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EXHIBIT 10.59
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
entered into as of October 27, 1997, by and among CODE ALARM INC, a Michigan
corporation (the "Company"), Pegasus Partners, L.P., Pegasus Related Partners,
L.P. (together with Pegasus Partners, L.P., "Pegasus") and General Electric
Capital Corporation ("GECC").
RECITALS
WHEREAS, the Company and Pegasus have entered into that
certain Unit Purchase Agreement, dated as of the date hereof (the "Purchase
Agreement"), pursuant to which, among other things, Pegasus is purchasing units
("Units"), each Unit consisting of one share of the Company's Series A
Preferred Stock (collectively, with other such shares, the "Preferred Shares")
and one Warrant (as hereinafter defined) to purchase 72.2525247 shares of the
Company's common stock, no par value (the "Common Stock"); and
WHEREAS, the Company has issued, and may in the future issue,
additional Warrants (as hereinafter defined) to Pegasus in consideration for
certain financial accommodations provided and to be provided by Pegasus to GECC
as contemplated by the Purchase Agreement and the Company or as part of Units
issued in payment of dividends on Preferred Shares;
WHEREAS, the Company has issued Warrants to GECC in
consideration for GECC making loans to the Company pursuant to the Credit
Agreement dated as of October 24, 1997 among the Company, GECC and the other
lenders and credit parties signatory thereto (the "Credit Agreement");
WHEREAS, in connection with the purchase and sale of the
Units, the making of loans pursuant to the Credit Agreement and the issuance of
the Warrants, the Company has agreed, on the terms and conditions set forth
herein, to register shares of Common Stock as set forth below.
NOW THEREFORE, in consideration of the foregoing recitals and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Affiliate" means, with respect to any specified person, any
other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the purposes
of this definition, "control" when used with respect to any specified person
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
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"Business Day" means any day that is not a Saturday, a Sunday
or a legal holiday on which banking institutions in the State of New York are
not required to be open.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated) of
corporate stock issued by such person, including each class of common stock and
preferred stock of such person.
"Common Stock" shall have the meaning set forth in the Recitals.
"Company" shall have the meaning set forth in the Recitals.
"Credit Agreement" shall have the meaning set forth in the Recitals.
"Delay Period" shall have the meaning set forth in Section 2(d) hereof.
"Demand Notice" shall have the meaning set forth in Section 2(a)
hereof.
"Demand Registration" shall have the meaning set forth in Section 2(b)
hereof.
"Demanding Holders" means the Holders delivering the Demand Notice
pursuant to Section 2(a) hereof.
"Effectiveness Period" shall have the meaning set forth in Section 2(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"GECC Holders" means GECC and its Affiliates (to the extent that they
hold Registrable Shares or securities exercisable for Registrable Shares) and
any other holder of Registrable Shares, or securities exercisable for
Registrable Shares initially held by or issuable to GECC or an Affiliate of
GECC.
"Hold Back Period" shall have the meaning set forth in Section 4
hereof.
"Holder" means Pegasus Partners, L.P., Pegasus Related Partners, L.P.,
GECC or such other person or persons who owns Registrable Shares or securities
exercisable for Registrable Shares.
"Interruption Period" shall have the meaning set forth in Section 5
hereof.
"Majority-in-Interest" of any group of Holders means holders of more
than 50% of the Registrable Shares held by such Holders or obtainable by such
Holders upon exercise of Warrants.
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"Pegasus Holders" means Pegasus and their Affiliates (to the extent
that they hold Registrable Shares or securities exercisable for Registrable
Shares) and any other holder of Registrable Shares, or securities exercisable
for Registrable Shares, initially held by or issuable to Pegasus or an
Affiliate of Pegasus.
"person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Piggyback Registration" shall have the meaning set forth in Section 3
hereof.
"Preferred Shares" shall have the meaning set forth in the Recitals.
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Shares covered by such Registration Statement and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Purchase Agreement" shall have the meaning set forth in the Recitals.
"Registrable Shares" means (i) shares of Common Stock issuable or
issued upon exercise of the Warrants and (ii) any shares of Common Stock issued
or issuable with respect to the shares of Common Stock referred to in clause
(i) above upon any stock split, stock dividend, recapitalization or similar
event; provided, however, that shares of Common Stock shall only be registrable
pursuant to this Agreement if and so long as they have not been (i) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (ii) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions and restrictive legends
with respect to such shares of Common Stock are removed upon the consummation
of such sale and the Company and the seller and purchaser of such shares of
Common Stock shall have received an opinion of counsel for the seller, which
shall be in form and content reasonably satisfactory to the Company and the
seller and purchaser and their respective counsel, to the effect that such
shares of Common Stock in the hands of the purchaser are freely transferable
without restriction or registration under the Securities Act in any public or
private transaction; provided, further, however, that shares of Common stock
issuable upon exercise of Warrants issued as part of Units shall not be deemed
"Registrable Shares" until the first anniversary of the date hereof.
