66.67% of the Registrable Securities;
provided that the Company may grant rights to employees of the Company and its
Subsidiaries to participate in Piggyback Registrations so long as such rights
are
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subordinate to the rights of the holders of Registrable Securities with respect
to such Piggyback Registrations as provided in paragraphs 2(c) and 2(d) below.
(g) SELECTIONS OF UNDERWRITERS. If any Demand Registration is an
underwritten offering, the selection by the Company of investment banker(s) and
manager(s) for the Offering must be approved by the holders of a majority of the
Registrable Securities included in such Demand Registration. Such approval will
not be unreasonably withheld.
2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register any of
its securities under the Securities Act (other than pursuant to (i) a Demand
Registration, (ii) a registration in connection with shares issued by the
Company in connection with the acquisition of any company or companies or (iii)
a registration solely of shares that have been issued pursuant to the Company's
employee benefit plans) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
will give prompt written notice to all holders of Registrable Securities of its
intention to effect such a registration and will include in such registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within 15 days after the receipt of the
Company's notice.
(b) PIGGYBACK EXPENSES. Subject to Section 5(b), the Registration Expenses
of the holders of Registrable Securities will be paid by the Company in all
Piggyback Registrations.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, the Company will include in such registration (i) first, the
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Registrable Securities on the basis of the number of Registrable Securities
owned by each holder of Registrable Securities participating in such offering,
and (iii) third, other securities requested to be included in such registration;
provided that in any event the holders of Registrable Securities shall be
entitled to register at least 20% of the securities to be included in any such
registration.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in
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such offering without adversely affecting the marketability of the offering, the
Company will include in such registration (i) first, the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Registrable Securities on the basis of the number of Registrable Securities
owned by each holder of Registrable Securities participating in such offering,
and (ii) second other securities requested to be included in such registration.
(e) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an
underwritten offering, the selection by the Company of investment banker(s) and
manager(s) for the offering must be approved by the holders of a majority of the
Registrable Securities included in such Piggyback Registration. Such approval
will not be unreasonably withheld.
(f) OTHER REGISTRATIONS. If the Company has previously filed a registration
statement with respect to Registrable Securities pursuant to Paragraph 1 or
pursuant to this Paragraph 3, and if such previous registration has not been
withdrawn or abandoned, the Company will not file or cause to be effected any
other registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Form S-8 or any successor form), whether on its own behalf or at
the request of any holder or holders of such securities, until a period of at
least six months has elapsed from the effective date of such previous
registration.
3. HOLDBACK AGREEMENTS.
(a) Each holder of Registrable Securities agrees not to effect any public
sale or distribution (including sales pursuant to Rule 144) of equity securities
of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the ninety
(90)-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are included (except as part of such underwritten registration),
unless the underwriters managing the registered public offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale or distribution of
its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and during the
ninety (90)-day period beginning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration (except as part
of such underwritten registration or pursuant to registrations on Form S-8 or
any successor form), unless the underwriters managing the registered public
offering otherwise agree, and (ii) to cause each holder of at least 5% (on a
fully-diluted basis) of its Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock, purchased from the Company at any
time after the date of this Agreement (other than in a registered public
offering) to agree not to effect any public sale or distribution (including
sales pursuant to Rule 144) of any such securities during such period (except as
part of such underwritten registration, if otherwise permitted), unless the
underwriters managing the registered public offering otherwise agree.
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4. REGISTRATION PROCEDURES. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof including the registration of common stock that may be
obtained upon conversion of Preferred Shares held by a holder of Registrable
Securities requesting registration as to which the Company has received
reasonable assurances that only Registrable Securities will be distributed to
the public, and pursuant thereto the Company will as expeditiously as possible:
(a) prepare and file (in the case of a Demand Registration not more than
sixty (60) days after request therefor) with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best efforts to cause such registration statement to become
effective (provided that as far in advance as practicable before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to the counsel selected by the holders of a majority of
the Registrable Securities covered by such registration statement copies of all
such documents proposed to be filed, which documents will be subject to the
review of such counsel);
(b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than one hundred and eighty (180)
days (subject to Paragraph (a) above) and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(c) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
seller;
(d) use its best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as any seller
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
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(e) notify each seller of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and,
if not so listed, to be listed on the National Association of Securities Dealers
automated quotation system;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting agreements
in customary form) and take all such other actions as the holders of a majority
of the Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities (including, without limitation, effecting a stock split or a
combination of shares);
(i) make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) permit any holder of Registrable Securities which holder, in its sole
and exclusive judgment, might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such holder and
its counsel should be included;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will promptly notify the holders of Registrable
Securities and will use its reasonable best efforts promptly to obtain the
withdrawal of such order; and
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(l) obtain a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters as the holders of a majority of the Registrable
Securities being sold reasonably request; and
(m) in connection with an underwritten public offering, (i) cooperate with
the selling holders of Registrable Securities, the underwriters participating in
the offering and their counsel in any due diligence investigation reasonably
requested by the selling holders or the underwriters in connection therewith and
(ii) participate, to the extent reasonably requested by the managing underwriter
for the offering or the selling holder, in efforts to sell the Registrable
Securities under the offering (including, without limitation, participating in
"roadshow" meetings with prospective investors) that would be customary for
underwritten primary offerings of a comparable amount of equity securities by
the Company.
5. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other Persons retained by the Company
(all such expenses being herein called "Registration Expenses"), will be borne
as provided in this Agreement, except that the Company will, in any event, pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit or quarterly review, the expense of any liability
insurance and the expenses and fees for listing the securities to be registered
on each securities exchange on which similar securities issued by the Company
are then listed or on the National Association of Securities Dealers automated
quotation system. The Company shall not be required to pay an underwriting
discount with respect to any shares being sold by any party other than the
Company in connection with an underwritten public offering of any of the
Company's securities pursuant to this Agreement.
(b) In connection with each Company-paid Demand Registration, the Company
will reimburse the holders of Registrable Securities covered by such
registration for the reasonable fees and expenses (including the fees and
expenses of counsel chosen by the holders of a majority of the Registrable
Securities initially requesting such registration) incurred by such holders in
connection with such registration. To the extent that there are any unreimbursed
expenses incurred by the holders of Registrable Securities, each holder shall
bear his or her pro rata share of such expenses based upon the number of shares
of Registrable Securities held by such holder that are included in such
registration relative to the number of all Registrable Securities included in
such registration.
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(c) The Company will reimburse the holders of Registrable Securities for
the reasonable fees and expenses (including the fees and expenses of counsel
chosen by the holders of a majority of the Registrable Securities) incurred by
such holders in enforcing any of their rights under this Agreement.
6. INDEMNIFICATION.
(a) INDEMNIFICATION OF SELLING STOCKHOLDERS BY THE COMPANY. The Company
agrees to indemnify and hold harmless each holder of Registrable Securities
which are registered pursuant hereto (each a "Selling Stockholder") and each
person, if any, who controls any Selling Stockholder within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the registration statement (or any
amendment thereto), or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or the
prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided, that subject to Section 6(c) below any such
settlement is effected with the prior written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by such Selling Stockholder),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i) or (ii) above;
provided, that this indemnity agreement shall not apply to any loss, liability,
claim, damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by the Selling
Stockholder expressly for use in the registration statement (or any amendment
thereto), or any preliminary prospectus or the prospectus (or any amendment or
supplement thereto).
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(b) INDEMNIFICATION OF COMPANY BY THE SELLING STOCKHOLDERS. Each Selling
Stockholder, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the registration
statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 6(a) above, as incurred, but only with respect to
untrue or alleged untrue statements or omissions made in the registration
statement (or any amendment thereto), or any preliminary prospectus or any
prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Selling Stockholder with respect to such Selling Stockholder expressly for
use in the registration statement (or any amendment or supplement thereto);
provided, that such Selling Stockholder's aggregate liability under this Section
6 shall be limited to an amount equal to the net proceeds (after deducting the
underwriting discount, but before deducting expenses) received by such Selling
Stockholder from the sale of Registrable Securities pursuant to a registration
statement filed pursuant to this Agreement.
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a), counsel
to the indemnified parties shall be selected by the Selling Stockholders (by
majority vote based on the number of Registrable Securities included in a
registration hereunder) and, in the case of parties indemnified pursuant to
Section 6(b), counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
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(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) CONTRIBUTION. (i) If a claim for indemnification under Section 6(a) or
6(b) is unavailable to an indemnified party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (by reason of public policy or otherwise), then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the actions, statements or
omissions that resulted in such losses as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any losses shall
be deemed to include, subject to the limitations set forth in this Section, any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.
(ii) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(f) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6(f), a holder shall not be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such holder from the sale of the
Registrable Securities subject to the proceeding exceeds the amount of any
damages that the holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged 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 misrepresentation.
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(iii) The indemnity and contribution agreements contained in this Section
are in addition to any liability that the indemnifying parties may have to the
indemnified parties.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may participate
in any registration hereunder which is underwritten unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
8. DEFINITIONS.
"Common Stock" means the Common Stock of the Company, par value $0.0001 per
share.
