EXHIBIT 99.3
DUALSTAR TECHNOLOGIES CORPORATION
REGISTRATION RIGHTS AGREEMENT
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October 27, 2003
Xxxxxxxxx, L.L.C.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Gentlemen:
DualStar Technologies Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to Xxxxxxxxx, L.L.C., or its designee
(the "Purchaser"), and the Purchaser proposes to purchase and accept from the
Company, upon the terms set forth in the Securities Purchase Agreement of even
date herewith (the "Purchase Agreement") certain shares of the Company's Common
Stock, par value $0.01 per share (the "Common Shares"), (subject to the
satisfaction of the terms and conditions set forth in the Purchase Agreement).
As an inducement to the Purchaser to consummate the transactions contemplated by
the Purchase Agreement, the Company agrees with the Purchaser, as follows:
1. Resale Shelf Registration. (a) Upon becoming eligible for use of a
Registration Statement on Form S-3, the Company shall, at its cost, use its
reasonable best efforts to file as promptly as is reasonably practicable after
the Company meets the prerequisites to utilize a Form S-3 under the Securities
Act of 1933, as amended (the "Act"), with the Securities and Exchange Commission
(the "Commission") and thereafter shall use its reasonable best efforts to cause
to be declared effective a registration statement (the "Resale Shelf
Registration Statement") on a Form S-3 relating to the offer and sale of the
Transfer Restricted Securities (as defined in Section 9) by the Purchaser or its
permitted transferees from time to time in accordance with the methods of
distribution to be set forth in the Resale Shelf Registration Statement and Rule
415 under the Act (hereinafter, the "Resale Shelf Registration").
(b) The Company shall use its reasonable best efforts to keep the
Resale Shelf Registration Statement continuously effective in order to permit
the prospectus included therein to be lawfully delivered by the Purchaser or its
permitted transferees for a period of two years from the date of its
effectiveness or such shorter period that will terminate when all the Common
Shares covered by the Resale Shelf Registration Statement (i) have been sold
pursuant thereto or (ii) are no longer Transfer
Restricted Securities (in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to have used its
reasonable best efforts to keep the Resale Shelf Registration Statement
effective during the requisite period if it voluntarily takes any action (except
in connection with a Blackout Period) that would result in the Purchaser or its
permitted transferees holding Common Shares covered thereby not being able to
offer and sell such shares during that period, unless such action is required by
applicable law.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Resale Shelf Registration Statement and
the related prospectus and any amendment or supplement thereto, as of the
effective date of the Resale Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Act and the rules and regulations of the Commission and (ii)
not to contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) The Purchaser agrees that if it wishes to sell its Common Shares,
or to permit a transferee to sell its Common Shares, pursuant to a Resale Shelf
Registration Statement and related prospectus, such sales will be made in
accordance with this Section 1(d). The person wishing to sell Common Shares
pursuant to a Resale Shelf Registration Statement and related prospectus agrees
to complete and return a customary Notice and Questionnaire in such reasonable
form as may be delivered by the Company to the Purchaser prior to any intended
distribution of Common Shares, under the Resale Shelf Registration Statement.
From and after the date the Resale Shelf Registration Statement is declared
effective, the Company shall, as promptly as is reasonably practicable after the
date a Notice and Questionnaire is returned by a selling person, and in any
event within fifteen (15) business days after such date, (i) if required by
applicable law, file with the Commission a post-effective amendment to the Shelf
Registration Statement or prepare and, if required by applicable law, file a
supplement to the related prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that the person delivering such Notice and Questionnaire is named as a
selling securityholder in the Resale Shelf Registration Statement and the
related prospectus in such a manner as to permit such person to deliver such
prospectus to purchasers of the Common Shares in accordance with applicable law
and, if the Company shall file a post-effective amendment to the Resale Shelf
Registration Statement, use commercially reasonable efforts to cause such
post-effective amendment to be declared effective under the Act as promptly as
is practicable, but in any event by the date that is sixty (60) days after the
date such post-effective amendment is required by this clause to be filed; (ii)
provide such selling person copies of any documents filed pursuant to Section
1(d)(i); and (iii) notify the such selling person as promptly as is reasonably
practicable after the effectiveness under the Act of any post- effective
amendment filed pursuant to Section 1(d)(i); provided, that if such Notice and
Questionnaire is delivered during a period in which the use of the prospectus is
suspended pursuant to Section 3(e) or during a Blackout Period (as defined in
Section 9), the Company shall so inform the person delivering such Notice and
Questionnaire and
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shall take the actions set forth in clauses (i), (ii) and (iii) above upon
expiration of the suspension period or Blackout Period. Notwithstanding anything
contained herein to the contrary, the Company shall be under no obligation to
name any person if such person has not supplied the requisite information
required by Section 1(d) as a selling securityholder in any Registration
Statement or related prospectus; provided, however, that if such person has
subsequently supplied the requisite information required by this Section 1(d)
pursuant to the provisions of this Section (whether or not the Purchaser has
supplied the requisite information required by this Section 1(d) at the time the
Resale Shelf Registration Statement was declared effective) such person will be
named as a selling securityholder in the Resale Shelf Registration Statement or
related prospectus in accordance with the requirements of this Section 1(d).