"Registration" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a Piggyback
Registration.
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"Registration Statement" means any registration statement under the
Securities Act of the Company that covers any of the Registrable Shares
pursuant to the provisions of this Agreement, including the related Prospectus,
all amendments and supplements to such registration statement, including pre-
and post-effective amendments, all exhibits thereto and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"underwritten registration or underwritten offering" means a
registration under the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.
"Units" shall have the meaning set forth in the Recitals.
"Warrants" mean (i) warrants to purchase Common Stock issued as part of
Units purchased by Pegasus pursuant to the Purchase Agreement or issued to
holders of Preferred Shares as part of Units issued in payment of dividends on
such Preferred Shares, (ii) warrants to purchase Common Stock issued to Pegasus
pursuant to Section 3.01(s) or 5.04 of the Purchase Agreement and (iii)
warrants to purchase Common Stock issued to GECC pursuant to the Warrant
Purchase Agreement dated as of October 24, 1997 between the Company and GECC.
SECTION 2. Demand Registration. (a) At any time and from time to
time, a Majority-in-Interest of the Pegasus Holders or a Majority-in-Interest
of the GECC Holders shall have the right, by written notice (the "Demand
Notice") given to the Company, to request the Company to register under and in
accordance with the provisions of the Securities Act all or any portion of the
Registrable Shares held by such Holders and/or the Registrable Shares for which
Warrants held by such Holders are exercisable, as designated by such Holders;
provided, however, that the aggregate number of Registrable Shares requested to
be registered pursuant to any Demand Notice shall be at least 50,000. Upon
receipt of any such Demand Notice, the Company shall promptly, but in no event
more than five days after receipt thereof, notify all other Holders of the
receipt of such Demand Notice and, subject to the limitations set forth below,
shall include in the proposed registration all Registrable Shares with respect
to which the Company has received written requests for inclusion therein within
20 days after delivery of the Company's notice. In connection with any Demand
Registration in which more than one holder of securities participates, in the
event that such Demand Registration involves an underwritten offering and the
managing underwriter or underwriters participating in such offering advise in
writing the Holders of Registrable Shares and the holders of other securities
to be included in such offering that the total number of Registrable Shares and
other securities to be included in such offering exceeds the amount that can be
sold in (or during the time of) such offering without delaying or jeopardizing
the success of such offering (including the price per share of the
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Registrable Shares and other securities to be sold), then the amount of
Registrable Shares and other securities to be offered for the account of such
Holders shall be reduced as follows: first, pro rata on the basis of the number
of securities other than Registrable Shares requested to be registered by the
holders of such securities; second, pro rata on the basis of the number of
Registrable Shares requested to be registered by Holders other than the
Demanding Holders; and third, pro rata on the basis of the number of
Registrable Shares requested to be registered by the Demanding Holders. The
Pegasus Holders as a group shall be entitled to five Demand Registrations and
the GECC Holders as a group shall be entitled to one Demand Registration
pursuant to this Section 2; provided, that any Demand Registration that does
not become effective or is not maintained for the time period required in
accordance with Section 2(c) shall not count as one of such Demand
Registrations, except as set forth in Section 2(f). Anything herein to the
contrary notwithstanding, the Company shall not be required to effect a Demand
Registration pursuant to this Section 2 within a period of six (6) months after
the effective date of any other Demand Registration.
(b) The Company, within 45 days of the date on which the Company
receives a Demand Notice given by Holders in accordance with Section 2(a)
hereof, shall file with the SEC, and the Company shall thereafter use its best
efforts to cause to be declared effective within 90 days following the date the
Company receives such Demand Notice, a Registration Statement on the
appropriate form for the registration and sale, in accordance with the intended
method or methods of distribution, of the total number of Registrable Shares
specified by the Holders in such Demand Notice (a "Demand Registration").
(c) The Company shall use commercially reasonable efforts to keep
each Registration Statement filed pursuant to this Section 2 continuously
effective and usable for the resale of the Registrable Shares covered thereby
for a period of 270 days from the date on which the SEC declares such
Registration Statement effective, as such period may be extended pursuant to
this Section 2, or if shorter, until all the Registrable Shares covered by such
Registration Statement have been sold pursuant to such Registration Statement.