"Registrable Securities" means (i) any Common Stock issued upon the
conversion of any Preferred Shares issued pursuant to the Stock Purchase
Agreement (whether held by a Purchaser or any successor or assignee of a
Purchaser), and (ii) any Common Stock issued or issuable with respect to the
securities referred to in clause (i) by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Registrable
Securities, such securities will cease to be Registrable Securities when they
have been distributed 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). For purposes of this Agreement, a Person will be deemed to be a holder
of Registrable Securities whenever such Person has the right to acquire directly
or indirectly such Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected. For purposes of calculating the
percentage of Registrable Securities for voting purposes, the Preferred Shares
shall be deemed to have been converted at the then applicable conversion price.
"Registration Expenses" has the meaning set forth in Section 5(a) hereof.
9. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not entered and will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with or violates the rights granted to the holders of Registrable
Securities in this Agreement.
(b) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will not take
12
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any action, or permit any change to occur, with respect to its securities which
would adversely affect the ability of the holders of Registrable Securities to
include such Registrable Securities in a registration undertaken pursuant to
this Agreement or which would adversely affect the marketability of such
Registrable Securities in any such registration (including, without limitation,
effecting a stock split or a combination of shares).
(c) REMEDIES. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(d) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of at least 66.67% of the Registrable
Securities.
(e) SUCCESSORS AND ASSIGNS. All covenants and agreements in this Agreement
by or on behalf of any of the parties hereto will bind and inure to the benefit
of the permitted respective successors and assigns of the parties hereto whether
so expressed or not.
(f) NOTICES. Except as otherwise expressly provided herein, any and all
notices, designations, consents, offers, acceptances or other communications
provided for herein shall be given in writing and shall be mailed by first class
registered or certified mail, postage prepaid, sent by a nationally recognized
overnight courier service or transmitted via telecopier as follows:
If to the Company:
Alarmguard Holdings, Inc.
000 Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. XxxXxxxxxx
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with a copy to:
Xxxxxxxx & Xxxx LLP
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to Advance:
Advance Capital Partners, L.P.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
If to any other Purchaser to the address set forth opposite such Purchaser's
name on Schedule I hereto.
Notice shall be deemed given, for all purposes, when deposited in the United
States mail as registered or certified mail, in which event the fifth day
following the date of postmark on the receipt of such registered or certified
mail shall conclusively be deemed the date of giving of such notice, on the
first Business Day following collection by the courier service or when
acknowledged by the receiving telecopier.
(g) INTERPRETATION OF AGREEMENT; SEVERABILITY. The provisions of this
Agreement shall be applied and interpreted in a manner consistent with each
other so as to carry out the purposes and intent of the parties hereto, but if
for any reason any provision hereof is determined to be unenforceable or
invalid, such provision or such part thereof as may be unenforceable or invalid
shall be deemed severed from the Agreement and the remaining provisions carried
out with the same force and effect as if the severed provision or part thereof
had not been a part of this Agreement.
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(H) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS (AND NOT THE CONFLICTS OF LAW) OF
THE STATE OF NEW YORK.
(i) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same Agreement.
(j) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof, and supersedes all
previous agreements.
* * * * *
[SIGNATURE PAGES FOLLOW]
15
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first written above.
ALARMGUARD HOLDINGS, INC.
By: ----------------------------------
Name:
Title:
ADVANCE CAPITAL PARTNERS, L.P.
By: Advance Capital Associates, L.P.,
its General Partner
By: Advance Capital Management, LLC,
its General Partner
By: -----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Principal
ADVANCE CAPITAL OFFSHORE PARTNERS, L.P.
By: Advance Capital Offshore Associates, LDC,
its General Partner
By: Advance Capital Associates, L.P.,
its Sole Director
By: Advance Capital Management, LLC,
its General Partner
By: -------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Principal
17
CANAAN EQUITY, L.P.
By: Canaan Equity Partners, L.L.C.
By: -------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Member/Manager
EXETER CAPITAL PARTNERS IV, L.P.
By: Exeter IV Advisors, L.P.
its General Partner
By: Exeter IV Advisors, Inc.,
its General Partner
By: ---------------------------------
Name: Xxxxx X. Xxx
Title: President
LB I GROUP INC.
By: ---------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Senior Vice President
18
XXXXXXX ASSOCIATES, L.P.
By: --------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
WESTGATE INTERNATIONAL, L.P.