2. Demand Registration.
(a) Subject to Section 2(b), after the Company becomes eligible to
utilize Form S-3 Registration Statements, if (i) the Company takes any action
that results in the termination of such Form S-3 eligibility, so that the Resale
Shelf Registration can no longer be used upon failure or (ii) the Company fails
to have a Resale Shelf Registration declared effective within 90 days after it
becomes eligible to utilize Form S-3 Registration Statements, Purchaser may
thereafter make a written request (the "Demand Notice") for registration under
the Act (a "Demand Registration") of Transfer Restricted Securities (such
securities are sometimes herein referred to as "Demand Securities"), subject to
Blackout Periods of up to 90 days in any period of twelve consecutive months.
The Demand Notice will specify the number of Demand Securities proposed to be
sold by the Purchaser and will also specify the intended method or methods of
disposition thereof. Following receipt of a Demand Notice, the Company will, as
promptly as is reasonably practicable, file a registration statement, and the
related prospectus (the "Demand Registration Statement" and, together with the
Shelf Registration Statement, the "Registration Statement") on any appropriate
form which will cover the Demand Securities that the Company has been so
requested to register by the Purchaser and use its reasonable efforts to cause
such Registration Statement to become effective.
(b) The Company will not be required to effect more than two such
Demand Registrations. The Company will not grant to future purchasers
registration rights that are superior to or limit the Purchaser's registration
rights granted herein.
A registration requested pursuant to this Section 2(b) will not be
deemed to have been effected (and it will not count as one of the Demand
Registrations) unless the Demand Registration Statement relating thereto has
become effective under the Act and the Purchaser (together with its permitted
transferees, as applicable) has been offered the reasonable opportunity to sell
its Demand Securities under the Demand Registration Statement; provided,
however, that if, after such Demand Registration Statement has become effective,
the offering of the Demand Securities pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court, such registration will be
deemed not to have been effected.
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(c) If the offering of Demand Securities pursuant to such registration
will be in the form of an underwritten offering, and if the managing underwriter
or underwriters of such offering advise the Company and the Purchaser that in
their view the number of Demand Securities requested to be included in such
offering may materially and adversely affect the success of such offering, the
Company will include in such registration the aggregate number of Demand
Securities which in the view of such managing underwriter or underwriters can be
sold without any such material adverse effect. If any Demand Securities are
required to be excluded pursuant to this Section 2, the number of Demand
Securities to be included in such registration will be reduced to the extent
necessary to reduce the total number of Demand Securities to be included in the
offering to the number recommended by such managing underwriter or underwriters.
(d) The Company shall be entitled to postpone for a reasonable period
of time (but not exceeding 45 days) the filing of any registration statement
otherwise required to be prepared and filed by it pursuant to Section 2 if (i)
the Board of Directors of the Company determines in good faith that effecting
such a registration or continuing such disposition at such time would have a
material adverse effect upon a proposed sale of all (or substantially all) of
the assets of the Company or a merger, reorganization, recapitalization or
similar current transaction materially affecting the capital structure or equity
ownership of the Company, or (ii) if the Company is in possession of material
information which the Board of Directors of the Company determines in good faith
it is not in the best interests of the Company to disclose in a registration
statement at such time; provided, however.
3. Registration Procedures. With respect to a Resale Shelf Registration
or to a Demand Registration, as applicable, the Company will, subject to
Sections 1 and 2, as promptly as is reasonably practicable:
(a) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the period described in Section
1(b) for Resale Shelf Registration or for Demand Registration for a period of
not less than 160 days (or such shorter period which will terminate when all
Demand Securities covered by a Demand Registration Statement have been sold or
withdrawn, but not prior to the expiration of the forty-day period referred to
in Section 4(3) of the Act and Rule 174 thereunder, if applicable); cause the
prospectus to be supplemented by any required prospectus supplement; and cause
such supplement to be filed pursuant to the Act and any regulations promulgated
thereunder;
(b) furnish to the Purchaser and the underwriter or underwriters, if
any, without charge, at least one copy of the Registration Statement and any
post-effective amendment thereto, upon request, and such number of conformed
copies thereof and such number of copies of the prospectus (including the
preliminary prospectus) and any amendments or supplements thereto, and any
document incorporated by reference therein, as the Purchaser or underwriter may
reasonably request in order to facilitate the disposition of the Common Shares
being sold thereunder (it being understood that the Company consents to the use
of the prospectus and any amendment or supplement
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thereto by the Purchaser covered by the Registration Statement and the
underwriter or underwriters, if any, in connection with the offering and sale of
the Common Shares, covered by the prospectus or any amendment or supplement
thereto);
(c) notify the Purchaser (and its transferees or affiliates, to the
extent they have included shares in a Registration Statement) at any time when a
prospectus relating thereto is required to be delivered under the Act, when the
Company becomes aware of the happening of any event as a result of which the
prospectus included in such Registration Statement (as then in effect) contains
any untrue statement of a material fact or omits to state a material fact
necessary to be stated therein in order to make the statements, in light of the
circumstances under which they were made, not misleading and, as promptly as is
reasonably practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Common Shares, such prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements, in light of the circumstances under
which they were made, not misleading;
(d) make generally available to its security holders an earnings
statement satisfying the provisions of Section 11(a) of the Act and the
regulations promulgated thereunder after the end of the twelve-month period
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which statement shall
cover said twelve-month period; and
(e) use commercially reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement.