(d) The Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 2, or suspend the use of any effective
Registration Statement under this Section 2, for a reasonable period of time
which shall be as short as practicable, but in any event not in excess of 60
days (a "Delay Period"), if the Company determines in good faith that the
registration and distribution of the Registrable Shares covered or to be
covered by such Registration Statement would materially interfere with any
pending material financing, acquisition or corporate reorganization or other
material corporate development involving the Company or any of its subsidiaries
or would require premature disclosure thereof and promptly gives the Holders
written notice of such determination, containing a statement of the reasons for
such postponement and an approximation of the period of the anticipated delay;
provided, however, that (i) the aggregate number of days included in all Delay
Periods during any consecutive 12 months shall not exceed the aggregate of (x)
180 days minus (y) the number of days occurring during all Hold Back Periods
and Interruption Periods during such consecutive 12 months and (ii) a period of
at least
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60 days shall elapse between the termination of any Delay Period, Hold Back
Period or Interruption Period and the commencement of the immediately
succeeding Delay Period. If the Company shall so postpone the filing of a
Registration Statement, the Holders of Registrable Shares to be registered
shall have the right to withdraw the request for registration by giving written
notice from the Holders of a majority of the Registrable Shares that were to be
registered to the Company within 45 days after receipt of the notice of
postponement or, if earlier, the termination of such Delay Period. The time
period for which the Company is required to maintain the effectiveness of any
Registration Statement shall be extended by the aggregate number of days of all
Delay Periods, all Hold Back Periods and all Interruption Periods occurring
during such Registration and such period and any extension thereof is
hereinafter referred to as the "Effectiveness Period". The Company shall not
be entitled to initiate a Delay Period unless it shall (A) to the extent
permitted by agreements with other security holders of the Company,
concurrently prohibit sales by such other security holders under registration
statements covering securities held by such other security holders and (B) in
accordance with the Company's policies from time to time in effect, forbid
purchases and sales in the open market by senior executives of the Company.
(e) The Company shall not include any securities that are
not Registrable Shares in any Registration Statement filed pursuant to this
Section 2 without the prior written consent of the Holders of a majority in
number of the Registrable Shares covered by such Registration Statement.
(f) The Demanding Holders may, at any time prior to the
effective date of the Registration Statement relating to a Demand Registration,
revoke such request by providing a written notice to the Company revoking such
request. In the event of such revocation, the Demanding Holders shall
reimburse the Company for all of its out-of-pocket expenses incurred in
connection with the preparation, filing and processing of the Registration
Statement, unless (i) there has been a material adverse change in the business,
assets, properties, condition (financial or other), results of operations or
prospects of the Company and its subsidiaries, since the time of the Demand
Notice, (ii) such revocation was based on the Company's failure to comply in
any material respect with its obligations hereunder or (iii) the Demanding
Holders choose to count the Demand Registration as one of the Demand
Registrations to which the Demanding Holders are entitled pursuant to the
second-to-last sentence of Section 2(a).
SECTION 3. Piggyback Registration. () Right to Piggyback.
If at any time the Company proposes to file a registration statement under the
Securities Act with respect to a public offering of securities of the same type
as the Registrable Shares for its own account (other than a registration
statement (i) on Form S-8 or any successor form thereto, (ii) filed solely in
connection with a dividend reinvestment plan or employee benefit plan covering
officers or directors of the Company or its Affiliates or (iii) on Form S-4 or
any successor form thereto, in connection with a merger, acquisition or similar
corporate transaction) or for the account of any holder of securities of the
same type as the Registrable Shares, then the Company shall give written notice
of such proposed filing to the Holders at least 30 days before the anticipated
filing date. Such notice shall offer the Holders the opportunity to register
such amount of Registrable Shares as they may request (a "Piggyback
Registration"). Subject to Section 3(b) hereof, the Company shall include in
each such Piggyback Registration all Registrable Shares with respect to which
the Company has received written requests for inclusion therein within 20 days
after notice has been given to the Holders. Each Holder shall be permitted to
withdraw all or any portion of the Registrable
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Shares of such Holder from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration.