By: Martley International, Inc.
as Attorney-in-Fact
By: ----------------------------
Name: Xxxx X. Xxxxxx
Title: President
ZIFF ASSET MANAGEMENT, L.P.
By: ----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
OZ MASTER FUND, LTD.
By: -----------------------------
Name: Xxxxxx X. Och
19
Title: Managing Member
OZ Management, L.L.C.
IBJS CAPITAL CORPORATION
By: -------------------------
Name: Xxxxx X. Xxxxxx
Title: Director
CREDIT SUISSE (GUERNSEY) LIMITED
as trustee of the Dynamic Growth Fund II
By: --------------------------
Name: M.E. Xxxxxx
Title: Associate
AETNA LIFE INSURANCE COMPANY
By: ---------------------------
Name: Xxxx Xxxxxxxx
Title: Assistant Vice President
GRANITE PROPERTIES MANAGEMENT
CORP.
20
By: ---------------------------------
Name: Xxxxx X. Xxxxx
Title: Director, Private Equity
By: ---------------------------------
Name: Xxxx Xxxxxxxxxxx
21
SCHEDULE I
---------------- -------------------- -------------------- ---------------------------
Name, Address and Shares of Shares of Shares of Common Stock
Telecopier Number Series A Convertible Series B Convertible initially issuable upon
Preferred Stock Preferred Stock Conversion of Convertible
Preferred Stock
Advance Capital Partners, L.P. 5,524 -- 669,575.76
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Attn: Xxxxxx Xxxxxxxxx
Advance Capital Offshore 1,726 -- 209,212.12
Partners, L.P.
x/x XXXXX Xxxx Xxxxxxxx (Xxxxxx
Xxxxxxx) Limited
Safehaven Corporate Centre
Xxxxxx Building
P.O. Box 31106 SMB
West Bay Road
Grand Cayman
Cayman Islands B.W.I.
000-000-0000
Attn: Xxxxxx Xxxxxxxxx
Xxxxxxx Associates, L.P. 2,000 -- 242,424.24
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Attn: Xxxxxxx Xxxxxx
Westgate International, L.P. 2,000 -- 242,424.24
c/o Stonington Management Corp.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Attn: Xxxxxxx Xxxxxx
Exeter Capital Partners IV, L.P. 2,500 -- 303,030.30
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Attn: Xxxxx Xxx
Aetna Life Insurance Company 5,000 -- 606,060.60
000 Xxxxxxxxxx Xxxxxx
XX00
Xxxxxxxx, XX 00000
(000) 000-0000
Attention: Private Equity Group
Ziff Asset Management, L.P. 7,250 --- 878,787.88
22
---------------- -------------------- -------------------- ---------------------------
Name, Address and Shares of Shares of Shares of Common Stock
Telecopier Number Series A Convertible Series B Convertible initially issuable upon
Preferred Stock Preferred Stock Conversion of Convertible
Preferred Stock
c/o Och-Ziff Management, L.L.C.
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Attn: Xxxxx Och/Xxxx Xxxxx
Xx Master Fund, Ltd. 2,000 --- 242,424.24
x/x Xxx-Xxxx Xxxxxxxxxx, X.X.X.
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Attn: Xxxxx Och/Xxxx Xxxxx
Canaan Equity L.P. -- 5,000 645,161.29
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
(000) 000-0000
Attn: Xxxxxxx Xxxxx
LB I Group Inc. 5,000 --- 606,060.60
c/x Xxxxxx Brothers
3 World Financial Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Attn: Xxxxxxx Xxxxxxxxxx
IBJS Capital Corporation 200 --- 24,242.42
Xxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Attn: Xxxxx Xxxxxx
Granite Properties 1,500 --- 181,818.18
Management Corp.
0 Xxxxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000
(000) 000-0000
Attn: Xxxxx Xxxxx
Credit Suisse (Guernsey) Limited 200 --- 24,242.42
as trustee for the Dynamic
Growth Fund II
P.O. Box 122, Helvetia Court
Xxxxx Xxxxxxxxx, Xx. Xxxxx Xxxx
Xxxxxxxx Xxxxxxx Xxxxxxx
XX0 0XX
###-##-#### 710934
Attn: Xxxxx Xxxxxxx
23
---------------- -------------------- -------------------- ---------------------------
Name, Address and Shares of Shares of Shares of Common Stock
Telecopier Number Series A Convertible Series B Convertible initially issuable upon
Preferred Stock Preferred Stock Conversion of Convertible
Preferred Stock
Xxxx Xxxxxxxxxxx 100 --- 12,121.21