(f) The Purchaser, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(c), will forthwith
discontinue (and, if applicable, cause its transferees or affiliates to
discontinue) disposition of the Common Shares until its receipt of the copies of
the supplemented or amended prospectus contemplated by Section 3(c) or until it
is advised in writing (the "Advice") by the Company that the use of the
prospectus may be resumed, and has received copies of any additional or
supplemental filings which are included or incorporated by reference in the
prospectus, and, if so directed by the Company, such holder will, or will
request the managing underwriter or underwriters, if any, to deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such holder's possession, of the prospectus covering such Common Shares
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time periods mentioned in Section 3(a) shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when the Purchaser shall
have received the copies of the supplemented or amended prospectus contemplated
by Section 3(c) or the Advice.
4. Restrictions on Sale. The Purchaser, if requested by the managing
underwriter or underwriters of any underwritten registration hereunder, agrees
not to effect any sale or distribution of the Common Shares under the Act during
the five (5)
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business days prior to and during the 90 day period beginning on the effective
date of such registration (except as part of such registration); provided, that
the foregoing restrictions shall apply only if all executive officers, directors
and beneficial owners of more than 5% of the Common Stock outstanding (on a
fully-diluted basis) shall agree to equivalent or more onerous restrictions;
provided, further, that the managing underwriters shall agree not to waive such
restrictions in favor of any other holder of Common Stock without giving the
Purchaser (and its transferees, it applicable) the opportunity to have such
restrictions waived in respect of a proportionate amount of its (or their)
Common Shares.
5. Registration Expenses. The Company will bear all of the costs and
expenses of each registration, including the fees and expenses of counsel and
accountants for the Company, and all other costs and expenses of the Company
incident to the preparation, printing and filing under the Act of the
Registration Statement (and all amendments and supplements thereto) and
furnishing copies thereof and of the prospectus included therein, the costs and
expenses incurred by the Company in connection with the qualification of the
Common Shares under the state securities or "blue-sky" laws of various
jurisdictions and the fees and expenses of a single counsel for the holders of
the Common Shares; provided, that the Company will not bear costs and expenses
of any holders of Securities for underwriters' commissions, brokerage fees,
transfer taxes, transaction fees, or the fees and expenses of accountants or
other representatives retained by any holder.
6. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless the Purchaser and any permitted transferee thereof holding the
Transfer Restricted Shares, their respective officers and directors and each
person who controls any of them within the meaning of either the Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, prospectus or preliminary prospectus or any omission or alleged
omission to state a material fact in order to make the statements (in the case
of the prospectus or any preliminary prospectus, in light of the circumstances
under which they were made) not misleading, except insofar as the same are
caused by or contained in any information with respect to the Purchaser
furnished in writing to the Company by or on behalf of the Purchaser for use
therein or by the Purchaser's failure to deliver a copy of the Registration
Statement or prospectus or any amendments or supplements thereto after the
Company has furnished the Purchaser with a sufficient number of copies of the
same.