(b) Priority on Piggyback Registrations. The Company
shall permit the Holders to include all such Registrable Shares on the same
terms and conditions as any similar securities, if any, of the Company included
therein. Notwithstanding the foregoing, if the Company or the managing
underwriter or underwriters participating in such offering advise the Holders
in writing that the total amount of securities requested to be included in such
Piggyback Registration exceeds the amount which can be sold in (or during the
time of) such offering without delaying or jeopardizing the success of the
offering (including the price per share of the securities to be sold), then the
amount of securities to be offered for the account of the Holders and other
holders of securities who have piggyback registration rights with respect
thereto shall be reduced (to zero if necessary) pro rata on the basis of the
number or amount of Common Stock (or the equivalent) requested to be registered
by each such Holder or holder participating in such offering.
(c) Right To Abandon. Nothing in this Section 3 shall
create any liability on the part of the Company to the Holders if the Company
in its sole discretion should decide not to file a registration statement
proposed to be filed pursuant to Section 3(a) hereof or to withdraw such
registration statement subsequent to its filing, regardless of any action
whatsoever that a Holder may have taken, whether as a result of the issuance by
the Company of any notice hereunder or otherwise.
SECTION 4. Holdback Agreement. If (i) the Company shall file
a registration statement (other than in connection with the registration of
securities issuable pursuant to an employee stock option, stock purchase or
similar plan or pursuant to a merger, exchange offer or a transaction of the
type specified in Rule 145(a) under the Securities Act) with respect to the
Common Stock or similar securities or securities convertible into, or
exchangeable or exercisable for, such securities and (ii) with reasonable prior
notice, the Company (in the case of a nonunderwritten public offering by the
Company pursuant to such registration statement) advises the Holders in writing
that a public sale or distribution of such Registrable Shares would materially
adversely affect such offering or the managing underwriter or underwriters (in
the case of an underwritten public offering by the Company pursuant to such
registration statement) advises the Company in writing (in which case the
Company shall notify the Holders with a copy of such underwriter's notice) that
a public sale or distribution of Registrable Shares would materially adversely
impact such offering, then each Holder shall, to the extent not inconsistent
with applicable law, refrain from effecting any public sale or distribution of
Registrable Shares during the ten (10) days prior to the effective date of such
registration statement and until the earliest of (A) the abandonment of such
offering, (B) 180 days after the effective date of such registration statement
and (C) if such offering is an underwritten offering, the termination in
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whole or in part of any "hold back" period obtained by the underwriter or
underwriters in such offering from the Company in connection therewith (each
such period, a "Hold Back Period"), provided, that the Holder shall be under no
such obligation unless each other beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of at least 5% of the Company's Common Stock and each
director and executive officer of the Company also agrees to refrain from
effecting any such public sale or distribution.
SECTION 5. Registration Procedures. In connection with the
registration obligations of the Company pursuant to and in accordance with
Sections 2 and 3 hereof (and subject to Sections 2 and 3 hereof), the Company
shall use commercially reasonable efforts to effect such registration to permit
the sale of such Registrable Shares in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the Company shall as
expeditiously as possible (but subject to Sections 2 and 3 hereof):
(a) prepare and file with the SEC a Registration
Statement for the sale of the Registrable Shares on any form for which the
Company then qualifies or which counsel for the Company shall deem appropriate
in accordance with such Holders' intended method or methods of distribution
thereof, subject to Section 2(b) hereof, and use commercially reasonable
efforts to cause such Registration Statement to become effective and remain
effective as provided herein;
(b) prepare and file with the SEC such amendments
(including post-effective amendments) to such Registration Statement, and such
supplements to the related Prospectus, as may be required by the applicable
rules, regulations or instructions under the Securities Act during the
applicable period in accordance with the intended methods of disposition
specified by the Holders of the Registrable Shares covered by such Registration
Statement, make generally available earnings statements satisfying the
provisions of Section 11(a) of the Securities Act (provided that the Company
shall be deemed to have complied with this clause if it has complied with Rule
158 under the Securities Act), and cause the related Prospectus as so
supplemented to be filed pursuant to Rule 424 under the Securities Act;
provided, however, that before filing a Registration Statement or Prospectus,
or any amendments or supplements thereto (other than reports required to be
filed by it under the Exchange Act), the Company shall furnish to the Holders
of Registrable Shares covered by such Registration Statement and their counsel
for review and comment, copies of all documents required to be filed;
(c) notify the Holders of any Registrable Shares covered
by such Registration Statement promptly and (if requested) confirm such notice
in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to such Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the SEC for amendments or supplements to such
Registration Statement or the related Prospectus or for additional information
regarding such Holders, (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of such Registration Statement or the initiation
