I:\ADVANCE\ALARM\MAIN\REGRIGHT.006
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3/31/98 09:18
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
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 initi
ated 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.
(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 Registra
ble 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 Regis
tration 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 em
ployees of the Company and its Subsidiaries to participate in
Piggyback Registrations so long as such rights are 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 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 securi
ties, 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.
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);
(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 partici
▇▇▇▇ 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
(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 perform
ing 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.
(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).
(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.
(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.
(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 question
naires, 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 pur
suant 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 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 agree
ments 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.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Advance:
Advance Capital Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 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.
(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]
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: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Principal
CANAAN EQUITY, L.P.
By: Canaan Equity Partners,
L.L.C.
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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: ▇▇▇▇▇ ▇. ▇▇▇
Title: President
LB I GROUP INC.
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice
President
▇▇▇▇▇▇▇ ASSOCIATES, L.P.
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Partner
WESTGATE INTERNATIONAL, L.P.
By: Martley International,
Inc.
as Attorney-in-Fact
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
ZIFF ASSET MANAGEMENT, L.P.
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
OZ MASTER FUND, LTD.
By:
Name: ▇▇▇▇▇▇ ▇. Och
Title: Managing Member
OZ Management, L.L.C.
IBJS CAPITAL CORPORATION
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
CREDIT SUISSE (GUERNSEY) LIMITED
as trustee of the Dynamic
Growth Fund II
By:
Name: M.E. ▇▇▇▇▇▇
Title: Associate
AETNA LIFE INSURANCE COMPANY
By:
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant Vice
President
GRANITE PROPERTIES MANAGEMENT
CORP.
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director, Private
Equity
By:
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
SCHEDULE I
Shares of
Common
Stock
initially
issuable
upon
Shares of Conversion of
Shares of Series B Convertible
Series A Convertible Preferred
Name, Address and Convertible Preferred Stock
Telecopier Number Preferred Stock
Stock
Advance Capital 5,524 -- 669,575.76
Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Advance Capital 1,726 -- 209,212.12
Offshore
Partners, L.P.
▇/▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇
▇▇▇▇▇▇▇) Limited
Safehaven Corporate
Centre
▇▇▇▇▇▇ Building
P.O. Box 31106 SMB
West Bay Road
Grand Cayman
Cayman Islands B.W.I.
▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Associates, 2,000 -- 242,424.24
L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Westgate 2,000 -- 242,424.24
International, L.P.
c/o Stonington
Management Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Exeter Capital 2,500 -- 303,030.30
Partners IV, L.P.
▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇
Aetna Life Insurance 5,000 -- 606,060.60
Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attention: Private
Equity Group
Ziff Asset 7,250 --- 878,787.88
Management, L.P.
▇/▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇.▇.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ Och/▇▇▇▇
▇▇▇▇▇
▇▇ Master Fund, Ltd. 2,000 --- 242,424.24
▇/▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇.▇.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ Och/▇▇▇▇
▇▇▇▇▇
Canaan Equity L.P. -- 5,000 645,161.29
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
LB I Group Inc. 5,000 --- 606,060.60
c/▇ ▇▇▇▇▇▇ Brothers
3 World Financial
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
IBJS Capital 200 --- 24,242.42
Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Granite Properties 1,500 --- 181,818.18
Management Corp.
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Credit Suisse 200 --- 24,242.42
(Guernsey) Limited
as trustee for
the Dynamic
Growth Fund II
P.O. Box 122,
Helvetia Court
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
###-##-#### 710934
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 100 --- 12,121.21