(b) Indemnification by the Purchaser. In connection with any
Registration Statement in which the Purchaser is participating, the Purchaser
will furnish to the Company in writing such information with respect to the
Purchaser as the Company reasonably requests for use in connection with any
Registration Statement or prospectus and agrees to indemnify, to the full extent
permitted by law, the Company, its directors and officers and each person who
controls the Company (within the meaning of
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either the Act or the Exchange Act) against any losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact in
order to make the statements in the Registration Statement or prospectus or
preliminary prospectus (in the case of the prospectus or any preliminary
prospectus, in light of the circumstances under which they were made) not
misleading, to the extent that such untrue statement or omission is contained in
any information or affidavit with respect to the Purchaser so furnished in
writing by or on behalf of such person for inclusion in any prospectus or
Registration Statement. The Company will be entitled to receive indemnification
in customary form from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution, to
the same extent as provided above with respect to information with respect to
such persons so furnished in writing by such persons specifically for inclusion
in any prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Promptly after receipt by
an indemnified party under this Section 6 of notice of the commencement of any
action or proceeding (including a governmental investigation), such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 6, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party except if and to the extent that such failure materially prejudiced the
indemnifying party. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnified party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses. No indemnifying
party will, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is a party and indemnity could have been sought hereunder by
such indemnified party unless such settlement includes an unconditional release
of such indemnified party from all liability on any claims that are the subject
matter of such action. An indemnifying party will not be liable for any
settlement of any action or claim effected without its written consent;
provided, however, that such consent will not be unreasonably withheld.
(d) Contribution. If for any reason the indemnification provided for in
Sections 6(a) and 6(b), respectively, is unavailable to an indemnified party,
then the indemnifying party will contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnified
party and the indemnifying party, as well as any other relevant equitable
consideration. The relative fault of such indemnifying party and indemnified
parties will be determined by reference to, among other things, whether any
action in question, including any untrue and alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has
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been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above will be deemed to include, subject to the
limitations set forth in Section 6(c), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of the Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
7. Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers of or consents to departures from the provisions hereof may not be
given without the written agreement thereto by the parties hereto.
8. Termination. This Agreement will continue in full force and effect
until there are no Transfer Restricted Securities outstanding.
9. Miscellaneous.
(a) Certain Definitions.
"Blackout Period" means a period of time in which the Company is in
possession of material non-public information which, in the good faith
determination of the Company's board of directors, the board of directors deems
it advisable not to disclose publicly; provided, however, that any such Blackout
Periods shall not exceed in the aggregate 90 days in any consecutive 360 day
period.
"Transfer Restricted Securities" means each Common Share until (i) the
date on which such share has been effectively registered under the Act and
disposed of in accordance with a Registration Statement or (ii) the date on
which such share is distributed to the public pursuant to Rule 144 under the Act
or is sold pursuant to Rule 144(k) under the Act.
(b) Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York.
(c) Captions. The Section captions used herein are for reference
purposes only, and shall not in any way affect the meaning or interpretation of
this Agreement.
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(d) Publicity. None of the parties hereto will issue any press release
or make any other public statement, in each case relating to or connected with
or arising out of this Agreement or the matters contained herein, without
obtaining the prior approval of the other parties to the contents and the manner
of presentation and publication thereof, except such reports or other notices
that the party issuing or making same has been advised by counsel are required
pursuant to applicable law or regulation.
(e) Notices. All notices and other communications provided for or
permitted hereunder will be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to the Company:
DualStar Technologies Corporation
00-00 00xx Xxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
Fax No.:
Attention:
with a copy to:
Xxxxxxxx Xxxx LLP
One Chase Xxxxxxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
(2) if to the Purchaser:
Xxxxxxxxx, L.L.C.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: 000-000-0000
Attention: Xxxx Xxxxxxxx
with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
All such notices and communications will be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
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(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, successors
and permitted assigns (including any permitted transferee of Transfer Restricted
Securities). The Purchaser may assign to any permitted transferee (any of its
officers, employees and its affiliates) of its Transfer Restricted Securities
(other than a transferee that acquires such Common Shares in a registered public
offering or pursuant to a sale under Rule 144 of the Securities Act (or any
successor rule)), its rights and obligations under this Agreement; provided,
however, (x) that such transferee then holds Transfer Restricted Securities
representing at least 10% of the aggregate number of Common Shares purchased
pursuant to the Purchase Agreement and (y) such transferee shall promptly notify
the Company and by taking and holding such Transfer Restricted Securities such
permitted transferee shall automatically be entitled to receive the benefits of
and be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement as if it were a party hereto. If the
Company shall so request any heir, successor or permitted assign (including any
permitted transferee) wishing to avail itself of the benefits of this Agreement
shall agree in writing to acquire and hold the Transfer Restricted Securities
subject to all of the terms hereof. For purposes of this Agreement, "successor"
for any entity other than a natural person shall mean a successor to such entity
as a result of such entity's merger, consolidation, sale of substantially all of
its assets, or similar transaction. Except as provided above or otherwise
permitted by this Agreement, neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Purchaser or by the Company without the prior written consent
of the other party hereto.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together will constitute one instrument.
(h) Entire Agreement. This Agreement, including the other documents
referred to herein which form a part hereof, contains the entire understanding
of the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its officer thereunto duly authorized as of the day
and year first above written.
DUALSTAR TECHNOLOGIES CORPORATION
By:
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Name:
Title:
XXXXXXXXX, L.L.C.
By:
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Name:
Title:
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