of any proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any
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proceeding for such purpose, and (v) of the happening of any event that
requires the making of any changes in such Registration Statement, Prospectus
or documents incorporated or deemed to be incorporated therein by reference so
that they will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(d) use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of such Registration
Statement, or the lifting of any suspension of the qualification or exemption
from qualification of any Registrable Shares for sale in any jurisdiction in
the United States;
(e) furnish to the Holder of any Registrable Shares
covered by such Registration Statement, each counsel for such Holders and each
managing underwriter, if any, without charge, one conformed copy of such
Registration Statement, as declared effective by the SEC, and of each
post-effective amendment thereto, in each case including financial statements
and schedules and all exhibits and reports incorporated or deemed to be
incorporated therein by reference; and deliver, without charge, such number of
copies of the preliminary prospectus, any amended preliminary prospectus, each
final Prospectus and any post- effective amendment or supplement thereto, as
such Holder may reasonably request in order to facilitate the disposition of
the Registrable Shares of such Holder covered by such Registration Statement in
conformity with the requirements of the Securities Act;
(f) prior to any public offering of Registrable Shares
covered by such Registration Statement, use commercially reasonable efforts to
register or qualify such Registrable Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Holders of such
Registrable Shares shall reasonably request in writing; provided, however, that
the Company shall in no event be required to qualify generally to do business
as a foreign corporation or as a dealer in any jurisdiction where it is not at
the time so qualified or to execute or file a general consent to service of
process in any such jurisdiction where it has not theretofore done so or to
take any action that would subject it to general service of process or taxation
in any such jurisdiction where it is not then subject;
(g) upon the occurrence of any event contemplated by
paragraph 5(c)(v) above, prepare a supplement or post-effective amendment to
such Registration Statement or the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference and file any
other required document so that, as thereafter delivered to the purchaser of
the Registrable Shares being sold thereunder (including upon the termination of
any Delay Period), such Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(h) use its best efforts to cause all Registrable Shares
covered by such Registration Statement to be listed on each securities
exchange, if any, on which similar securities issued by the Company are then
listed or quoted and, if no such securities are so listed,
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to be listed on the Nasdaq Stock Market and, if listed on the Nasdaq Stock
Market, use its best efforts to secure designation of all such Registrable
Shares covered by such registration statement as "NASDAQ Securities" within the
meaning of Rule 11Aa2-1 promulgated under the Exchange Act or, failing that, to
secure Nasdaq Stock Market authorization for such Registrable Shares and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Shares with
the National Association of Securities Dealers, Inc. (the "NASD");
(i) on or before the effective date of such Registration
Statement, provide the transfer agent of the Company for the Registrable Shares
with printed certificates for the Registrable Shares covered by such
Registration Statement, which are in a form eligible for deposit with The
Depository Trust Company;
(j) make available for inspection by any Holder of
Registrable Shares included in such Registration Statement, any underwriter
participating in any offering pursuant to such Registration Statement, and any
attorney, accountant or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records and other
information, pertinent corporate documents and properties of any of the Company
and its subsidiaries and affiliates (collectively, the "Records"), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibilities; provided, however, that the Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors in writing are confidential shall not be disclosed to any Inspector
unless such Inspector signs a confidentiality agreement reasonably satisfactory
to the Company (which shall permit the disclosure of such Records in such
Registration Statement or the related Prospectus if necessary to avoid or
correct a material misstatement in or material omission from such Registration
Statement or Prospectus) or either (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such Registration
Statement or (ii) the release of such Records is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction; provided further,
however, that (A) any decision regarding the disclosure of information pursuant
to subclause (i) shall be made only after consultation with counsel for the
applicable Inspectors and the Company and (B) with respect to any release of
Records pursuant to subclause (ii), each Holder of Registrable Shares agrees
that it shall, promptly after learning that disclosure of such Records is
sought in a court having jurisdiction, give notice to the Company so that the
Company, at the Company's expense, may undertake appropriate action to prevent
disclosure of such Records; and
(k) if such offering is an underwritten offering, enter
into such agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such other
appropriate and reasonable actions requested by the Holders of a majority of
the Registrable Shares being sold in connection therewith (including those
reasonably requested by the managing
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underwriters) in order to expedite or facilitate the disposition of such
Registrable Shares, and in such connection, (i) use commercially reasonable
efforts to obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters and counsel to the Holders of the
Registrable Shares being sold), addressed to each selling Holder of Registrable
Shares covered by such Registration Statement and each of the underwriters as
to the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such counsel
and underwriters, (ii) use commercially reasonable efforts to obtain "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each
selling holder of Registrable Shares covered by the Registration Statement
(unless such accountants shall be prohibited from so addressing such letters by
applicable standards of the accounting profession) and each of the
underwriters, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
underwritten offerings, (iii) if requested and if an underwriting agreement is
entered into, provide indemnification provisions and procedures reasonably
requested by such underwriters. The above shall be done at each closing under
such underwriting or similar agreement, or as and to the extent required
thereunder. The Company may require each Holder of Registrable Shares covered
by a Registration Statement to furnish such information regarding such Holder
and such Holder's intended method of disposition of such Registrable Shares as
it may from time to time reasonably request in writing. If any such
information is not furnished within a reasonable period of time after receipt
of such request, the Company may exclude such Holder's Registrable Shares from
such Registration Statement. Each Holder of Registrable Shares covered by a
Registration Statement agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 5(c)(ii),
5(c)(iii), 5(c)(iv) or 5(c)(v) hereof, that such Holder shall forthwith
discontinue disposition of any Registrable Shares covered by such Registration
Statement or the related Prospectus until receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(g) hereof, or
until such Holder is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amended or
supplemented Prospectus or any additional or supplemental filings which are
incorporated, or deemed to be incorporated, by reference in such Prospectus
(such period during which disposition is discontinued being an "Interruption
Period") and, if requested by the Company, the Holder shall deliver to the
Company (at the expense of the Company) all copies then in its possession,
other than permanent file copies then in such holder's possession, of the
Prospectus covering such Registrable Shares at the time of receipt of such
request. Each Holder of Registrable Shares covered by a Registration Statement
further agrees not to utilize any material other than the applicable current
preliminary prospectus or Prospectus in connection with the offering of such
Registrable Shares.
SECTION 6. Registration Expenses. Whether or not any
Registration Statement is filed or becomes effective but subject to Section
2(f), the Company shall pay all costs, fees and expenses incident to the
Company's performance of or compliance with this Agreement, including (i) all
registration and filing fees, including NASD filing fees, (ii) all fees and
expenses of compliance with securities or Blue Sky laws, including reasonable
fees and disbursements of counsel in connection therewith, (iii) printing
expenses (including expenses of printing
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certificates for Registrable Shares and of printing prospectuses if the
printing of prospectuses is requested by the Holders or the managing
underwriter, if any), (iv) messenger, telephone and delivery expenses, (v) fees
and disbursements of counsel for the Company, (vi) fees and disbursements of
all independent certified public accountants of the Company (including expenses
of any "cold comfort" letters required in connection with this Agreement) and
all other persons retained by the Company in connection with such Registration
Statement, (vii) fees and disbursements of one counsel, other than the
Company's counsel, representing all of the Holders of Registrable Shares being
registered, selected by a Majority-in-Interest of Holders of the Registrable
Shares being registered, or in the event of a Demand Registration, selected by
the Demanding Holders and reasonably satisfactory to a Majority-in-Interest of
Holders of the Registrable Shares being registered other than the Demanding
Holders, (viii) fees and disbursements of underwriters customarily paid by the
issuers or sellers of securities and (ix) all other costs, fees and expenses
incident to the Company's performance or compliance with this Agreement.
Notwithstanding the foregoing, any discounts, commissions or brokers' fees or
fees of similar securities industry professionals and any transfer taxes
relating to the disposition of the Registrable Shares by a Holder, will be
payable by such Holder and the Company will have no obligation to pay any such
amounts.
SECTION 7. Underwriting Requirements. (a) Subject to
Section 7(b) hereof, the Demanding Holders shall have the right, by written
notice, to require that any Demand Registration provide for an underwritten
offering.
(b) In the case of any underwritten offering pursuant to
a Demand Registration, the Demanding Holders shall select the institution or
institutions that shall manage or lead such offering, which institution or
institutions shall be reasonably satisfactory to the Company and to a
Majority-in-Interest of the Holders participating in such offering, other than
the Demanding Holders. In the case of any underwritten offering pursuant to a
Piggyback Registration, the Company shall select the institution or
institutions that shall manage or lead such offering. No Holder shall be
entitled to participate in an underwritten offering unless and until such
Holder has entered into an underwriting or other agreement with such
institution or institutions for such offering in such form as the Company and
such institution or institutions shall determine.
(c) Each Holder participating in a Registration shall
promptly supply in writing such information as the Demanding Holders, the
Company or the underwriters reasonably request.
SECTION 8. Indemnification. () Indemnification by the
Company. The Company shall, without limitation as to time, indemnify and hold
harmless, to the full extent permitted by law, each Holder of Registrable
Shares whose Registrable Shares are covered by a Registration Statement or
Prospectus, the officers, directors and agents and employees of each of them,
each Person who controls each such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent lawful, from and against any and
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all losses, claims, damages, liabilities, judgment, costs (including, without
limitation, costs of investigation, preparation and reasonable attorneys' fees)
and expenses (collectively, "Losses"), as incurred, arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in
such Registration Statement or Prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same are based upon information furnished in writing to the Company by or
on behalf of such Holder expressly for use therein.
(b) Indemnification by Holder of Registrable Shares. In
connection with any Registration Statement in which a Holder is participating,
such Holder shall indemnify and hold harmless, to the full extent permitted by
law, the Company, its directors, officers, agents or employees, each Person who
controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act) and the directors, officers, agents or
employees of such controlling Persons, from and against all Losses arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in such Registration Statement or the related Prospectus or any
amendment or supplement thereto, or any preliminary prospectus, or arising out
of or based upon any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue or alleged
untrue statement or omission or alleged omission is based upon any information
furnished in writing by or on behalf of such Holder to the Company expressly
for use in such Registration Statement or Prospectus. Each Holder's indemnity
obligations under this Section 8 shall be limited to the total sales proceeds
(net of all underwriting discounts and commissions) actually received by such
Holder in connection with the applicable offering.
(c) Conduct of Indemnification Proceedings. If any
Person shall be entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party from which such
indemnity is sought (the "indemnifying party") of any claim or of the
commencement of any proceeding with respect to which such indemnified party
seeks indemnification or contribution pursuant hereto; provided, however, that
the delay or failure to so notify the indemnifying party shall not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been prejudiced by such delay or failure. The
indemnifying party shall have the right, exercisable by giving written notice
to an indemnified party promptly after the receipt of written notice from such
indemnified party of such claim or proceeding, to assume, at the indemnifying
party's expense, the defense of any such claim or proceeding, with counsel
reasonably satisfactory to such indemnified party; provided, however, that (i)
an indemnified party shall have the right to employ separate counsel in any
such claim or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (1) the indemnifying party agrees to pay such fees and expenses;
(2) the indemnifying party fails promptly to assume the defense of such claim
or proceeding or fails to employ counsel reasonably satisfactory to such
indemnified party; or (3) the named parties to any proceeding (including
impleaded parties) include both such indemnified party and the indemnifying
party,
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and such indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it that are inconsistent with those
available to the indemnifying party or that a conflict of interest is likely to
exist among such indemnified party and any other indemnified parties (in which
case the indemnifying party shall not have the right to assume the defense of
such action on behalf of such indemnified party); and (ii) subject to clause
(3) above, the indemnifying party shall not, in connection with any one such
claim or proceeding or separate but substantially similar or related claims or
proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one firm of attorneys (together with appropriate local counsel) at any time for
all of the indemnified parties, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by the indemnifying party,
such indemnified party shall not be subject to any liability for any settlement
made without its consent. The indemnifying party shall not consent to entry of
any judgment or enter into any settlement unless (i) there is no finding or
admission of any violation of any rights of any person and no effect on any
other claims that may be made against the indemnified party, (ii) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party and (iii) such judgment or settlement includes as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release, in form and substance reasonably satisfactory to the indemnified
party, from all liability in respect of such claim or litigation for which such
indemnified party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in
this Section 8 is unavailable to an indemnified party in respect of any Losses
(other than in accordance with its terms), then each applicable 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, on the one hand, and such indemnified party, on the other
hand, 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, on the one hand, and indemnified
party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been taken 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 any such action, statement or
omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include any legal or other fees or expenses 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 8(d) were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the provisions of
this Section 8(d), an indemnifying party that is a Holder shall not be required
to contribute any amount which is in excess of the amount by which the total
proceeds (net of all underwriting discounts and commissions) received by such
Holder from the sale of the Registrable Shares sold by such Holder in the
applicable offering exceeds the amount of any damages that such indemnifying
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party 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.
SECTION 9. Granting of Registration Rights. The Company
shall not grant any registration rights inconsistent with those granted
hereunder or that give any securityholder a position with respect to cut-backs
that are superior to the Holders' position as granted herein, without the
consent of a Majority-in-Interest of the Holders of the Registrable Shares
(voting together as a single class).
SECTION 10. Miscellaneous. (a) Rules 144 and 144A. The
Company covenants that it will file any reports required to be filed by it
under the Securities Act and the Exchange Act so as to enable Holders holding
Registrable Shares to sell such Registrable Shares without registration under
the Securities Act within the limitation of the exemptions provided by (a)
Rules 144 and 144A under the Securities Act, as each such Rule may be amended
from time to time, or (b) any similar rule or rules hereafter adopted by the
SEC. Upon the request of any such Holder, the Company will forthwith deliver
to such Holder a written statement as to whether it has complied with such
requirements.
(b) Termination. This Agreement and the obligations of
the Company and the Holders hereunder (other than Section 8 hereof) shall
terminate on the first date on which no Registrable Shares remain outstanding.
(c) Notices. All notices, demands, requests, or other
communications which may be or are required to be given, served, or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by hand delivery (including delivery
by courier), or facsimile transmission, addressed as follows:
(i) If to the Company:
Code Alarm Inc.
000 Xxxx Xxxxxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx and Xxxxx Xxxxxx
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
(ii) If to any Holder, at its last known address
appearing on the books of the Company maintained for such purpose.
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served or
sent. Each notice, demand, request or communication shall be deemed to have
been duly given five business days after being deposited in the mail, postage
prepaid, if mailed; when delivered by hand, if personally delivered; or upon
receipt, if sent by facsimile (followed by a confirmation copy sent by either
overnight or two (2) day courier).
(d) Separability. If any provision of this Agreement
shall be declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions hereof
which shall remain in full force and effect.
(e) Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
devisees, legatees, legal representatives, successors and assigns.
(f) Entire Agreement. This Agreement represents the
entire agreement of the parties and shall supersede any and all previous
contracts, arrangements or understandings between the parties hereto with
respect to the subject matter hereof.
(g) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of a
Majority-in-Interest of the Holders. Notwithstanding the foregoing, this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions thereof may not be given, (i) in a manner
which adversely affects the rights of the GECC Holders, unless the Company has
obtained the written consent of a Majority-in-Interest of the GECC Holders or
(ii) in a manner which adversely affects the rights of the Pegasus Holders,
unless the Company has obtained the written consent of a Majority-in-Interest
of the Pegasus Holders.
(h) Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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(i) Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be one and the same agreement, and
shall become effective when counterparts have been signed by each of the
parties and delivered to each other party.
(j) Governing Law; Consent to Jurisdiction and Venue. In
all respects, including all matters of construction, validity and performance,
this Agreement and the obligations arising hereunder shall be governed by, and
construed and enforced in accordance with, the laws of the State of Michigan
applicable to contracts made and performed in such state, without regard to the
principles thereof regarding conflict of laws, and any applicable laws of the
United States of America. EACH OF THE COMPANY, PEGASUS AND GECC CONSENTS TO
PERSONAL JURISDICTION, WAIVES ANY OBJECTION AS TO JURISDICTION OR VENUE, AND
AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE, IN XXX
XXXX XX XXX XXXX, XXXXX XX XXX XXXX. Service of process on the Company or any
Holder in any action arising out of or relating to this Agreement shall be
effective if mailed to such party in accordance with the procedures and
requirements set forth in Section 10(c). Nothing herein shall preclude any
Holder or the Company from bringing suit or taking other legal action in any
other jurisdiction.
(k) Mutual Waiver of Jury Trial. BECAUSE DISPUTES
ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND
ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
(l) Calculation of Time Periods. Except as otherwise
indicated, all periods of time referred to herein shall include all Saturdays,
Sundays and holidays; provided, however, that if the date to perform the act or
give any notice with respect to this Agreement shall fall on a day other than a
Business Day, such act or notice may be timely performed or given if performed
or given on the next succeeding Business Day.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first written above.
CODE ALARM INC.
By: /s/ Xxxx Xxxxxxx
--------------------------
Name: Xxxx Xxxxxxx
Title: President
PEGASUS PARTNERS, L.P.
By: Pegasus Investors, L.P., its general partner
By: Pegasus Investors GP, Inc., its general partner
By: /s/ Xxxxxxx Xxxx
--------------------------
Name: Xxxxxxx Xxxx
Title: Vice President
PEGASUS RELATED PARTNERS, L.P.
By: Pegasus Investors, L.P., its general partner
By: Pegasus Investors GP, Inc., its general partner
By: /s/ Xxxxxxx Xxxx
--------------------------
Name: Xxxxxxx Xxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Xxxxxxx X. Xxx Xxxx
--------------------------
Name: Xxxxxxx X. Xxx Xxxx
Title: Duly Authorized Signatory
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